Co-founder Equity Split
Co-founder Equity & Vesting
Model equity splits based on contribution factors. Set your vesting schedule. See why equal splits are usually wrong.
Who conceived the core idea? (weight: 20%)
Full-time = 10, part-time = 5, advisory = 2 (weight: 40%)
Seed capital, assets, or early cash brought in (weight: 10%)
Rarity and criticality of skills to this startup (weight: 30%)
Equity Split
Vesting Schedule
Industry standard. 25% vests at 12 months, then monthly for 36 months. Recommended for most startups.
Reserve for ESOP Pool
Create the ESOP pool before your first funding round so dilution hits existing founders, not the new investors.
Why 50/50 is usually wrong
Commitment diverges. In 18 months, one founder will be full-time, one part-time. Equity locked in at 50/50 creates resentment and deadlock.
Skill value changes. Early technical advantage may become less critical as you hire engineers. The model reflects contribution at founding, not permanence.
Cliff matters most. If a co-founder leaves before the cliff, you should be able to reclaim unvested shares. Without vesting, there's no lever.
This tool helps you think through equity division — it's not a substitute for a formally documented founders' agreement or a shareholders' agreement. Consult a company secretary or startup lawyer before formalising splits. Last updated 2026-06-22.
Common questions
Co-founder equity, statute-cited.
How does the equity split model work?+
The tool weights four contribution factors — idea origination (20%), commitment (40%), capital (10%) and skill (30%) — to suggest a split, or lets you enter percentages manually. The weights are a decision framework, not a legal rule: Indian company law does not prescribe founder splits, so the split is whatever the founders agree in the shareholders' agreement and the articles.
What is a vesting schedule and a cliff?+
Vesting means founders earn their shares over time — typically 4 years with a 1-year cliff, meaning no shares vest before month 12 (then 25% vests and the rest monthly). Vesting is enforced contractually through the shareholders' agreement and buy-back provisions; it is a market convention for Indian startups, not a statutory requirement of the Companies Act 2013.
What happens if a co-founder leaves early?+
Under a standard 4yr/1yr schedule, a founder who leaves before the cliff gets nothing; one who leaves after vests only the earned portion, with unvested shares typically repurchased at face value (good leaver) or for bad leavers on harsher terms defined in the agreement. The tool simulates these scenarios — but the actual outcome is governed by your shareholders' agreement, which is contractual, not statutory.
How do good-leaver and bad-leaver terms work?+
A good leaver (death, disability, departure by agreement) usually retains vested shares; a bad leaver (resignation in breach, competition, misconduct) typically faces repurchase of both vested and unvested shares at face value or a discount. These definitions are entirely contractual — the tool warns you that your SHA governs and bad-leaver terms vary widely.
When should I create the ESOP pool?+
Before your first funding round, so the dilution of creating an ESOP pool hits the founders rather than the new investors — a common structuring decision in Indian startups. An ESOP pool is created by board/member resolution under s.62(1)(b) of the Companies Act 2013 read with the Companies (Share Capital and Debentures) Rules 2014, and the tool suggests typical pool sizes (10–15% pre-seed to seed).