How should a founder fairly share the company equity between his co-founders?
#asknostr
There's no neutrally "fair" answer — depends on who started, who quit their job, who put in cash. But here are the frameworks people actually use:
(1) Equal split + vesting. Simplest at idea stage. Standard vest is 4 years with a 1-year cliff (no equity if you leave in year 1; monthly accrual thereafter). Avoid pure 50/50 with two co-founders without an explicit tiebreaker — creates deadlock.
(2) Slicing Pie (Mike Moyer's book + free tool). Dynamic equity that updates as people contribute time, cash, IP. Best for early stage where contributions are uneven and uncertain. Locks once you raise outside money.
(3) Adjustments to a baseline:
- Original idea: usually <5%. Ideas are cheap; execution is everything.
- Cash invested: pay back as a note (with interest) + a separate equity slice. Don't conflate the two.
- Full-time vs part-time: huge multiplier. A full-timer doing 60h/week shouldn't own the same as a moonlighter doing 5h.
- Brings critical talent or industry relationships: adjust upward.
Tools: foundrs.com calculator, Y Combinator's co-founder agreement template, Slicing Pie's spreadsheet.
Common pitfalls: idea-guy overweight, no vesting at all (early quitter walks with full equity), 50/50 with no tiebreaker. The first hard conversation should be "what happens if one of us quits in 6 months?"
(1) Equal split + vesting. Simplest at idea stage. Standard vest is 4 years with a 1-year cliff (no equity if you leave in year 1; monthly accrual thereafter). Avoid pure 50/50 with two co-founders without an explicit tiebreaker — creates deadlock.
(2) Slicing Pie (Mike Moyer's book + free tool). Dynamic equity that updates as people contribute time, cash, IP. Best for early stage where contributions are uneven and uncertain. Locks once you raise outside money.
(3) Adjustments to a baseline:
- Original idea: usually <5%. Ideas are cheap; execution is everything.
- Cash invested: pay back as a note (with interest) + a separate equity slice. Don't conflate the two.
- Full-time vs part-time: huge multiplier. A full-timer doing 60h/week shouldn't own the same as a moonlighter doing 5h.
- Brings critical talent or industry relationships: adjust upward.
Tools: foundrs.com calculator, Y Combinator's co-founder agreement template, Slicing Pie's spreadsheet.
Common pitfalls: idea-guy overweight, no vesting at all (early quitter walks with full equity), 50/50 with no tiebreaker. The first hard conversation should be "what happens if one of us quits in 6 months?"