As I understand, you typically raise funding just by creating new shares. There is usually a bunch of shares to cover options you're giving your employees, thou

As I understand, you typically raise funding just by creating new shares. There is usually a bunch of shares to cover options you're giving your employees, though ("option pool", something like 20% appears to be common); you may or may not be able to defer giving options until you raise money. (In the case of funding, you keep n% of the pre-money value of the company; in the case of options, you keep n% of the value of the company.) Equity vesting for founders is a good idea, and very common. (If the developer quits in a month, you don't want him to own 25% of the company.) The business guy can make a case that he should have accelerated vesting, since he's been at it for longer. Cliffs are possible ("no shares for the first year"), as is accelerated vesting on change of control (basically, you get your shares faster if the company is sold; this makes it easier to leave, which is bad for the buyer, which lowers the price (s)he'll pay; so this is somewhat hard to negotiate.) The "fair" distribution of shares depends very heavily on what everyone brings to the table; you may want to "Ask HN" with more details. (For 60%, he'd better be good.) (EDIT: also, if he just wants to be able to out-vote both of you, you can easily create a class of shares with extra voting powers.)