Ask HN: Sharing equity with cofounders while I fund it 100%

[absqueued]

I have a startup, three years running now. We have started to generate some revenue to survive and bear the operational cost.

When the revenue wasn't here - I have invested in it 100% money. I have put in so far around half million USD.

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.

My technical cofounder works around 14 hours a day while the cofounder manager works office hours.

Please share you advice on how should I split and share the equity so that they feel valued and respected.

[rman666]

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.

[absqueued → rman666]

In total, we are just three cofounders. I have set aside 15% for employee stock and rest 90% to be divided by contribution based.

As of now the company incorporation is solely on my name hence I own 100% shares. None of my cofounders are too pushy.

I want to split in on fair contribution basis.