A shift is underway in how startup co-founders split their equity

Most startups have multiple co-founders. And in most cases, one of those co-founders—typically the CEO—owns a bigger piece of the company than the rest. 

This question of how a company’s equity will be split is one of many choices that early-stage co-founders must make. As time goes on, most startups begin to issue equity to investors and advisors in exchange for capital and guidance and to employees as a form of high-upside compensation. At the outset, however, the pie is still intact. 

How co-founders choose to divide it among themselves can have long-term implications, both in terms of who controls the company and in the financial outcomes for the co-founders. If a company eventually succeeds, a few percentage points of ownership could be worth many millions of dollars. 

Out of more than 32,000 companies on Carta with multiple co-founders that incorporated between 2015 and 2024, about 24% of founding teams divided their equity equally. For teams with just two co-founders, the percentage of teams with an even split is substantially higher; for founding teams between three to five co-founders, it’s much lower. 

How co-founders divide their equity

Why do equity splits tend to be unequal? The primary reason is that all co-founders are not created equal. Some co-founders might be devoting more time and energy to a startup than others. Some might be treating it as a full-time job, while others might be juggling other responsibilities outside the company. 

Different co-founders receive different amounts of equity for the same reason that different employees at a company receive different salaries: In general, the goal is to ensure that what someone’s getting out is commensurate with what they’re putting in. 

“Founders should consider the degree of commitment that a certain founder is making,” says Frances Mosley, a partner at DLA Piper who represents many emerging companies and venture investors. “What kind of role do they have, what have they contributed to the company so far, and what are they going to contribute going forward?”

Even splits are growing more common

In the past several years, however, founding teams of all sizes have been choosing to spread out their equity more equally. 

Back in 2015, 31.5% of two-person founding teams divided their equity equally. In 2024, that figure was 45.9%. For three-person founding teams, the portion of even equity splits rose from 12.1% to 26.9% over the same span. Last year, the practice of distributing a startup’s equity equally among all co-founders was more common than it’s ever been. 

Why are practices changing? In Mosley’s view, it’s because the habits of founders have changed. 

The criteria remain the same: Founding teams are still dividing equity among themselves based on their respective commitments and contributions to the company. These days, though, it’s more common to see founding teams where all co-founders have fully committed to the startup and are treating the work as a full-time job. 

Plenty of startups still have one or more co-founders who aren’t full-time employees—perhaps an academic researcher or technician with some specialized knowledge or skill. And there are still weekend tinkerers spinning up new companies in their spare time. But it’s become increasingly common for “founder” to be a job in and of itself. 

“I think there’s been a professionalization of the founder role,” Mosley says. “The startup ecosystem is pretty well established at this point, and there’s an expectation that you’re going to put in your time, that everybody’s working for sweat equity to make sure that it gets going.”

“I think there’s been a professionalization of the founder role,” Mosley says. “The startup ecosystem is pretty well established at this point, and there’s an expectation that you’re going to put in your time, that everybody’s working for sweat equity and toward ensuring that the startup will be a success.”

A narrowing gap among co-founders

As equal equity splits have grown more common, the typical gap in equity ownership among co-founders has narrowed, particularly for smaller founding teams. 

Among companies on Carta with two co-founders incorporated in 2019, the median equity split between those co-founders was 60-40. This was the same median split that existed four years earlier, in 2015. By 2024, however, it had shrunk to 51-49. 

Again, in most cases, the co-founder who holds the larger share of equity is also the company’s CEO. 

With the median three-member founding teams from 2019, the primary co-founder owned 50% of the equity and the third co-founder owned 13%, a difference of nearly 4x. By 2024, those numbers were 44% and 22%, a difference of just 2x. 

Mosley says that many of her startup clients do split their initial equity equally among the co-founders. But they do so because it’s the best way to reflect the various roles, commitments, and responsibilities of the co-founders, not as a default. Equity can be a powerful tool. Mosley advises her clients to be strategic and intentional in how they use it. 

“If you want to go 50-50, that’s completely fine,” Mosley says. “That’s a business call. But equity ownership is definitely not something that should be taken for granted. As founders, you should really consider that at the very beginning.”