As you’re reading this article, we suppose you’d want to learn more about offering equity to a technical co-founder.
Different teams have different approaches to splitting the shares. Some do it right away, others get to know each other first, then split the equity.
There’s a formula to follow, called the
Founders Pie Calculator. It’s a method of dividing equity created by Frank Demmler, an Adjunct Teaching Professor of Entrepreneurship at Carnegie Mellon University.
In contrast to popular notion, the shares are not distributed equally just because 'it's fair.' Demmler suggests to evaluate each of these aspects:
- Business knowledge
- Domain expertise
- Commitment and risk
You need to assign weight to each, and rate the founders in each of these aspects on a scale of 0-to-10.