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Global·66d ago
Startup Guides
Free
Cofounder Equity Splits: 50/50 vs Vesting Cliffs
What you'll learn The 3 equity models that work (and 2 that destroy startups), plus a decision framework for your specific situation. Why it matters Bad equity splits are the #1 reason cofounder relationships explode. Getting this right in month 1 saves your company in year 3. The playbook 1) Default: 50/50 with 4-year vesting + 1-year cliff — both must earn their shares over time; if one leaves, unvested shares return to the company. 2) Weighted split — if one cofounder has domain expertise, capital, or existing traction, adjust 60/40 or 55/45. 3) Never — 100/0 with 'trust me bro' equity promises later. Get it in writing on day 1. 4) Vesting cliff — 25% vests at month 12, then 1/48th monthly. This is non-negotiable — protects everyone. 5) Sign a Founders' Agreement before writing code. Templates on gov.uk, Ycombinator, LawTrust India (₹5,000). Common mistakes Skipping vesting because 'we're friends' (friendship + business + no contract = disaster). Rewarding tenure vs contribution. Not planning for a cofounder leaving. Next action Have 'the equity conversation' this week. Draft your split + vesting terms in a Google Doc. Get a lawyer to formalise before you take investment.