From Lemonade to IPO: A Beginner’s Guide to Equity Through Stories

Chapter 1: What is “Equity”? Starting with How to Split Lemonade Profits

Summer is here! The sun is blazing like a giant oven, and kids in town are out riding their bikes and eating popsicles.

Emily sat on her porch, staring longingly at the boy next door playing with his skateboard, her eyes filled with envy.

“This summer, I must get that limited-edition blue skateboard!” Emily swore to herself.

But when she looked at her piggy bank—only 38 dollars inside—she sighed. That’s still far from the 300-dollar price tag.

“I’ve got it!” she jumped up, her eyes sparkling. “I’ll open a lemonade stand!”

Team Assembly: Enter Jack & Mia

Early the next morning, she rushed over to her friend Jack’s house with a sketchpad and calculator.

“Jack! I’ve decided to sell lemonade. Want to do it together? You’re the best at squeezing lemons!”

Jack nodded while munching on toast. “Sure! Beats doing summer homework all day.”

Then she found Mia. “Mia, you helped me draw my birthday card, and you’re amazing at design! Can you make posters and help us attract customers?”

Mia smiled. “Absolutely! I can draw super cute signs. But... how do we split the money?”

The three of them looked at each other. Silence.

“I’ll put in 100 dollars to buy lemons and paper cups,” Emily said.

“I’m going to be squeezing lemons for hours every day!” Jack argued.

“And without my posters, no one would even stop to buy!” Mia added.

Suddenly, the air went quiet. Tension.

Their First “Board Meeting” Begins!

Emily quickly grabbed a notebook. “Hold on, let’s think this through. We’re basically doing a business together. That means each of us is like a part-owner. Shouldn’t we talk about who owns how much of this stand?”

Mia blinked. “You mean... we have shares?”

Jack gasped. “We’re baby bosses?! Should I ask my dad to invest too?”

Emily nodded seriously. “Let’s treat it like a real company. Whoever puts in more—money or effort—gets a bigger share.”

Real Discussion: How to Turn Contributions Into Shares?

Mia asked, “But how do we decide how much my poster is worth? Money is easy, but creativity?”

Emily thought for a moment. “We can estimate the value of each person’s contribution, like this:”

• Cash Investment: I’m putting in 100 dollars for supplies. That’s easy to measure.

• Labor Time: Jack will be squeezing lemons 3 hours a day, 20 days. If we value his time at $1/hour: 3 hrs × 20 days = $60

• Design & Marketing: Mia makes the sign and hands out flyers. Let’s value that at $40

“Then we add up the total, and calculate what percent each of us contributed.”

Equity Allocation Table:

Jack nodded. “So... we’re basically turning our work and money into slices of cake?”

Emily smiled. “Exactly! This lemonade stand is our cake, and each of us gets a piece depending on how much we helped make it.”

Mia’s eyes lit up. “So if I want a bigger slice in the future, I just need to design more stuff?”

They all burst into laughter.

Shares Aren’t Fixed Forever—They Can Change!

Jack asked, “If I invite my brother to help squeeze lemons later, can I give him some of my shares?”

Emily replied, “Only if we all agree. Shares can change, but it needs to be written down.”

Mia added, “We should make a real ‘Founders Agreement’... like a real company!”

Jack grinned. “I call dibs on writing ‘Jack — Shareholder No.002’ on the front page!”

The three high-fived. “Lemonade Inc. is officially born!”

 ✦✦✦

As they began prepping for Day 1 of business, Emily stared at the equity chart thoughtfully.

“What if a neighbor wants to invest later? Do we give them shares too?”

Mia added, “Maybe there are different kinds of shareholders? Like those who bring money... or skills... or make big decisions?”

Jack said, “We’ve got lots more to learn about being real bosses.”

They agreed: this summer, they’d not only sell lemonade—they’d learn the rules of the game too.