• February 2019
    M T W T F S S
    « Jan    

Does a startup co-founder necessarily have to own 50% of the equity?

No, there are no requirements for how you split equity in your business. You should certainly outline equity division in your operations agreement, but coming to those terms will be easier said than done. As other answers have indicated, 50% between two founders could cause issues if there are disagreements in the future.

Many co-founder relationships have a personal element to them, perhaps you are related or close friends. Because of the personal connection, it’s especially important to face business with a completely different mindset. If you allow emotions to control how you operate, then things will likely go south.

A good rule of thumb, is that no matter how you decide to divide equity, you should make all shares subject to vesting restrictions. That way, you at least protect the business if someone tries to leave the company and take a large portion of it with them.

It would be best for you to seek the counsel of a start-up attorney. They can assist you by providing helpful insight into how you can best divide the equity in your business so that it has the best opportunity to thrive.

LawTrades has assisted over 1000 businesses with their start-up process. Allow us to be there for you, too. We can connect you to a skilled start-up attorney that can break down the finer details of business planning and help you make solid decisions for your future. Let’s talk.

Legal is hard. Let’s tackle it together.

Speak to one of our Legal Pros and discover how we can help.

Let's Talk


There is no comment on this post. Be the first one.

Leave a comment