How to Split Equity Among Co-Founders

Splitting equity is a critical early decision that shapes founder relationships, investor trust, and future motivation. It’s not just about dividing shares — it’s about defining expectations and protecting the company.

Why it Matters

Splitting equity isn’t just a math problem — it’s a trust test.
How you divide ownership early on sets the tone for co-founder dynamics, investor confidence, and long-term motivation.
Get it wrong, and you risk resentment, misalignment, or even implosion.

Founders Checklist

Before finalizing equity splits, make sure to:

Discuss each founder’s role, commitment, and timeline
Consider past contributions and future responsibilities
Use vesting schedules (ideally 4 years with a 1-year cliff)
Decide how to handle departing co-founders
Put everything in writing: Founders’ Agreement and Stock Purchase Agreements
File your 83(b) elections within 30 days (if applicable)

Founder Fails

Issuing equity without a vesting schedule
Not filing the 83(b) election
Using verbal agreements instead of signed documents
Avoiding hard conversations for the sake of “fairness”

When to ask for Help

You and your co-founder(s) can’t agree on what’s fair
You want to avoid tax mistakes (especially with 83(b) filings)
You’re adding a late-joining or part-time founder
You’re setting up equity for advisors or contractors
You’re planning to raise funds soon and want clean docs and clarity for investors

Frequently Asked Questions

Q: Should we just split it evenly?
A: Not always. Equal splits sound fair, but if one founder is part-time or less experienced, a weighted split may avoid long-term tension.

Q: Can we adjust equity later?
A: Yes, but it’s harder once stock is issued. If you’re unsure, issue equity with vesting — that way, unearned shares return to the company if someone leaves early.

Q: What if someone leaves before the cliff?
A: That’s what the cliff is for — they walk away with zero equity if they leave before year one.