When should start-up co-founders discuss equity?

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When should start-up co-founders discuss equity?

Question: (org. on Quora)

When should start-up co-founders discuss equity?

Assuming that the start-up starts as a project, should discussion of equity occur before the product is done / before any funding is received? Or is it more customary to wait for a round of funding before discussing equity?

Answer (by Dan Walter)

Start discussing it immediately. Getting the equity split and details right can take some time. This doesn't mean that you HAVE to finalize things immediately, but you should all be on the same page regarding the path to finalizing the details.

I have seen this issue become the dividing force at many small companies. When done correctly it should be the uniting force.

When all things are equal things should be split equally.  When it is obvious that there is one "more than equal" player, care must be taken to ensure that everyone truly understands their roles and accountability.

And, remember that equity, among sane and reasoned people (not always the case) can be adjusted down the road. This is most easily done by offering more equity to the person(s) doing the most, rather than trying to take equity away from those doing the least.



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