Read this first as there is no single formula to share your startup equity. It is all about your and your co-founders values and your future investors.

“If you don’t value your co-founders, neither will anyone else.”
How to Split Equity Among Co-Founders: Co-Founders, Stock Equity, Management | Y Combinator

“Adopt a “more organic” agreement than the static one typically adopted by founders. Vesting, in which each founder has to earn his or her equity stake by remaining involved in the startup or by achieving pre-defined milestones, is one way to achieve the dynamic approach”.
The Very First Mistake Most Startup Founders Make (hbr.org)

3  Common Practices for Allocating Co-Founder Equity and pros and cons of each
Co-Founder Equity Splits—Ways to Approach Allocations • ROCK CENTER STARTUP GUIDE (hbs.edu)

“The main consideration in dividing equity should be the “relative importance of each founder to the future prospects of the venture”
Dividing equity between founders by Chris Dixon (a partner at a16z focusing on web3.)

“The first step is the hardest (5%-25%) + CEO gets more (5%) + Fulltime commitment is expensive (200%)”
The only wrong answer is 50/50: Calculating the co-founder equity split by Dan Shapiro (CEO and cofounder of Glowforge, the iconic 3D laser printer).

Startup Equity Calculator

The best way to divide startup equity — Mike Moyer — To “grunt fund”

Splitting Founder Equity: Avoid “Grunt Funds” — José Ancer — Not to “grunt fund”

Getting Started — Allocating Equity and Founder’s Investment — Brad Feld — The interaction of equity splits with bootstrapping.

Once you know your values, you are ready to answer these questions before your meeting with lawyers:

Company / project description

• What is we are working on?

• What is the purpose of our company?

Initial funding sources

• Who and how much finances this project until it becomes self-sustainable or we attract investors?

• How much each co-founder will contribute?

• How it will be recognised (equity or loans)?

Time commitment and roles

• Who and how much works on this project?

• Is anybody working full-time, how will they cover their living expenses?

• How do we recognise this contribution?

 Company shares

• How will we split the ownership? Is it based on $ and time invested, salary not taken?

Decision making – operational

• How do we make decisions?

• What to do if we disagree on important operational ones?

Decision making- company shares and Drag along and roulette provisions 

• Consider, unexpected sale offers with 50% shareholder wanting to sell and the remaining 50% wanting to stay?

• One shareholder gives a notice with an offer to buy out the other(s) at a pre-determined minimum price (such as an independently determined market value, plus a premium.) If the other shareholder(s) do not wish to sell, they have the option to buy out the first shareholder at the same price.

•  Can co-founders sell some of their shares to third party? If so, how?

 IP ownership

• What is our IP (if any)?

• How we are going to protect it (trade secret, copyright, trademark, patent)?

• Who owns IP? Company or founder(s)?

• Who is investing in IP commercialisation (product development, marketing, sales, support)?

  If technology IP is transferred to your start-up, and your equity split based on future efforts: another tool (for IP producing co-founder) to consider is “royalties” based on results (and after all revenue generating expenditure).

Early exit of co-founders

• How can a co-founder leave a project?

• Can co-founders sell their share to third parties? How?

• How can we remove a non-performing co-founder? How do we decide on non-performance?

• What is going to happen to their shares?

 Limitations/ not compete for ex-cofounders

 Can they work on competing projects and if so, how soon?

Confidentiality

What can we disclosure without NDA to third parties?

Legal

• Legal status (business name vs company vs not-for-profit), directors, company secretary etc.

• If a business name, when will convert to a company?