Blog•5 min read•Legal & Finance
The Complete Guide to Startup Equity Distribution
How to fairly split equity among co-founders and early employees
Important Note
This guide provides general information. Always consult with a lawyer before making equity decisions.
Why Equity Distribution Matters
Equity distribution is one of the most critical decisions you'll make as a founder. Get it wrong, and you risk:
- Co-founder conflicts and departures
- Difficulty attracting talent
- Problems raising future funding
- Legal disputes down the road
Common Equity Split Models
1. Equal Split (50/50 or 33/33/33)
Best for: Co-founders starting together with equal commitment
Simple and shows equal partnership
May not reflect actual contributions
2. Dynamic Split Based on Contributions
Consider factors like:
- Who had the idea
- Time commitment (full-time vs part-time)
- Cash investment
- Domain expertise
- Network and connections
Typical Equity Ranges
- CEO/Lead Founder: 50-70%
- CTO/Technical Co-founder: 20-35%
- Other Co-founders: 10-25%
- Employee Pool: 10-20%
- Advisors: 0.25-1% each
Vesting Schedules
Always implement vesting to protect the company if a founder leaves early:
- Standard: 4-year vesting with 1-year cliff
- Cliff: No equity vests until 1 year of service
- Monthly vesting: After cliff, equity vests monthly
Need Help with Equity Distribution?
Use our AI-powered equity calculator to model different scenarios.
Try Equity Calculator