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A few additional notes: 1) Investors do look at equity splits. Or at least my fund does, and I assume we're not an exception. I think uneven splits can be reas
by lpolovets 10y ago
A few additional notes:
1) Investors do look at equity splits. Or at least my fund does, and I assume we're not an exception. I think uneven splits can be reasonable as long as they're just. For example, I think Reid Hoffman had more equity in LinkedIn than the rest of the large founding team combined, but that made a lot of sense: he already had a great name in the Valley, he self-funded the business for the first year, and so on. It would have been much harder to find a substitute for him than for other founding team members (all of whom were great in their own right).
2) I don't say "always" very often, but you should always have vesting. Always. I've seen friends break up over equity issues because they didn't have vesting. You don't necessarily have to do a 1-year cliff, but it should take years for someone to accumulate 30% or 50% of a company.
3) If you're interested in advice on this topic, the book I always recommend to people is The Founder's Dilemmas (https://www.amazon.com/dp/B007AIXKUM/ https://www.amazon.com/dp/B007AIXKUM/). The author analyzed data on thousands of founding teams to come up with practical advice for people who are starting companies. There's a chapter on equity splits in the book.