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Splitting up startup equity is among the most awkward tasks you’ll take on as a new founder. We all want to be valued and to show other team members that they’re valued too. However, it’s not realistic to think every role is equally important, everyone will put in equal effort, or everyone is taking on equal risk. Equity allocations should reflect the above realities and be in line with how future investors and employees will expect to see equity split up.  

Below is a detailed guide to typical equity splits within startup companies in different technology sectors. Before we dive into the details, there are a few rules of thumb to remember:

• Poorly structured equity splits are cited as the #3 reason startups fail (right behind lack of market need and running out of capital). It’s naïve to think a simple 50:50 split will keep everyone happy. I’ve seen startups lose key employees, because they became frustrated when they saw a ton of equity in the hands of someone who was no longer doing much work for the company. Think critically and show your current and future equity holders that you’re taking equity allocation seriously.
• Equity is mostly meant to drive future commitment and effort, not reward prior work. While it’s fine to allocate some equity in recognition of past work, like giving shares to a medical device inventor or the entrepreneur who did all the prior customer discovery, most of your equity should be used to incentivize future commitment, trust and value contribution.
• Everyone gets diluted. As you raise capital, investors will get equity in your startup company, decreasing the percentage of the company the founders own. The percentages below generally reflect what people get before investors take their share.
• It only counts if you write it down. People often hear what they want to hear and remember what they want to remember. Once you’ve agreed upon who gets what, make sure you capture it in a form you can refer back to later. Ideally, this will take the form of a founder agreement, bylaws or an operating agreement that spells things out in detail. At a minimum, you should write what you agreed to in an email and have all of your co-founders reply confirming that they agree.

Who’s Who in an Early-Stage Startup

Everyone in a startup has an important title. To level set, here’s a list of typical startup roles and what they actually mean:

• CEO / Visionary Founder 
  Typical contribution: Full-time, leads company formation, fundraising, strategy 
  Tasks: Pitching investors, building roadmap, hiring
• Technical Co-founder 
  Typical contribution: Builds the product or tech, may be CTO 
  Tasks: Coding, hardware development, technology roadmap
• Business Co-founder 
  Typical contribution: Handles sales, marketing, partnerships 
  Tasks: Early customer discovery, market strategy
• Scientific Founder 
  Typical contribution: Inventor or Principal Investigator (medtech/biotech) 
  Tasks: Intellectual property creation, R&D leadership
• Advisory/Part-time Founder 
  Typical contribution: Contributes part-time, may bring network or IP 
  Tasks: Strategic input, early credibility

Equity Split Examples

Let’s look at what a “typical” equity split might look like for three different kinds of startups:

Note: Clinical and scientific advisors are typically brought on under advisor agreements with 0.25–1% equity each, vesting over 1–2 years. Their shares come from the common pool or a carved-out advisory allocation.

Tip: Equal splits only make sense if effort, risk, and commitment are equal. If one founder quits their job and the other doesn’t, that’s not equal.

Vesting Is Non-Negotiable

Even for founders, equity should vest. Vesting is a process by which owners of a company earn their shares over a period of time, rather than getting their shares up front. The goal is to ensure that shares only go to those who’ve put substantial time into the startup. Standard terms are:

• 4-year vesting – Founders get a portion of their equity each month that they are with the company over a 4-year time period. If they leave early, they only get to keep the shares that have vested.  
• 1-year vesting cliff – If a founder leaves within the 1st year, they don’t get any shares at all.  

The terms above protect the startup if someone quits early. This is founder-friendly and investor-friendly. It ensures everyone earns their equity over time. While some startups may choose slightly shorter or longer vesting periods and vesting cliffs, we strongly recommend you use the standard terms, which have been tested over many years.

How Timing Affects Equity

The term “founder” can be non-specific. Generally, these are people who joined at the very beginning. However, startups sometimes apply this term to key hires that join later. As you think through the tables above, it’s important to consider when people joined the startup. Those who joined earliest typically took on the greatest risk and received the least monetary compensation; many probably worked for free for a while.  

Here are a few stages when people might join and how that might impact their equity shares:

• Co-founders: You all joined before the company raised seed capital and probably worked for no money for a while. They get the full percentages listed above.
• Early employees: These are the first 1-5 people you actually hire and often join when the company has raised seed capital. They receive a salary although it may be below market rate. They’re often given 0.5% to 3% equity or an equivalent amount of stock options.
• Executive hires: These are the rock stars you hire after you’ve raised your Series A or later round. They provide significant experience and enormous credibility to your startup. They receive a full salary and are often given 0.1% to 2% equity or an equivalent amount of stock options.
• Advisors and board members: These experts may join your team at any time, although they are more likely to be given equity if the join early and more likely to be paid if you are at or beyond Series A. They might be given 0.25% to 1% equity or an equivalent amount of stock options, which are usually considered fully vested.

These ranges vary based on market norms, industry, and how “hot” the startup is. In high-risk, deep-tech startups (like medtech), early contributors may get more to compensate for longer timelines.

Closing Advice

Your startup’s cap table tells the story of who believed in the company and when. Make sure it reflects contributions fairly and helps build a team that’s aligned for the long haul. Here are a few final reminders and tips:

• Talk early, talk openly. Have equity conversations before things get serious. It’s harder to renegotiate later.
• Use equity calculators. There are tons of online spreadsheets, including the widely used “Splitting the Pie” calculator, that can help you think through and calculate equity splits.
• Write it down. As noted above, use founder agreements or at least confirm by email so you have a written record of what everyone agreed to.