3 ms·

Please go through this excellent post by Y Combinator - https://www.ycombinator.com/library/5x-how-to-split-equity-among-co-founders https://www.ycombinator.co

by qazpot 5y ago

Please go through this excellent post by Y Combinator - https://www.ycombinator.com/library/5x-how-to-split-equity-among-co-founders https://www.ycombinator.com/library/5x-how-to-split-equity-a... It should be equal split. An idea's worth is zero, it is the execution that matters. Other way to look at it is if they are offering you 15% and keep 85% for them, without an mvp or revenue how are they justifying having 5.6 times more equity than you. The only possible justification is the few thousand dollars that they have put in, you can either match that or maybe take slightly less equity to offset that amount based on the expected valuation. But please do not settle for less than equal split, because you will be putting the same amount of effort in the execution of the idea.

drooby 5y ago
Yeah I even shared that video with them to help explain my thoughts. They claim that they plan on investing up to $50k in the first year, which was additional justification for a lower equity split. But again, this feels strange to me - they're basing current equity split off of projected funding? Is that weird? If it was just based off the current few thousand dollars that have been invested that would make sense to me. (But the few thousand dollar difference still wouldn't justify an equity difference so high) This does bring up a good point though. The founder claims that they would probably be contributing a lot more cash than me, and thus taking on more risk. And on top of that, they don't want me to get entangled with voting rights on how to spend cash if I would not be the one contributing the most cash, thus, less equity. How do founders reconcile differences in co-founder funding early on? And especially after equity has already been distributed? Idk.. this all seems so ridiculous to me. No? The company is currently worthless - difference in a few thousand dollars seem to pale in comparison to the execution abilities of creating a solid product. Of course, maybe my execution abilities suck, but thats what the 1 year cliff is for. /rant Anyways. I told them I'm out.
- laurentl 5y ago
  Good call. A lot of red flags in here, including one I haven't seen in the other comments: the relationship with the brother. If you're both technical, you have more seniority than him but he has more shares and co-founder status? You're in for recurring headaches about who owns the tech, and you'd always be in the minority.

by qazpot 5y ago

drooby 5y ago

Yeah I even shared that video with them to help explain my thoughts. They claim that they plan on investing up to $50k in the first year, which was additional justification for a lower equity split. But again, this feels strange to me - they're basing current equity split off of projected funding? Is that weird? If it was just based off the current few thousand dollars that have been invested that would make sense to me. (But the few thousand dollar difference still wouldn't justify an equity difference so high) This does bring up a good point though. The founder claims that they would probably be contributing a lot more cash than me, and thus taking on more risk. And on top of that, they don't want me to get entangled with voting rights on how to spend cash if I would not be the one contributing the most cash, thus, less equity. How do founders reconcile differences in co-founder funding early on? And especially after equity has already been distributed? Idk.. this all seems so ridiculous to me. No? The company is currently worthless - difference in a few thousand dollars seem to pale in comparison to the execution abilities of creating a solid product. Of course, maybe my execution abilities suck, but thats what the 1 year cliff is for. /rant Anyways. I told them I'm out.

laurentl 5y ago
Good call. A lot of red flags in here, including one I haven't seen in the other comments: the relationship with the brother. If you're both technical, you have more seniority than him but he has more shares and co-founder status? You're in for recurring headaches about who owns the tech, and you'd always be in the minority.