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How do I design a dynamic equity split agreement with my Co-Founders?

Chris Barsness,

startup, finance, law, and tech nerd

Each person in a founding team brings some value which normally the company needs to succeed and without one spoke in the wheel, it may fail.  Realize that early on the person with the cash may be the most needed, but later someone with marketing experience may be more necessary to launch your product/service.

Try to come up with an idea on each person's contribution as of today (because stock in most cases is not supposed to be issued for future services) and split things percentage wise on that basis for now.  Add more founder's stock for each person on a vesting schedule as mentioned by Warrick Taylor.  Everyone wants to give each person incentives to stay around as long as their contribution is needed.  Vesting over time is usually the best way to accomplish this and avoid possibly 409A deferred comp tax issues for the founder's stock.  I have used performance based vesting in the past, but it is a little bit more difficult to avoid the situation where someone claims they performed, but the other founders disagree.

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