How do we divide equity?

Think of it this way. It's like hiring a vp of sales that closed a 5m deal and then he walks away with 30% of the company never to work again. Is that worth it to you?

In general equity should only be given for long term commitment although in strategic cases it can be used to incentive. IMHO 30% is way too much. Perhaps 5-10% and only for deals that put you on the map.

Don't give outright equity, it gives the salesperson an enormous incentive to close the deal even if it's a bad one for your company. Instead, promise the salesperson %X percent of net profit for the customer, for the lifetime of that customer. That way the salesperson also has a big incentive to keep the customer happy.

Make a LARGE poster board with 1,000 squares on it.

You take your portion of squares what you think you're worth

before the contest starts.

Let the other people earn squares of equity through sales

performance over the next 6 months. After 6 months ,

the equity game is over.------ Next problem ?

You are doing the bulk of the heavy lifting, are you not? Let's say you find an advisor/mentor who can open his Rolodex and get you some serious financing? They deserve a taste of the pie. The maximum I would offer would be in the .05% - .075% range. Anything more than that, and you are giving away the farm...

At the end of the day, all you've got is your equity and your IP. Don't spend it like a drunken sailor on his first shore leave.

Couple of points to add onto the great answers here - Create a pool of Phantom Shares in the company equaling maybe 15-20% of the equity. They don't have voting rights nor can cannot be converted without an event (buy-out, vesting, go public, retiring, etc.) - these are to be distributed to you long term valuable players as others commented. For non long term but valuable players create a commission structure averaging 5-10% for initial sale (minus hard costs of customization etc.) and 2-3 % for lifetime of customer as long as they are employed or contracted by you. Would have a sales contract for both employees and partners outlining this as well as details of sales rules of engagement to keep bad sales out.

Just a couple of thoughts

Frank Demmler at CMU has a very interesting means to quantify equity calculations - I'd look at that to get a guideline on what sales are worth.

Hint: it isn't zero, but it isn't very high either. Unless the salesperson is connecting into huge, must have customers which are not accessible in any other way, it simply doesn't make sense to give out any substantial portion of equity for sales.