Essay · ~8 minute read

How to Split Equity Among Co-Founders

Michael Seibel · Y Combinator Free Beginner

This is the essay to read first, from a YC partner who co-founded Justin.tv/Twitch and has done equal splits across his own startups. It makes the honest case that early contributions are a tiny sliver of a 7 to 10 year build, so an equal split plus vesting protects the friendship better than haggling over who did more in month one. It is the clearest short answer to 'how do we split this without a fight later.'

  • Default to an equal split: the value is almost all in the years ahead, not in who wrote the first line of code, and a lopsided early split kills motivation when you need it most.
  • The real protection against a later fight is a 4 year vesting schedule with a 1 year cliff, so anyone who walks in year one leaves with nothing and the equity stays with whoever actually builds the company.
  • Have the awkward conversation now, on paper, rather than discovering the disagreement two years in when there is real value on the table.

It answers 3 questions

  1. What equity should I offer a technical co-founder vs. an early engineer?
  2. How should my co-founder and I split equity, and is 50/50 a mistake?
  3. How should I split equity and think about founder salaries when neither of us has money and we don't want a fight later?

Read with it

  1. A free, no-signup calculator that forces you and your co-founder to actually weigh the inputs (idea, roles, who is full time,... Foundrs Tool · ~10 minutes to work through Foundrs Co-Founder Equity Calculator Foundrs
  2. The definitive, data-driven book on early founding-team decisions, drawing on quantitative research covering nearly 10,000... Princeton University Press Book · ~480 pages The Founder's Dilemmas Noam Wasserman
  3. The canonical dynamic-equity framework for fairly splitting ownership based on real contributions before funding, when nobody... slicingpie.com Tool · Framework + software + handbook Slicing Pie: Dynamic Equity Split Model & Calculator Mike Moyer
  4. Altman's condensed operating manual for founders, including sharp guidance on focus, spending your time on what only you can... playbook.samaltman.com Article · long Startup Playbook Sam Altman
  5. When neither founder has money, the honest question is not 'what is fair' but 'what can the company afford without starving... Kruze Consulting Article · ~10 minute read Startup CEO Salary Report Kruze Consulting
  6. When a term sheet lands and you are tempted to fight over the last point of valuation, this is the essay that reframes the... paulgraham.com Essay · 12 min read The Equity Equation Paul Graham
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