table stacks up? Try our calculator to
compare your situation.
Building an awesome company with co-founders?
If you’re powering through without paying current or future co-founder founders market salary, its likely that equity (i.e. a slice of the company) is part of the equation.
The split should rarely be equal but it should still be equitable given everyone’s different levels of contribution and motivation to the venture.
But how to calculate to a fair equity split? There’s a few approaches (like Slicing Pie). However, if you need quick and efficient you have this calculator!
Add Founders Names
Please select the most appropriate Founder for the below questions.
Who is the CEO?
Which founders are coding most of the site/app?
Who had the original idea and told the others?
If you could magically hire a few developers, would one of the founders become their manager, and if so, who?
Which founders are working part-time and will join full-time once you get funding
If this founder left, it would severely impact your chances of raising funding
If this founder left, your development schedule would be severely impacted
If this founder left, it would compromise your launch or initial traction
If this founder left, it would probably prevent us from generating revenue quickly
Who writes the blog and the marketing copy that goes on the site?
Who comes up with most of the feat ures?
Who has a spreadsheet with budget estimates or simulations
So far, who pays for basic business expenses like printing business cards, web hosting?
Who pitches investors?
Who is well connected with your target industry, providing introductions to potential customers, journalists and influencers?
Based on your answers, the following equity split is recommended:
The equity numbers assume a typical 4-year vesting for all founders including the CEO, with no cliff. It also assumes that no significant salary is provided to any of the co-founders (if that is wrong, you are entering into an employee relationship, not a co-founder relationship). If a founder leaves, vesting applies and they forfeit the shares that have not vested yet.
Having a “weak CEO” means that your CEO may not be getting their hands dirty enough to make the startup take-off. This typically occurs when the CEO is the “idea person” and expects others (such as the developers) to implement their vision.
The fact that a founder has been working on the project for significantly longer than others (one year or more) is not justification in itself for more equity. Instead, consider adjusting the vesting schedule.
Actually, no. Most startups have one or two co-founders, total. A few have three. Usually, when people ask for 4, 5 6 or more co-founders, it’s a sign that someone (the CEO) is not willing to make the hard decisions. Do you really think all 6 potential co-founders are critical to the success of the company? Try to be honest and separate the real co-founders from the friends who are happy to join for the ride.
You should treat founders who put significant cash separately. Consider them as co-founders and fill out the questions ignoring the cash contribution. By the way, if most of their contribution is cash, they are not really co-founders, either they are investors who want to tell you how to run your business, or you are their cheap employee. Once you figured out how much equity their work deserves, do projections for a normal round of funding and see how much their cash would be worth.
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