Simplifier

Think of a new business like a giant pie that hasn’t been baked yet. "Equity" is just a fancy word for your slice of that pie. At the very beginning, which people call the "pre-seed" stage, there are usually only two or three people in the kitchen. Because everyone is working equally hard to get the oven started, it is very common for co-founders to split the pie evenly, such as 50/50 or 33/33/33. Sometimes, the slices aren't exactly equal. If one person has been working on the idea for a long time or is putting in their own money to buy the ingredients, they might get a slightly bigger slice. The goal is to make sure everyone feels the split is fair so they stay motivated to keep cooking together for years to come. However, you don't usually get your whole slice on the first day. Most partners use a "loyalty plan" where you earn your piece of the pie bit by bit over four years. This protects the business; if someone decides to leave the kitchen early, they only take the small bite they actually earned, leaving the rest of the pie for the people who stay to finish the job.

Startup Lawyer

At the pre-seed stage, equity should generally be split as close to equally as possible among active co-founders. From a risk mitigation standpoint, a significant imbalance—such as an 80/20 split—is a red flag for future investors. It often signals potential resentment or a lack of long-term commitment, both of which lead to expensive litigation or founder departures that can kill a company before it scales. The specific percentage is secondary to the legal structure governing it. You must implement a formal Restricted Stock Purchase Agreement (RSPA) that includes a standard four-year vesting schedule with a one-year cliff. This ensures that if a founder leaves early, the company can repurchase unvested shares. Without this protection, you risk "dead equity" sitting on your cap table, which makes the entity virtually uninvestable. Finally, ensure all equity issuances are backed by formal board consents and that every founder files an 83(b) election with the IRS within 30 days of the grant. Failing to handle the paperwork correctly at this stage creates massive tax liabilities and legal hurdles during your first priced round. Protect the entity now so you don't have to pay a litigator to fix it later.

Exited Tech Cofounder

At the pre-seed stage, if you’re both coming in full-time and bringing essential, complementary skills, you should be looking at something close to an equal split. I’ve seen too many founders get bogged down in "who had the idea first" or who put in the first few thousand dollars. In my experience, the idea is worth almost nothing compared to the next seven to ten years of execution. If the split feels unfair on day one, that resentment will fester and eventually kill the company when things get difficult—and they always do. The real mistake isn't the specific percentage; it's the lack of protection. I learned the hard way that any split without a four-year vesting schedule and a one-year cliff is a suicide pact. You aren't just handing out pieces of a pie; you are creating a mechanism to ensure everyone earns their keep. If a co-founder walks away after six months with 20% of the cap table, your company is effectively dead to future investors. Focus less on the number and more on the legal mechanics that keep everyone incentivized for the long haul. Pragmatically, if there is a massive disparity in experience or initial capital, a 60/40 or 70/30 split might be justifiable, but only if it reflects the actual value being brought to the table over the next decade. Don't optimize for a larger slice of a zero-value company. If you can't have a rational, data-driven conversation about equity now, you won't survive the board meetings or the pivot points later. Experience has taught me that a slightly smaller piece of a massive success