Here founders of Zenlike are sharing their story of how they came to a decision to split unequally and why it felt as a right thing to do.
For a short resume: they agreed on a 55/45 split. Founder 1 got 55% for two reasons: first, he had been working already for 2 months on the project and secondly he had made a significant investment into the project. No premium was given for the idea. As for other factors, the two founders seemed to have a comparable level of experience, expertise and network value.
Recommended reading for those who are in the process of negotiating equity division with their co-founders. It clearly shows that in truly successful ventures even equity talks are more about fairness and cooperation than about “splitting” or getting into a more advantageous position in comparison to your co-founders.
We were also happy to see that the logic of Zenlike founders can be absolutely replicated in our FES model. While our model by default assigns some equity premium for an idea, this can be easily overridden by indicating that all founders are the “idea persons”. And FES helps founders consider even a wider range of their strengths and competencies which can be vital for the startup and which should therefore influence their equity splits.
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If you are a team of founders ready to divide equity for the first time, or you want to check how fair is your current agreement on equity split, or you are just interested in founder equity issues, you are welcome to visit us at foundersolutions.com and try Founder Equity Solution (FES) model. It’s free and easy to use!
We get many questions from founders why they should use the model if they can always split equally. Well, equal split doesn’t always mean fair. And it actually can harm the startup. If founders split equally and then one of the founders feels that she contributes more to the project, that may cause tension between founders and result in a less stable startup performance. Investors, so the research says, tend to give lower valuations to teams splitting equally, because they suspect that such teams lack entrepreneurial negotiation skills.
FES has everything to help you decide on a fair equity split for your team. Go to the website, open the model, answer the questions and get the recommendation on how to divide equity within several minutes! You may agree with it or not – that’s fine. You may adjust it further with your team. Important is that you can use this recommendation as a starting point in equity negotiations with your co-founders and turn uncomfortable conversations into a fun teamwork!
We hope you’ll enjoy using FES! We’d love to hear your feedback here or at http://foundersolutions.com
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