Browse MBAs SECTION 13: Entrepreneurship & New Ventures

The Founder Equity Splitter

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The Founder Equity Splitter

Help me think through splitting equity among co-founders fairly.

The founders and what each brings: [DESCRIBE ROLES, COMMITMENT, IDEA
ORIGIN, CAPITAL, RISK]
The situation: [FULL-TIME/PART-TIME, WHO STARTED IT, ANY MONEY IN]

Provide:
1. The factors that should drive the split (future contribution and risk
   matter more than the original idea)
2. Why an even or near-even split is often healthiest, and when it isn't
3. Why vesting (typically over years, with a cliff) protects everyone
4. The conversations to have now to avoid a blow-up later
5. What to document and where to get it done properly

Be clear this is a framework for the conversation — the actual agreement
needs a lawyer, and I should get one. Flag the future-contribution trap of
over-weighting who had the idea.

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