Y-Combinator Guide: How to Split Equity between Cofounders & When You Should (and Shouldn’t) Split Equity Evenly?
Founders often ask how they should split equity with their co-founders….
If you search web on this topic, you will see horrible advice, typically advocating for significant inequality among different founding team members.
Lot of founders follow this trend because of following reasons:
- I came up with the idea for the company
- I started working n months before my co-founder
- This is what we agreed to
- My co-founder took a salary for n months and I didn’t
- I started working full time & months before my co-founder
- I am older/more experienced than my co-founder
- I brought on my co-founder after raising n thousands of dollars
- I brought on my co-founder after launching my MVP
- We need someone to tie-break in the case of founder arguments
Founders tend to make the mistake of splitting equity based on early work.
All of these lines of reasoning screw up in four fundamental ways:
- It takes 7 to 10 years to build a company of great value. Small…
