Founder equity split

How ownership is divided between the founders at the start.

Example

50/50 between two founders, both on a four-year vest with a one-year cliff.

Important

Do not split based on who had the idea. Ideas are cheap and the next four years are not. Split on expected contribution, commitment and risk taken from here.

Related terms

• Equity — Ownership in the company, usually held as shares.
• Vesting — Earning your shares over time rather than owning them all immediately.
• Cliff — An initial period during which no equity vests at all. Leave before it and you get nothing.
• Dead equity — A meaningful stake held by someone no longer contributing to the company.

Lessons that explain it

• Do you actually need a co-founder? — The honest case for and against. Solo founding is harder but not disqualifying, and a bad co-founder is much worse than none. (10 min)
• What to look for in a co-founder — Complementary skills matter less than commitment, values, communication and how someone behaves when things go badly. (12 min)
• Where to find a co-founder — Former colleagues first, then communities and events. The best predictor is having worked together before. (10 min)
• The conversation to have before you commit — Fifteen questions that feel awkward now and prevent the disaster later. Have this before any equity is discussed. (15 min)
• The trial project — Two to four weeks of real work together before committing anything. The cheapest insurance in the whole company. (10 min)
• Splitting founder equity — Not based on who had the idea. Based on what each person brings from here — and it should be a real conversation, not a reflex 50/50. (12 min)

All 176 terms in the Founder glossary