The rise of equal equity

You're founding a company with a close colleague (or two…or three). Do you split the equity pie into equal splices or does one founder get a bigger piece?

The data above from 40,000+ US startups makes a couple points clear:

Splitting equally (so 50/50 in a two-founder team, or 33/33/33 in a three-founder company) has gotten more popular in recent years.

Most companies still choose something else.

Interestingly this trend towards equal splits is much more pronounced in the two-founder model. We see equal splits in about 44% of all startups with 2 founders, whereas equal among 3 founders only appears in 27% of startups.

The difference is actually even wider than it appears. In unequally split 2-founder companies, the "lead" founder takes 51% on median while the second founder holds 49%. Pretty close.

In a 3 or 4 founder team, the CEO generally has a much higher share of the business than the other cofounders. Why? Honestly, I couldn't say.

Before you ask - any of these configurations can be successful. We don't see major differences in success rates between equal or unequally split companies with one big caveat: if your splits are something like 80/20 or 90/10, the success rate is lower.

So have the talk, split the pie fairly (whatever fair means to you here) and get building.

Onwards!

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Cheers,

Peter Walker

Carta Insights