Equity Split
How ownership of a company is divided among co-founders at the start.
Definition
Equity split refers to how founder ownership is divided among co-founders when a company is formed. Key factors include idea origination, full-time commitment, domain expertise, technical contribution, capital contributed, and CEO role. There is ongoing debate between dynamic splits (adjusted over time) and fixed splits decided upfront. Most advisors recommend deciding early — before the first investor — and coupling any split with 4-year vesting.
Why It Matters
Co-founder equity disputes are a leading cause of startup failure. An unfair split breeds resentment that compounds over years. An equal split on unequal contribution does the same. Agreeing on split early, documenting it clearly, and attaching vesting removes a major source of long-term conflict.