Do 50-50 Equity Splits Affect VC Fundraising Success

Do founders who split equity 50/50 at the start perform better than those with unequal splits?

At least along one vector of performance (VC fundraising) the answer is: not really.

There are lots of opinions on this topic. Some smart people believe strongly that if you have 2 founders at the company, the initial split should be 50/50 in order to preserve fairness and motivation.

Other smart people believe you need to have unequal splits (if only by a percentage point or two) in order to streamline decision-making and maintain the speed advantage over bigger companies.

My personal take is that there isn't a "right" answer. The only wrong answer is splitting equity carelessly without serious discussions amongst the founders.

But some on either side of this debate argue that one setup or the other is likely to increase performance of the startup as a whole - and that we can measure.

Looked at 4,540 startups that incorporated in the US between 2018-2020. We then split them by the founding team choice (equal splits or non-equal splits) and tracked them through the venture stages.

𝗢𝘂𝘁𝗰𝗼𝗺𝗲𝘀

• Of the 2,923 companies that split 𝘂𝗻𝗲𝗾𝘂𝗮𝗹𝗹𝘆 to start, 8.7% had made it to a Series B as of Jan 1, 2025.

• Of the 1,617 companies that split 𝗲𝗾𝘂𝗮𝗹𝗹𝘆 to start, 9.6% had made it to Series B as of Jan 1, 2025.

You can compare the graduation rate percentages across each stage as well, jumping from seed to A to B. They are super close at every point, although in each case the teams with equal splits did slightly better.

So yes - 50/50 is a great way to divide the pie. But so is 51/49 or 55/45 or many other points. Just don't avoid the difficult conversation.

#startups #founders #founderequity #fundraising

If you want more data on how founder equity works from idea stage to pre-IPO, check out the full report at the URL in the graphic below!