How Startup Founders Really Split Equity in 2023

How startup founders really split equity in 2023.

Lots and lots of opinions on this question from the top voices in venture - let's dig into what the data shows us.

Caveats upfront:

• This is from 3,044 companies incorporated last year that are using Carta cap table. It's a snapshot of equity splits before any real fundraising (although they may have raised a little on SAFEs).

• Excluded solo founders from the analysis (but about 28% of companies were solo founders, respect!)

• Lines for each founder show the range from the 25th percentile to the 75th, with the big orange dot marking the median equity percentage.

• For the percent that split equally on the righthand column, we were a little flexible. So a 2-founder team where one founder held 49.5% and the other 50.5% counted as an equal split.

To be clear, there is no "right" way to do this. Splitting equally is a wonderful strategy and has many advantages - and an unequal split can be equally fair and useful.

One thing that is usually left out of this conversation, however, is that equal splits become much less common as founding team size increases. It's pretty rare for 4 founders to each get 25% of the equity pie.

𝟮-𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗧𝗲𝗮𝗺𝘀

• Median split is 51% for founder A, and 45% for founder B (judged independently, so doesn't always add to 100%)

• Most common founding team size

𝟯-𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗧𝗲𝗮𝗺𝘀

• Split: 47% for Founder A, 33% for Founder B, 17% for Founder C

𝟰-𝗙𝗼𝘂𝗻𝗱𝗲𝗿 𝗧𝗲𝗮𝗺𝘀

• Split: 36% for A, 25% for B, 19% for C, 10% for D

Of course the founders for these companies may change over time. Many startups start with solo founders and then a cofounder is brought on in a year or two. So this snapshot may look a little different in 24 months.

And for those wondering if companies with equal splits have higher rates of success - data suggest no. According to Jason Lemkin's analysis of 30 recent SaaS IPOs, only 4 had equal cofounder equity by that point.

Any way you slice it - this is one of the most crucial conversation to have with your cofounders. Don't put it off until later!

#founders #startups #equity #ownership #preseed _____________________

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