How should co-founders split equity fairly?
A fair split accounts for more than the original idea, it should weigh each founder’s ongoing commitment, relevant experience, capital contributed, network, and risk taken. Avoid defaulting to an even split without discussing these factors, and always apply vesting so equity is earned over time, not granted upfront.
Is a 50-50 equity split a good idea?
Usually not, even for two equally committed founders. A 50-50 split can create decision-making deadlock when co-founders disagree, since neither has a tie-breaking stake. Many advisors recommend a deliberately uneven split, such as 51-49 or 55-45, or a clear tie-break mechanism in the founders’ agreement.
What is founder vesting and why does it matter?
Vesting means a founder earns their equity gradually over time rather than receiving it all upfront. The standard structure is a 4-year vesting schedule with a 1-year cliff, meaning a founder who leaves within the first year keeps none of their equity, and the rest vests gradually afterward. This protects the company and the remaining founders if someone leaves early.
Should a co-founder who only contributes money get the same equity as one who works full-time?
Generally, no. A contribution that is primarily financial, with limited day-to-day involvement, is often better structured as an investment, through a SAFE, convertible note, or straightforward equity investment, rather than full co-founder equity. This calculator flags this situation and suggests considering it.
Does equity splitting work differently in India versus other countries?
Yes. In India, equity is typically issued as shares of a Private Limited Company, and non-compete clauses against a departing founder are void under Section 27 of the Indian Contract Act, so protection relies on confidentiality and IP assignment instead. In the US and other jurisdictions, founders often need to consider tax elections like an 83(b) election within a strict 30-day window. Always get jurisdiction-specific legal advice.
Is this calculator’s result legally binding?
No. This tool gives a suggested starting point for negotiation, not a legal determination. Your actual equity split should be finalised in a properly drafted Founders’ Agreement, reviewed by a lawyer, that also covers vesting, IP assignment, and what happens if a founder leaves.