How to Split Founder Equity Fairly (and Avoid Regret Later)
How to Split Founder Equity Fairly (and Avoid Regret Later)
You’ve got the dream:
You and your co-founders are ready to change the world.
But when it comes to splitting the pie,
things can get tricky — fast.
Here’s why getting founder equity right early on
can save you headaches (and heartaches) down the road.
1️⃣ Recognize Contributions Beyond Money
Not every founder brings cash.
Some bring ideas, networks, sweat equity, or critical skills.
✅ Who is committing full-time?
✅ Who’s investing personal funds?
✅ Who’s bringing industry connections or IP?
Example: A fintech startup gave equal shares to three founders.
But only one quit his job to work full-time.
Resentment quickly built up, nearly tanking the company.
2️⃣ Consider Vesting Schedules
Vesting ensures founders earn their shares over time —
protecting the company if someone leaves early.
✅ Standard: 4-year vesting with a 1-year cliff
✅ Aligns long-term commitment with ownership
Example: A SaaS startup nearly collapsed when a co-founder left after six months,
taking 25% ownership with him — because they didn’t set up vesting.
3️⃣ Don’t Ignore Future Investors
Your cap table needs to have room to breathe.
✅ Leave space for future investors, employee stock options, or key hires
✅ Avoid over-allocating everything up front
Example: A promising startup struggled to raise Series A funding
because their founders had already maxed out the cap table.
4️⃣ Talk About Expectations Early
Align on more than just numbers.
✅ What are your shared goals?
✅ What’s the exit plan?
✅ How will you handle disagreements?
Example: A media startup avoided disaster by doing an early founder retreat
to hash out expectations — long before any conflicts arose.
5️⃣ Why Work With Paperwork.sg?
We:
✅ Advise on founder equity structures
✅ Work with legal partners to draft agreements
✅ Help set up clean, investable cap tables