Essay · 5 min read

How to Split Equity Among Founders

Michael Seibel · Y Combinator Free Beginner

This is the canonical case for splitting close to equal, written by a YC group partner. It arms you with the exact four reasons to hand a skeptical cofounder (or your own ego): a great company takes 7 to 10 years, so who wrote the first line of code in month one is noise; more equity means more motivation; almost every startup dies, and a demotivated cofounder is how; and Seibel's blunt line that if you won't give your partner an equal share, you picked the wrong partner.

  • Value the 7 to 10 years of work ahead, not who had the idea or showed up first, so small year-one differences never justify a lopsided split
  • A cofounder who insists on 90 percent is signaling they will under-motivate the person they most need, which is why investors read it as a red flag
  • If you are not willing to split equity roughly equally, that is a sign you have the wrong cofounder, not the wrong split
Open on michaelseibel.com ↗

It answers 2 questions

  1. How should I split equity with my cofounders before I raise?
  2. I am a first-time founder outside the big metros and my co-founder is in Bengaluru. Does where we are based change how we split equity or set up the company?

Read with it

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