I have seen the YC videos that say prevailing wisdom calls for 50/50 equity split among founders and I understand the rationality for it, but I still have some questions in cases of late stage joins.<p>Obviously every scenario is different...<p>What about a scenario where one co-founder worked for a year without a salary, built the product, built a team, and raised a significant pre-seed over the course of Year 2?<p>If a co-founder is brought into the business now at this stage, what would be an equitable way to approach the relationship that is as fair as possible to all parties involved?<p>Something about 50/50 in that scenario feels inequitable to me in principle. I have seen a suggestion that keep 50/50 but vesting schedules should handle this, but I think that doesn't really account for things properly either. I think you should want all co-founders on the same vesting schedule to keep their interests aligned.<p>I have been thinking instead about the following scenario:<p>* Whatever has vested, stays vested with the original co-founder.<p>* The remainder goes into a founder pool and is divided equally by all parties moving forward.<p>* The 4 year clock resets for all parties involved at that point (but with no cliff for the original parties).<p>Does this seem equitable? It seems like a good balance of reward, not taking away any equity that was already earned, and making sure that folks are aligned based on their current position in the business / moving forward.<p>I welcome feedback, especially from anyone who has been in a similar position.
There are a number of possible ways to approach it. Based on the description, you seem justified in getting more than 50/50 equity. But it may not be as "late stage" as you imagine.<p>For example, your description is very product-focused. I wonder whether there are users/customers? Revenue? Product/market fit? If I were a potential co-founder, lacking these would indicate it is still very early/"risky". If these are not present even after 1-2 years of work, perhaps a co-founder is 100% necessary to accelerate its growth.<p>Another aspect is whether the co-founder (and yourself) will be paid a market salary via the "pre-seed". If so, that could justify less equity. Or the opposite -- if you're paid more, that could more palatably justify a more even split!<p>Ultimately, I would just be honest and upfront with your potential co-founder about it. As long as you are both on the same page and believe it's fair, that is what matters most.