Equity distribution refers to the way ownership of a company is divided among its shareholders. This can include founders, investors, and employees who receive shares as part of their compensation. The distribution is often outlined in a company's cap table, which details the percentage of ownership each party holds. In startups, equity distribution is crucial for attracting talent and investment. It helps align the interests of the team and investors, motivating them to work towards the company's success. Properly managing equity distribution can also prevent conflicts and ensure fair compensation for contributions made by each stakeholder.