New ask Hacker News story: Ask HN: Co-founder equity split methods?
Ask HN: Co-founder equity split methods?
6 by askhn2023 | 3 comments on Hacker News.
I am a solo founder that created a MVP with help from a friend. The product has both software and hardware. I wrote all the software and worked on the hardware with my friend. My friend designed the main PCB of the product. Now I wanted to bring my friend as a co-founder for a couple of reasons: 1. They have complimentary skills: hardware / PCB design. 2. I need a co-founder overall to improve productivity and need different inputs on many things. The problems: 1. Currently my friend can only commit 1 full day per week. Future commit depends on how things go. 2. I started the project long before my friend started helping design the PCB. (about 2 years before). 3. The software work is far more than the hardware work in this project. 4. If I split the equity, say 10%, for my friend as co-founder given their commit level. What happens when they increase their commit level in the future, say to 50% or even full-time commitment after one year. Note, my friend can also write software. I.e. he is not hardware-only guy but so far only did the hardware work in this project. My question is: what are the recommended methods of equity split for my friend as a co-founder in this case? Here are some points I collected so far: 1. Some say 50/50 split is good in general because it provides the sense of equality. 2. Some day 50/50 split is almost never good because it can cause deadlocks. 3. Almost everyone says vesting over years (4 years?) is good, and 1-year cliff is good. 4. I've read a book called "Slicing Pie handbook", but it seems to me it requires a lot overhead to get it right. I was also wondering: is there some well-known method that is more dynamic than the fixed percent split, and also less dynamic / simpler than the "slicing pie" method? Thanks!
6 by askhn2023 | 3 comments on Hacker News.
I am a solo founder that created a MVP with help from a friend. The product has both software and hardware. I wrote all the software and worked on the hardware with my friend. My friend designed the main PCB of the product. Now I wanted to bring my friend as a co-founder for a couple of reasons: 1. They have complimentary skills: hardware / PCB design. 2. I need a co-founder overall to improve productivity and need different inputs on many things. The problems: 1. Currently my friend can only commit 1 full day per week. Future commit depends on how things go. 2. I started the project long before my friend started helping design the PCB. (about 2 years before). 3. The software work is far more than the hardware work in this project. 4. If I split the equity, say 10%, for my friend as co-founder given their commit level. What happens when they increase their commit level in the future, say to 50% or even full-time commitment after one year. Note, my friend can also write software. I.e. he is not hardware-only guy but so far only did the hardware work in this project. My question is: what are the recommended methods of equity split for my friend as a co-founder in this case? Here are some points I collected so far: 1. Some say 50/50 split is good in general because it provides the sense of equality. 2. Some day 50/50 split is almost never good because it can cause deadlocks. 3. Almost everyone says vesting over years (4 years?) is good, and 1-year cliff is good. 4. I've read a book called "Slicing Pie handbook", but it seems to me it requires a lot overhead to get it right. I was also wondering: is there some well-known method that is more dynamic than the fixed percent split, and also less dynamic / simpler than the "slicing pie" method? Thanks!
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