Split founder equity before incorporating: a 4-question checklist

Start with 50/50, then adjust

You and your co-founder are deciding who gets what before the company exists. A split built before incorporation is easier to defend than one argued over after a fight. Founder equity paperwork can cost between €500 and €2,000, while founder disputes can lead to legal bills in the tens of thousands. Most startups begin with a 50/50 split. Use that default to start the conversation, not as a reward for showing up first.

Keep the conversation practical. Write down what each person will do before a customer. If one person is building the product and the other is finding customers, the split should reflect that division of labor. If both are doing both, the split may stay close to even.

Four questions make the split defensible

The checklist is short. Answer each question quickly, and keep the answer simple enough to explain to a skeptical investor later. If you cannot say why a number is where it is, the split is not ready.

• Time commitment. Who is leaving a job, cutting hours, or working nights? Count full-time, part-time, and unpaid work. A founder who is all in should usually hold more than one who is testing the idea on weekends.
• Idea ownership. Did one person bring the core problem, the customer insight, or the technical path? Credit the idea, but do not overpay for a title. The value is in the problem being real and the team being able to solve it.
• Capital. Who is putting money into the company before outside investors? Track seed money, equipment, rent, and personal expenses paid on behalf of the business. A small amount can matter, but it should not buy control unless the risk is real.
• Risk. Who is giving up salary, savings, housing stability, or a safer career? Risk is the life change each founder accepts while the company is unproven.

Do not answer from titles. A co-founder label does not prove contribution. A person who has already interviewed customers, built a working prototype, or paid for a server has a stronger case than a person who only has a name on the plan. Ask for evidence, not enthusiasm.

Move away from the default only when the contribution gap is clear. If one founder is CEO, that responsibility is usually reflected by a 5% to 15% equity premium over a non-CEO co-founder. A founder who brings more time and more risk can sit near the top of that range. When the gap is small, keep the split close to even.

A worked example keeps the split honest

Say Alex and Sam are building a software company. Alex is CEO and works full time. Sam works part time and brought the original customer insight. Start from the common default, then move the split in Alex's favor for the CEO role. Sam keeps a meaningful stake because the idea and part-time work are real. Each percentage has a reason attached to it.

Before dividing the founders' shares, leave room for the people who will come later. Pre-seed companies commonly set aside 12% to 15% of equity for employee options, with that pool often reduced to 10% by Series A. Advisors are commonly offered 0.25% to 1% of a startup. Dilution is normal. Amazon founder Jeff Bezos holds under 10% of the company.

Make the split stick before incorporation

The next paperwork step is small: write the split into a founder agreement before you file incorporation. State each founder's percentage, the role of each founder, the time commitment, the capital contributed, and the risk accepted. The four questions give you a record of why the numbers are where they are. If a founder leaves early, the company should not be stuck with a large unearned stake. Add a vesting schedule so the equity is earned over time, not just assigned at the start.