How Much Equity to Give Your Cofounder

Seibel says founders often miss key points when dividing equity. He argues the split should support cofounders’ motivation over the years it can take to build a company, even if they are not yet focused on that long-term commitment.

Seibel cautions against treating negotiation as the main basis for an equity split. He describes four-year vesting with a one-year cliff: someone who leaves or is fired within the first year receives no equity, which limits the long-term cost of a cofounder decision that proves wrong.

Because vesting provides a hedge, Seibel says it often makes sense to be more generous with cofounder equity. A meaningful stake can help cofounders stay committed when the startup struggles and act like owners by working late, recruiting friends, and contributing beyond daily expectations.

Seibel says equal splits are a useful rule of thumb when circumstances are otherwise equal, but they do not fit every case. CEOs should consider whether they expect to rely on their cofounders long term; if they do not see them as worth a generous grant, he suggests reconsidering the team.