It’s been a busy and exciting week for the private capital market. Anthropic filed its S-1, and while a potential valuation of $1.5 trillion puts the company behind Claude, they are now in a league of their own. There are some key takeaways when looking at the seven cofounders and their equity stake in the company. And, they’re about to be really really rich.
Equity is THE long-term incentive exclusive to private companies. It not only drives potential wealth creation, but it also aligns the team with investor interests, crucial for sustained success.
There are seven cofounders at Anthropic who each hold approximately 232-244 million shares. Sounds like a lot, right? But each one comes out to ~1.4% of the company.
This month, we are using the filing to walk through three things every private company needs to know: how equity is expressed, how it dilutes, and how founder equity is benchmarked.
1. Percentage of fully diluted shares > a share count
Equity is only meaningful as a percentage of fully diluted shares. The reason we can convert the seven cofounders’ share counts into percentages is that the S-1 discloses the fully diluted share count. Even then, journalists have used slightly different totals, but it comes out to roughly 16.94 billion.
The same is true for any offer letter. A grant of 50,000 shares tells you nothing until you know how many shares exist in total.
So, lesson #1: when it comes to equity, you want to know the percentage of fully diluted shares so that you know exactly how much you own.
2. Dilution is inevitable, so the starting number has to be right.
After raising $125 billion+ dollars, the seven cofounders combined hold about 1.69 billion shares, which translates to roughly 10% of the company in economic ownership. Even more interesting: a special Class F share gives the cofounders 50.1% of voting control.
Using a chart from the Comp Planning Tool on the Thelander platform, you can see what happens to founder total equity and non-founder equity as a company raises capital. Simply put, equity goes down while the total cash increases.
3. Founder total shares vs. founder shares for current job
Several of Anthropic’s cofounders are also C-Suite executives: Dario Amodei is CEO, Daniela Amodei is President, Jared Kaplan is the CSO and Tom Brown is Chief Compute Officer. The numbers in the headlines are their total holdings, which don’t show how much of that equity was granted for founding the company and how much for the executive roles they hold.
So, what is the difference between founder shares and founder shares for current job, and how do you interpret each number? Let’s start with the definitions.
Non-Founder’s shares: The percent of fully diluted shares granted to a non-founder CEO as part of their total compensation package.
Founders’ shares: Percent of fully diluted shares awarded for being a founder.
Founders’ shares for current job: This is the one that trips people up. This is equity granted separately to a founder who also holds an executive position – compensation for the job they’re doing, not for having started the company.
When you’re benchmarking a founders equity, it is the total number that matters.
What’s the bottom line?
The Anthropic IPO will bring new liquidity to the market. It’s also a reminder for every private company that it’s never too soon to put your compensation infrastructure in place. The sooner you get it right, the better.
When it comes to equity, there are two rules of thumb. First, know every grant as a percentage of fully diluted shares. Second, make sure every grant is competitive and in line with market from the start, so it still holds meaningful value as you continue to raise capital.
And, plan, plan, plan for dilution!