{"id":391,"date":"2023-01-19T05:28:35","date_gmt":"2023-01-19T05:28:35","guid":{"rendered":"https:\/\/www.ajiabraham.com\/?p=391"},"modified":"2025-11-18T17:07:15","modified_gmt":"2025-11-18T17:07:15","slug":"startup-equity-split-for-cofounders","status":"publish","type":"post","link":"https:\/\/www.codeventures.com\/blog\/startup-equity-split-for-cofounders\/","title":{"rendered":"How to Split Equity Among Startup Cofounders?"},"content":{"rendered":"<p><span data-preserver-spaces=\"true\">I am fortunate to work with many talented and energetic founders through <a href=\"https:\/\/www.codeventures.com\">Codeventures<\/a> and <a href=\"https:\/\/www.iscripts.com\/\" rel=\"nofollow \">iScripts<\/a>. Most of them are well informed about the industry, product, and customers. But the basic starting up part seems challenging.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">One of the topics that keep coming is splitting the equity among the founders. Many companies with great potential die on the vine because the splitting of equity is not done properly. Many times they can&#8217;t move beyond their initial discussion about equity split.\u00a0<\/span><span data-preserver-spaces=\"true\">Even if a co-founder agrees to a particular split now, it doesn&#8217;t mean they would see it that way later.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If you are trying <a href=\" https:\/\/www.codeventures.com\/blog\/how-to-divide-startup-equity-fairly-using-a-startup-equity-calculator\/\">split equity<\/a> among co-founders<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Be fair<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Be equitable<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Be upfront<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Please remember 100% of nothing is still nothing.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">I will try to tell you how to think\u00a0 about an <a href=\"https:\/\/www.codeventures.com\">software development for equity<\/a> split. I can tell you few guidelines that worked for me and others in the past.<\/span><\/p>\n<p><img decoding=\"async\" class=\"alignnone size-full wp-image-396\" src=\"https:\/\/www.ajiabraham.com\/wp-content\/uploads\/2021\/03\/co-founders-equity-calculator.jpg\" alt=\"startup equity calculator\" width=\"800\" height=\"491\" \/><\/p>\n<h2><strong>There are many tools to help you with equity split among co-founders<\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">I am a fan of\u00a0 Slicing Pie and Mike Moyer. It&#8217;s an excellent method to keep the share equitable. But it needs some effort from the side of founders on an ongoing basis. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">So it would require a strong CEO candidate and may lead to unpleasant conversations regularly.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Other options are normal option grants. We created a <a href=\"https:\/\/www.codeventures.com\/equity-calculator\">co-founder equity calculator<\/a> as a guideline. It looks at your monetary and effort combinations. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">It also takes into consideration some of the co-founders might be taking some salary and others may not.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The opportunity cost for different co-founders may be different. So considers that as well.<\/span><\/p>\n<h2><strong>Here are some of the items to avoid\u00a0<\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">Once you agree on the <a href=\"https:\/\/www.ajiabraham.com\/equity-startup-advisors\/\" rel=\"nofollow \">equity split<\/a>, avoid doing the equity grant and vesting immediately. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">When you start, everybody is very enthusiastic. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">But things may look different after 2-3 months. So it beneficial to have equity vesting over a period between, say, 2-5 years. Also useful to have a cliff for equity. <\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If a founder leaves before the cliff period, they will abandon their equity portion. The typical cliff period is six months to 2 years. That will avoid having founders who left the startup but holding a significant chunk of equity.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">\u00a0It is tough to put a valuation for the company before getting professional funding. Everybody will have differing opinions, and there is no value in having that discussion. So leave valuation out of the equity split discussions.<\/span><\/p>\n<p>There are several concerns that co-founders tend to have about splitting equity amongst themselves.<\/p>\n<p>However, splitting equity will only do good for your company -especially if you are running a startup organization. Just be fair and equitable as much as possible. If you feel you are stuck contact a neutral third party that you trust and respect. They may see things differently when they look from the outside.<\/p>\n<p><span data-preserver-spaces=\"true\">If you need to check each founder&#8217;s equity shares based on your input, you can use our startup\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.codeventures.com\/equity-calculator\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">equity calculator<\/span><\/a><span data-preserver-spaces=\"true\">.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I am fortunate to work with many talented and energetic&#8230;<br \/><a class=\"read-more\" href=\"https:\/\/www.codeventures.com\/blog\/startup-equity-split-for-cofounders\/\">Read More<\/a> <\/p>\n<div class=\"reading-time\"><span class=\"clock-icon\">\ud83d\udd52<\/span> 3 min read<\/div>\n","protected":false},"author":3,"featured_media":575,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[],"class_list":["post-391","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-startup-guide","entry"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/posts\/391","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/comments?post=391"}],"version-history":[{"count":13,"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/posts\/391\/revisions"}],"predecessor-version":[{"id":2317,"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/posts\/391\/revisions\/2317"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/media\/575"}],"wp:attachment":[{"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/media?parent=391"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/categories?post=391"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.codeventures.com\/blog\/wp-json\/wp\/v2\/tags?post=391"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}