I have a startup, three years running now. We have started to generate some revenue to survive and bear the operational cost.<p>When the revenue wasn't here - I have invested in it 100% money. I have put in so far around half million USD.<p>It's about time I share some equity with my cofounders who are only contributing the human resource. One of them is technical and another looks after managerial aspects.<p>My technical cofounder works around 14 hours a day while the cofounder manager works office hours.<p>Please share you advice on how should I split and share the equity so that they feel valued and respected.
That’s a lot of money to have put in without having a plan on how you’re going to deal with co-founders. I believe current best practice is that 1-4 co-founders is ideal, with a preference for 2 or 3 co-founders. In these cases I’ve assumed a near equal split, with one co-founder getting slightly more equity to avoid deadlocks. For example, a three person startup might have founder shares split 40/30/30. I’m not an attorney or tax professional but I’d suggest this kind of a split with all co-founders having 4-year vesting with a 1-year cliff. Remember to leave at least 10% of shares for an employee stock plan. I’d treat your contributions to date as a note payable. Be sure to consult an attorney and a tax advisor.