Get The Basics

How do I split equity between my co-founders?

Oh, the equity question.
The Basics

First off, let’s get on the same page - you only need to worry about splitting Equity if you have a Corporation (LLCs don’t have equity, they have different classes of members). If you have a corporation, when it comes time to raise funding, you’ll need to have the equity split between cofounders sorted out. There’s no magical formula for doing this, but there are a few approaches: the 50/50 or 49/51 split is fine when partners bring equal skills and dedication to the venture. If one partner dedicates a lot more time or brings more advanced skills to the venture, then they may get a larger majority stake. There are a few online calculators that you can use to get potential breakdowns, but what matters most is that the cofounders agree on the splits and that you get this down in writing with a Founder’s Agreement so that there are no disputes down the line, when the equity actually translates into real money.

The Details

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