How do I split equity with my co-founder fairly?
Key Factors to Weigh
Use these criteria to calculate fair equity split: Idea/IP origination (10–15%), Technical execution skills (25–40%), Business development/sales skills (20–30%), Full-time commitment level (+5–15%), Capital contribution (proportional to investment), and Risk taken (who quit a high-paying job?).
Common Split Structures
Technical + Business co-founders: 55:45 or 60:40 favouring tech if product-first
Equal contributors: 50:50 (avoid if possible — creates deadlocks)
3 co-founders: 40:35:25 based on contribution weighting
With investor co-founder: Reduce equity proportionally based on capital invested
Vesting Schedule (Critical)
Always use vesting: 4-year vesting with 1-year cliff is standard. This means: 0% equity for the first year, then 25% vests after year 1, then 1/48 per month for next 3 years. This protects the company if a co-founder leaves early.
ESOP Pool
Reserve 10–15% ESOP (Employee Stock Option Pool) for future key hires before splitting remaining equity. Better to dilute before splitting than after.
Legal Documentation
Use a Founders Agreement covering: equity split, vesting, IP assignment (all IP belongs to company, not individuals), non-compete, and buyout rights. Cost: Rs 15,000–50,000 for a proper founders agreement from a startup lawyer.
Calculate your equity split with our Co-Founder Equity Calculator.