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How should equity be split in a startup?


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Splitting equity in a startup involves several key considerations:

  • Foundersโ€™ Contributions: Base the split on each founderโ€™s input, including the initial idea, financial investment, and time.
  • Roles and Responsibilities: Consider ongoing roles, giving more equity to those with greater responsibilities.
  • Future Commitment: Allocate more to founders committed long-term.
  • Vesting Schedules: Use a vesting schedule (e.g., four years with a one-year cliff) to ensure long-term commitment.
  • Early Team: Reserve equity for advisors and early employees to motivate them.
  • Market Standards: Research industry norms to ensure fairness.

Discuss these factors openly to reach a fair and motivating equity distribution.

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