How Cofounders Split the Startup Equity Pie

For Thanksgiving, let's dig into startup co-founder equity pie.

How do co-founders split their (delicious) company ownership?

You make think everyone just splits equally and calls it a day.

Actually, the data says differently.

Only 42% of 2-founder companies split the initial equity 50/50, according to our study of 8,509 US companies. That drops to 19% of 3-founder companies - and only 9% of 4-founder companies.

So how does this equity pie actually get cut?

• For a 2-founder team, the median split is 55% to 45% between founders A and B.

• 3-founder team: A= 47%, B= 33%, C= 20%

• 4-founder team: A=40%, B=27%, C=20%, D=13%

• 5-founder team: A=36%, B=24%, C=18%, D=12%, E=10%

Clear pattern in the data for there to be a "lead" founder in the team (we've called that person Founder A). They typically receive an outsize portion of equity and very often serve as the CEO.

if you look at recent tech IPOs, you'll see the discrepancy between founders remains true in most public companies as well.

Of course, there is no "right" way to split equity! Many companies split equally and have wonderful outcomes.

The important thing is to have an in-depth conversation with all the founders around equity early in the company's life. Even more important - make sure all of this equity comes with a vesting schedule.

𝗜𝗺𝗽𝗼𝗿𝘁𝗮𝗻𝘁 𝗱𝗮𝘁𝗮 𝗻𝘂𝗮𝗻𝗰𝗲𝘀 𝘁𝗼 𝗸𝗲𝗲𝗽 𝗶𝗻 𝗺𝗶𝗻𝗱

• We measured the equity splits in the chart BEFORE any fundraising happened. So this is a view of the initial company pie. No employee option pool yet either.

• We considered any individual with 5% or more to be a co-founder, excluding any institutional participants (things like accelerators or venture studios).

• US companies only, founded between Jan 1, 2019 and Jan 1, 2023.

Happy turkey day and good luck splitting your pies!

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