Skip to content
FTLABBefore

Topic map / People

Cofounders, equity and separation

Substantial

11 questions

Hellmann and Wasserman’s working paper studied how founding teams split the first equity. In that sample, lower performance lined up with teams who settled early, negotiated quickly, or split equally, and combining the three lined up with the lowest performance. It is correlational. Migdał later called forcing an equal cofounder his biggest mistake. Neither source is a rule for your team.

  1. 1.What have you already made together, rather than only discussed?

  2. 2.What did your last real disagreement change?

  3. 3.What will each person own for the next six months?

  4. 4.What equity is a promise, and what is a documented grant?

    Pass 2 · strengthened

    Keep the conversation, the contribution, and the document apart. A practitioner’s split is not a universal rule.

  5. 5.When does vesting start, and is there a cliff?

  6. 6.What happens to equity if someone leaves in the first year?

    Pass 2 · strengthened

    A vesting recommendation, a request to hand shares back, and a grant that already exists are three different things.

  7. 7.Who decides when you cannot agree?

  8. 8.What outside job, family duty, or investor conflicts with this partnership?

  9. 9.Have you described a fair separation while you are still on good terms?

    Pass 2 · strengthened

    Leaving a role does not, by itself, settle the shares, the board, the contract, or access.

  10. 10.What would a ninety-day trial teach you that a title would not?

    Pass 2 · strengthened

    Test the work together. Do not force a person to fit a story about the right kind of founder.

  11. 11.What changes when a reset or repurchase asks a departing founder to surrender already-vested rights?

    Pass 2 · new

    A recommendation to give equity back is not a power to take it. Read the grant.

    A request to hand back vested shares

Sources

  • ResearchDecember 2012 draft, copyright 2014

    The First Deal: The Division of Founder Equity in New Ventures · Thomas Hellmann and Noam Wasserman, HBS Working Paper 14-085

    A working-paper survey of how founding teams split the first equity. In that sample, teams who settled early, negotiated quickly, or split equally had lower performance on employment growth and venture capital, and combining the three lined up with the lowest performance. It is a signal to record the reasons, not a rule that equal splits fail.

  • Community4 November 2025

    A postmortem on our $2.5 million database gateway · Jacek Migdał, Quesma

    A founder’s account of raising $2.5 million, staying in pilots, splitting with a cofounder, and selling the technology. He argues for a concrete customer action, not only verbal interest. His account is not a base rate.

  • PractitionerChecked 14 October 2026

    Co-founder equity mistakes to avoid · Y Combinator, Michael Seibel

    The page says the advice is for early, pre-product-market-fit, venture-funded technology startups, and not for other businesses or later-stage companies. It recommends four-year vesting and a one-year cliff for all founders. If a cofounder leaves or is fired before the cliff, still pre-product-market fit, Seibel says he has seen a token amount, from five percent down to two percent. After the cliff but still pre-product-market fit, he recommends they retain no more than five percent, which often means giving some equity back. That is his recommendation for that situation, not a law and not a general duty to surrender vested rights. The page said “over 1 year ago”; no precise date was shown.

  • PractitionerLast reviewed 20 April 2022

    Single-trigger and double-trigger acceleration · Cooley GO

    US startup and venture practice writing. The page says the terms may be understood differently in other contexts, including public companies. Single-trigger acceleration is vesting that speeds up on one event, often a sale, and sometimes an involuntary termination. It says this is not the norm even for founders and key executives. Double-trigger acceleration needs two events. Rights depend on the grant and on local law. The page does not create a power to take shares that have already vested.

  • PractitionerChecked 14 October 2026

    Model Rule 1.13, comment: organisation as client · American Bar Association

    The comment says the organisational client is a legal entity and cannot act except through officers, directors, employees, shareholders, and other constituents. It is a US model rule, not UAE law. A direct request was blocked; a second fetch returned the comment. A company lawyer is not automatically the founder’s lawyer.