This is a lack of retirement planning. If you don’t pay people what they are worth, they will go elsewhere.

Rather than give raises only, start profit sharing immediately so they can see that their compensation is tied to profits.

No one or two employees will idly talk about leaving if they are getting paid their worth. If they still think they can do better, invite them to leave. If you haven’t already, make them sign a nondisclosure and noncompete.

Once the talk has died down, start with your best internal leader and hammer out a long-term buyout agreement. Then, offer the same thing to each employee to buy an equal share. What you don’t sell now, finance for them. You probably want to take payments over time anyway, so stagger the payments over five years, after which time they can vote their vested shares.

There will be no reason to sabotage you or the deal if stock shares immediately transfer back to you, and the other owners will turn on them.

In effect, you are creating an employee owned cooperative to supercede you.

You made money by paying them less than what they are worth. Rather than have them compete, you need to get them to buy you out.

You also might not get as much as you want because they are going to give themselves raises, and there will be less profit to pay you with.

Just don’t be surprised if they don’t value it like you do, but a smaller percentage is better than 100% of nothing.

I figure that equity will be mostly diluted at the next funding round. Each new round of investors will attempt to buy a controlling share.

If prospects look good, they will inject at least enough to double capitalization, diluting current ownership shares and pecentage by half or more. Even if the total value increases, your shares may not because there are more shares.

Get an option to purchase or reinvest matching funds to maintain your equity share. If others are investing, it’s worth investing. Double-digit profits and growth can more than offset any loans taken to buy stock to maintain your ownership percentage.

It will only kick in when they issue additional shares, and your equity share could be diluted.