EQUITY AND AGREEMENTS · FOUNDER GUIDE
How to split equity between cofounders
Written by CofoundAlly · Updated
The short answer
Split equity based on what each founder will contribute from now on, not on who had the idea. Weigh responsibilities, time commitment, capital, risk taken and hard-to-replace skills. Many early teams who start together and commit full time choose equal or near-equal splits. Whatever you choose, put every founder on a vesting schedule and set aside room for future employees and investors.
Focus on the future, not the past
Building a company takes years. The idea and the first few weeks of work are usually a small part of the total effort. A split that rewards the person who started first can create resentment later when everyone is carrying the same load.
Ask what each person will be responsible for over the next few years, how much time they will commit, whether they are putting in money or giving up salary, and how hard their skills would be to replace.
Equal versus unequal splits
Equal splits signal partnership and avoid a long negotiation at the start of the relationship. Unequal splits can be fair when commitment or contribution genuinely differ, for example when one founder is full time and another is part time, or when one founder has already funded or built a significant part of the business.
Avoid splits that leave decisions deadlocked without a plan. Two founders at exactly 50/50 should agree how ties are broken.
Plan for dilution
Your ownership will shrink as you add an employee option pool and raise investment. Model a few future rounds so every founder understands what their stake may look like after dilution. The percentage matters less than owning part of a company that succeeds.
Frequently asked questions
Should cofounders always split equity 50/50?
Not always. Equal splits work well when founders start together and commit equally. If contributions or commitment differ significantly, an unequal split can be fairer. Vesting protects both approaches.
Should the person with the idea get more equity?
Usually only a little, if any. Execution over several years creates most of the value. Weigh future responsibilities and commitment more heavily than the original idea.
What happens to equity if a cofounder leaves?
That depends on your vesting terms and agreements. With vesting, a founder who leaves keeps the shares that have vested and the company can usually repurchase the unvested shares.
Next step
Use the free CofoundAlly Equity Calculator to compare splits and see how ownership changes as you raise.
This guide is general information, not legal, tax or financial advice. Rules differ by country; check with a qualified professional before acting.