• October 2018
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I am reluctantly recruiting a co-founder, how much equity should I offer them?

Before recruiting a co-founder, you should consider their role in the business.

A co-founder isn’t just someone that you offer equity to, they are someone that has a pretty important role in your company. That role varies company to company, and you should give some serious thought about what that looks like to you—and them. Are they more of a marketing guru? Can they handle the administrative side of things? Are they better at organizing and planning? Figure out what their job is and make sure that it takes into consideration the long-term rather than what works for right now. You don’t want to bring on a co-founder only to have their job outsourced later and leave them out to dry.

If you know their job won’t be there in the future, then maybe you aren’t looking for a co-founder, but an employee.

To answer the question about equity—that depends. As a rule of thumb, evenly split equity usually causes more issues than it helps to solve problems. Evaluate their worth in terms of skill and time and then discuss terms that make both of you happy.

If you need some help grappling with equity and other areas of startup law, then you should get in touch with us at LawTrades. We are passionate about startups—we’ve already helped over 1000 entrepreneurs with various stages of business development. We’d be happy to help you, too. Check out our website and get in touch if we seem like a good match.

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