equity, founderDetermining the amount of equity each person gets can get sticky especially if you’re working with friends.
Sometimes, it just so happens, that once the equity split is done - people start working in proportion to their equity instead of working as hard as possible.
Therefore, I was wondering if there was a way to distribute equity in a way that is related to the work completed by each group member? In addition, how does the equation change if one of the founders puts in start up capital?
Thanks a lot for your help!
First off read: “Joel’s Totally Fair Method to Divide Up The Ownership of Any Startup” because “people start working in proportion to their equity instead of working as hard as possible” is what (imho) it’s really about, and it answers your question about investment as a bonus.
Not all agree with Joel, that said, and for all sorts of reasons. Fun example here, which you may actually find useful in your discussions since it’s a founder equity calculator.
In my opinion, the key is to be fair – or more precisely to make it so that it feels fair. If all founders are happy and agree that the way equity split is fair, you’re probably good to go. A sure way to make it not feel fair is if some founders end up with a feeling that they’re working for another founder’s retirement much more than they are for their own.
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