SeedBlink’s Post

🔑 Co-founder Equity: The Make-or-Break Decision for Startups Whether you’re just beginning or already running a startup, here’s the reality check: how you split equity with your co-founder(s) isn’t just a formality. It’s the key to long-term motivation and trust. Here are the essential takeaways: 1. Be Generous with Equity Equity isn't a reward for past effort; it’s the motivation to tackle the years ahead. Avoid the “stingy CEO” mistake—equity should incentivize everyone on the team to stick through thick and thin. 2. Prioritize Equal or Near-Equal Splits While exact parity isn’t necessary, close-to-equal splits create alignment and prevent resentment. If one founder is holding 90% while others grind day in and day out, motivation fades fast. 3. Establish Vesting and Cliffs Protect everyone involved by implementing vesting (typically four years) and a one-year cliff. This prevents founders from leaving early and holding unearned shares, preserving the company’s flexibility to reward those still committed. 4. Know When to Part Ways Let’s face it—some co-founder relationships won’t last. For pre-product-market-fit startups, a leaving founder should retain minimal equity (YC suggests 5% or less). Keep the equity available for those pushing the company forward. Bottom line? Equity is a tool to fuel your team’s drive, not just an asset to hoard. Long-term success often relies on how well you align co-founder interests from day one. So, start generous, stay fair, and keep everyone focused on the road ahead. 🤔 Have thoughts on equity splits in startups? Share below!

💡 The Art of Equity Splits: Maximizing Motivation in Startup Co-Founders 📚 As a seasoned entrepreneur and startup advisor, I’ve seen countless founders grapple with the question of how to split equity among co-founders. It’s a critical decision that can significantly impact a startup’s success. After years of experience and observing thousands of startups, I’ve come to a conclusion that might surprise you: Generous, often equal (or near-equal) equity splits are often the best approach. ➡️ Many founders make the mistake of dividing equity based on early contributions or perceived value. They cite reasons like coming up with the initial idea, starting work earlier, or having more experience. However, this approach is fundamentally flawed. ➡️ The key point many miss is that equity splits should maximize motivation. Building a successful startup takes 7–10 years of hard work. Your equity split needs to motivate your co-founders to stick with the company through these challenging years. ➡️ As a CEO, your primary goal should be creating an equity split that maximizes your team’s motivation, not just negotiating the best deal for yourself. Remember, a larger slice of pie means nothing if the company fails due to an unmotivated team. ➡️ To protect yourself while being generous, use vesting and a cliff. Typically, this means four-year vesting with a one-year cliff. If a co-founder leaves or is fired within the first year, they get nothing. This is your safety net if you’ve misjudged a co-founder. ➡️ Because you have this protection, it often benefits you to be more generous with equity, not less. You want your co-founders’ equity stake to be what gets them up at night, working weekends, and recruiting friends. You want them to feel like true owners, not just employees. ➡️ While I’ve advocated for equal splits in the past, it’s not a one-size-fits-all solution. The key is to be considerate about your co-founders’ future motivation. If you don’t think they’re worth a generous equity grant, why are they co-founders at all? When splitting equity, think long-term about motivation. Be generous while protecting yourself with vesting and a cliff. Remember, your startup’s success depends on having a fully committed, motivated team. A slightly smaller piece of a successful company is far more valuable than a huge slice of a failed venture. If you’re not willing to give your partners a generous share, perhaps you’re choosing the wrong partners. ❗️ Prioritize building a team of co-founders you truly believe in and want to motivate for the long haul. #StartupAdvice #VC #Leadership #Equity #Management Source :- V3V Ventures

Couldn't agree more with this! In my experience, the mythical 50-50 split rarely makes sense in real life. The real conversation should be about what each person brings to the table: Time commitment? Cash investment? Industry expertise? Who's taking on which responsibilities? These might be awkward conversations to have with your co-founders, but they're absolutely important before you split that equity pie. Better to be honest about the natural imbalances in roles and contributions than force an equal split that looks good on paper but doesn't reflect reality. Every founding story is unique - your equity split should be too. 💡

This is an interesting post about founder equity from Kevin Jurovich

4 Fundamental Mistakes in Fundraising That Startup Founders Can't Afford Are you gearing up for a fundraising round? Then this is for you... In this insightful article, Greg Waisman shares crucial mistakes startups often make when preparing for Series A. Here's a quick guide for founders: 1. Budgeting Blunders: Clearly articulate how much you need, why, and when investors can expect returns. Uncertainty signals poor financial planning. Provide detailed data and growth projections. 2. Diversify Your Options: Don't rely on one or two investors; diversify to mitigate risks. Avoid appearing overly eager, and plan negotiations strategically. Investors should be on a waiting list with pre-scheduled meetings. 3. Match Investors to Your Product: Ensure your product aligns with investors' interests and the market. Research potential investors in your sector, emphasising how your company fits their portfolio. Product-market fit is critical. 4. Craft a Compelling Pitch: As a founder, your charisma and vision matter. Prepare a compelling pitch that highlights strengths, anticipates tough questions, and instills confidence in investors. Confidence in you translates to confidence in your venture. In the world of fundraising, forewarned is forearmed. Be meticulous, avoid these pitfalls, and boost your chances of fundraising success! #StartupTips #FundraisingStrategy #EntrepreneurshipSuccess

very important to note while operating in this space.

