How Much Equity Should We Get?
By Kevin Vela
From time to time we’ll get a client who asks us to help determine the equity split between co-founders. As attorneys to the company, it’s not our place to say who should get how much equity. But we can help to point founders in the right direction.
First rule of co-founder equity: everyone vests. This has been covered ad-nauseam, but it’s worth stating again. Everyone vests. The standard is four years with a one-year cliff. The cliff is important. Startups are really fun until stuff hits the fan. It’s good to see who can stick past that point.
Secondly, be open and honest about what you can commit, and what you expect from each other. Put your roles and responsibilities down on paper. And be specific. “Manager fundraising” is not specific. “Create a three-stage fundraising plan, identify at least 15 target investors for each round, draft initial pitch deck, and seek feedback from three people with experience in startups” is.
Once you are done, put it down on paper and then find yourself a good startup attorney to document the agreement.