A framework to help founders divide equity fairly and build lasting partnerships.
One of the greatest challenges for any start-up is deciding how to
divide and manage the founders’ shares.
In the excitement of building their idea, many entrepreneurs
overlook the importance of revisiting their original deal
structure—the very foundation of their partnership.
Unfortunately, this often leads to promising ventures collapsing
when disagreements around ownership become insurmountable.
Consider this common scenario: two founders agree at the outset to split ownership evenly, 50/50. As time goes on, one founder dedicates 50 hours a week to the project, while the other contributes only 20. This imbalance lasts for months, until incorporation approaches. At that point, the first founder insists that his greater commitment justifies an 80% share. The second founder disagrees, arguing that, although his hours were fewer, his contributions carried more weight and still warrant equal ownership. With trust eroded, the partnership ultimately falls apart.
We’ve encountered stories like this countless times when start-ups come to us seeking investment. To avoid such outcomes, founders must regularly revisit and, when needed, redefine the central terms of their agreement during the company’s early stages.
These elements directly influence the ownership each founder can reasonably claim. By reviewing them consistently—from the idea phase through incorporation—teams can make sure every individual’s contributions are fairly acknowledged. This transparent and collaborative process helps prevent conflict, builds trust, and leads to a share structure that is widely accepted as equitable.
There is no perfect formula for splitting equity; every arrangement ultimately comes down to negotiation. What matters most is that ownership reflects each founder’s actual contribution and level of commitment. Since building a company is a long-term journey, structuring equity fairly from the very beginning is critical to long-term success.
For start-ups seeking investment, this process is especially important. Investors will always want clarity on ownership and formal agreements. At Crosspring, we’ve applied this methodology for years and consistently seen that when time, assets, and money are carefully accounted for, partnerships hold up better and equity splits become far more balanced. After incorporation, we also advise teams to conduct regular founder and board evaluations to keep alignment strong.
Wishing you all the best in building a great company.