The push for ‘growth at all costs’ for startups is dying as investors focus on sustainable growth. Diverse founders are poised to take advantage of this shift. Here’s why 👇 Prior to now, VCs have looked for companies that can ‘triple, triple, double, double,’ meaning that their revenue triples the first three years, and doubles the last two years, brining ARR to $100M+ very quickly. But the game is changing — leaning away from growth at all costs to a more sustainable growth mindset. This shift is a big deal for underrepresented founders for two reasons: 1. More ownership - Instead of needing to raise five or six rounds of funding, founders can get to profitability after just one or two rounds. That means that at exit, founders own closer to 55-70% of their company, as opposed to the 10-20% that comes with dilution from multiple rounds of funding. 2. More realistic outcome expectations - Investors are realizing that being capital-efficient is a strength, not a limitation. Diverse founders, who’ve always struggled to raise money, have operated this way out of necessity. What once held us back is now an asset. Profitability is back in the spotlight, and for underrepresented founders who’ve struggled with fundraising and have had to get creative with less capital, this is a huge opportunity. If you've been struggling to raise money, this could be the perfect time to build something great with less capital and more control

Founder equity is always a fun one. I won't name names but a few war stories. One of mine was equal spit among founders because they were matched by VCs (and long before there were services to match founders too!) It was disastrous because they had different visions, different goals and backgrounds. It blew up for them. They were both ousted. One went on to do a second company and some noteriety. The company is successful and own a good portion of developer today. Strong investors. Even splits among founders seem to work best in my experience. Three founders was always easiest because they tended to discuss things and had defined roles. Two founders was harder because there were more assumptions made, less formality and had a bunch of breakups when its two. The rule of thumb a few years ago was to dissuade a founder from going solo - even at YC Startup School it was frowned upon. The industry has matured since then. I have a few super successful solo operators out there that are right in that role. They delegate well, correct course and know timing. But like everything it all depends on the people. Its a long game and how you treat people, your character matter in this world. Long memories. (If you click on Peter Walker's post there is a bonus in the comments he shares the solo founder break out numbers and you can subscribe to Carta's numbers.)

How much equity should each co-founder get? 📊 A study of 7,764 US-based startups looked at median equity splits among co-founders before fundraising—the trends are a bit surprising. Most founding teams think they should divide equity equally, but even splits are rarer than you might think. While the idea of a perfectly equal split sounds great, it often falls short of addressing each founder's contributions. 𝐌𝐞𝐝𝐢𝐚𝐧 𝐄𝐪𝐮𝐢𝐭𝐲 𝐒𝐩𝐥𝐢𝐭𝐬 📊 Two-Founder Team 🤝  - Founder A: 55% - Founder B: 45% Three-Founder Team 🤝  - Founder A: 47% - Founder B: 33% - Founder C: 17% Four-Founder Team 🤝 - Founder A: 40% - Founder B: 27% - Founder C: 18% - Founder D: 10% One common issue among first-time founders is saying, "We make decisions together." While this sounds good in theory, it rarely works in practice—someone needs to make the final call. I split the equity equally in a previous venture, only to realize it didn’t reflect our differing contributions. This time, my co-founder and I discussed our inputs and agreed on a distribution that truly reflects our roles, laying the foundation for a successful partnership. A big shoutout to Peter Walker and the team at Carta for running this study. Peter is a must-follow for all startup data like this! #startups #venturecapital #entrepreneurship ____ Like this? Follow Kevin Jurovich for daily startup & VC insights and an occasional meme.✌️

4 Fundamental Mistakes in Fundraising That Startup Founders Can't Afford Are you gearing up for a fundraising round? Then this is for you... In this insightful article, Greg Waisman shares crucial mistakes startups often make when preparing for Series A. Here's a quick guide for founders: 1. Budgeting Blunders: Clearly articulate how much you need, why, and when investors can expect returns. Uncertainty signals poor financial planning. Provide detailed data and growth projections. 2. Diversify Your Options: Don't rely on one or two investors; diversify to mitigate risks. Avoid appearing overly eager, and plan negotiations strategically. Investors should be on a waiting list with pre-scheduled meetings. 3. Match Investors to Your Product: Ensure your product aligns with investors' interests and the market. Research potential investors in your sector, emphasising how your company fits their portfolio. Product-market fit is critical. 4. Craft a Compelling Pitch: As a founder, your charisma and vision matter. Prepare a compelling pitch that highlights strengths, anticipates tough questions, and instills confidence in investors. Confidence in you translates to confidence in your venture. In the world of fundraising, forewarned is forearmed. Be meticulous, avoid these pitfalls, and boost your chances of fundraising success! #StartupTips #FundraisingStrategy #EntrepreneurshipSuccess