FOUNDER EQUITY

One of the more complicated questions founders face in the beginning, is the notion of how to split your founder equity. There is the founder who had the idea and worked on the idea solo for a few months. Then there is the other founder who’s the techie and hacked together the MVP during long lonely nights at home. And then there is the MBA who developed the business plan and got you into your first investor meetings…

It’s definitely one of the questions I hear from founders quite a bit — and as you might imagine, it can also be one of the most contentious questions.

Recently I came across an article which mentioned a study conducted by Professor Noam Wassermann (Harvard Business School) — it’s solid advice, so let me share this with you:

“There is no right way to split equity. But research shows that founders who had the original idea for the company get around 10 to 15 more percentage points of equity than co-founders. Founders who have led other startups generally get 7 to 9 extra points, and the one who becomes CEO gets from 14 to 20 extra points.”

There you have it. Use this is a starting point for your discussion — it should help quite a bit.

Build What Matters.
Pascal ツ