How do you split equity between three founders?

Summary

1. Rule 1) Try to split as equaly and fairly as possible.
2. Rule 2) Don’t take on more than 2 co-founders.
3. Rule 3) Your co-founders should complement your competencies, not copy them.
4. Rule 4) Use vesting.
5. Rule 5) Keep 10\% of the company for the most important employees.

How is the equity distributed in the Founders or the team?

Equity allocation to co-founding team members should reflect a reward for the value they’re expected to contribute. If the expected contributions are fairly equal, then the initial equity should be allocated relatively equally (for example, 51\% and 49\%).

How do you allocate equity among founders?

If you have an advisor or a professor who contributes to the startup project, put this person before your first employees. As a rule, independent startup advisors get up to 5\% of shares (or no equity at all). Investors claim 20-30\% of startup shares, while founders should have over 60\% in total.

How much equity do founders give up?

Well, folks, just like the timeless post-Labor Day fashion question, the answer is often, “It depends”. Founders typically give up 20-40\% of their company’s equity in a seed or series A financing. But this number could be much higher (or lower) depending on a number of factors that we will discuss shortly.

How much equity should a CTO get?

A paid non-founding CTO typically gets 2-5\%. Factors weighing for a higher equity grant are: the salary is more than a little under scale.

How do you distribute founder equity to co-founders?

For a co-founder who makes considerable capital contribution, you may consider giving them additional founder shares in return. Alternatively, you can consider distributing founder equity on the basis of the individual level of work contribution (sweat equity) from each individual.

Should startups split up founder equity?

Startups are about execution, not about ideas. Dramatically unequal founder equity splits often give undue preference to the co-founder who initially came up with the idea for the startup, as opposed to the small group founders who got the product to market and generated the initial traction.

Should equequity be split equally?

Equity should be split equally because all the work is ahead of you. My advice for splitting equity is probably controversial, but it’s what we have done for all of my startups, and what we almost always recommend at YC: equal equity splits among co-founders. [1] These are the people you are going to war with.

Should co-founders be split equally?

Dramatically unequal founder equity splits often give undue preference to the co-founder who initially came up with the idea for the startup, as opposed to the small group founders who got the product to market and generated the initial traction. Equity should be split equally because all the work is ahead of you.