Co-founder equity split : close to even
Super common question startup founders have.
“How should I split equity with my cofounder?”
There are conflicting advice on how equity should be split between co-founders. Y Combinator famously advocates for equal split, and others provide calculators to split the equity "fairly".
What does the data say about the (Most Common) actual equity split between co-founders?
51%/45% : median equity split between two co-founders (calculated independently so doesn't add to 100%)
41% of companies split equity equally <source : Carta Peter Walker>
Most common method is for one co-founder be the "lead" in that they have the largest share and others follow.
<Source : linkedIn - Peter Walker>
Interesting thing about the Carta data above. In data published previously by Carta, that included companies incorporated in 2019 to 2021, 41% of the 2-founder companies split evenly (3 points lower than 2023 data). Maybe a trend favoring equal split?
Examples of equity splits
- Google : 50/50
- Microsoft : 64/36 (60/40)
- Apple : Steve Jobs, Steve Wozniak, and Ron Wayne, 45/45/10
- Oracle : Larry Ellison, Bob Miner, and Ed Oates, was 60/20/20
What is being said on this topic.
"if I see a co-founding team with the technical co-founder with 10% and the other ‘business’ cofounders with 90%, its a pass for me." - Harry Stebbings 20VC
"What do investors make of teams that split the equity equally? Our data suggest that they are less than thrilled. Even after statistically controlling for a lot of factors, our data still suggest the same basic message: companies that have equal splits have more difficulty raising outside finance, especially venture capital." [HBR ]
3. However, you should evade 50/50% split between two co-founders. From a legal perspective, it can be problematic due to control/deadlock issues (e.g., the stockholders elect the Board, and the Board appoints the CEO). [Benchhacks]
The only wrong answer is 50/50: Calculating the co-founder equity split [Geekwire] ( a bit dated -2011- still but relevant)
If the expected contributions are fairly equal, then the initial equity should be allocated relatively equally (for example, 51% and 49%). - [Justin Kan]
Other Resources :
Y Combinator : https://www.ycombinator.com/library/5x-how-to-split-equity-among-co-founders
Carta : equity split calculator