Two Contentious Startup Questions Equity Split and Vesting

The two most contentious questions about startup founder equity - do we split it equally and what about our vesting schedules?

Whenever I present to groups of early founders, these points of debate inevitably come up.

Interestingly, the data is actually pretty clear on both!

1. Most founding teams do not split equally.

For 2 cofounders, 56% split unequally. It’s not usually a major gap (say 55/45) but the majority do something other than 50/50.

And for more cofounders, like 3-5, unequal splits comprise the vast majority.

50/50 is a totally great way to build a company and a founder relationship - but it’s not the only way. Have the tough convos on ownership early and often.

2. Every single founder should have a vesting schedule.

This is a non-negotiable, must-have, deal-breaker equity term. Without a vesting schedule, the founders are setting themselves up for a lot of pain in the event of a founder divorce. Pain that may include their company no longer being an investable startup by VCs.

4-year vest is common but 5 or 6 years is becoming more popular too.

Hope this helps smooth any heated discussions 🙏

Data below from 7,764 startups using Carta, all founded between 2019-2023, before they took on any outside funding.

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