Startup equity for co-founder


I've been working at a pre-launch startup for the past year (going to launch in the next several weeks). I'm supposed to sign my Stock Purchase Agreement soon, but wanted to run this by to see if I am getting a good deal for the amount of work that I put in.

I am receiving 10% of the whole company for my contributions in the year. I dedicated nearly full-time hours to this startup. Part of me feels like this is low especially if I haven't been paid for my time (I started right after I came out of college).

The split goes as follows:
6% angels
10% option pool
10% me
remainder other founder

Now, the other founder originally had the idea and worked on a good chunk of the project before I came in. When I came in, I helped offset the development work, did some bug fixes and feature implementations. He is doing the pitching and most of the fundraising.

Does this seem like a fair deal for everyone?

Thank you.

Software Co-Founder Equity Legal

asked Jan 10 '13 at 07:03
Rabid Zombie
113 points
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1 Answer


There's an app for that - Fill it out and see what it says.

While the tool doesn't address a funding source (founder or otherwise), understanding where you would be from ground zero is somewhat useful. Also challenging is that your are likely to be considered an early hire (paid in equity) vs a "founder". One could argue either position - but since you are negotiating now (and not prior to starting) you fall more into the first hire camp.

After reviewing Joels post on share allocation and this post on equity for early employees you should have some ammo to either agree with or argue for more equity.

Either way - talk to someone about tax implications of receiving shares.

answered Jan 10 '13 at 07:38
Jim Galley
9,952 points
  • After filling it out, the application recommended that I receive 34% of the company. It's kind of confusing for me right now because the app doesn't take into account the investors and VCs... how does the equity eventually get split with them? – Rabid Zombie 10 years ago
  • Edited my answer to add additional info. Would have been better to get 34% agreement before starting work AND then use the IOU post funding approach for payback. Perhaps a blended approach can be agreed to. – Jim Galley 10 years ago
  • Yeah, I should've established some agreement before starting my work but unfortunately, it's too late for that :/. I think an IOU would be perfect for this situation since equity is pretty much set at this point (10%). From what I know, I'll be taking 10% of the whole company (10% of the total shares available) - does this mean that it won't be diluted when investors join on? – Rabid Zombie 10 years ago
  • Most likely issue will be pre-money - so yes, you will (like others) become diluted. Examples on what to expect [here]( – Jim Galley 10 years ago

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