I had a not so positive experience where my potential co-founder wanted a similar amount of equity, but didn't care that much about control. We ended up going separate ways due to major differences of opinion and I am sure that if we had continued down the same path he would have used his share to block any important decisions, whereas if the deal was only about percentage and not votes from the start, my position would be much more protected. I have been working and investing on my startup for the past 2,5 years, and would hate to see my company destroyed due to founder fighting. Thanks!!!

A couple of things:
1) Picking a co-founder should be treated as seriously as picking your wife or husband. So the best way to avoid conflicts is to really date as long as possible.
2) 50/50 splits almost *never* work between co-founders. Unless you are already very close friends with a lot of arguments and challenging scenarios behind you, I think co-founder scenarios that are most healthy are where there is a decisive difference in equity (in excess of 60% to the one Founder).
3) 4-year vesting & shareholder agreements ensure that if a Founder leaves or is fired, the remaining unvested shares are cancelled.

The idea of a class of shares specific only to you is a *really* bad idea. It makes you appear unfavorably to others (especially potential investors) and absent massive traction, a deal-breaker for anyone but incredibly unsophisticated investors.

I would also be remiss if I didn't answer your question by asking you to reflect deeply on your own involvement as a leader and whether the differences of opinion could and will be handled differently with other employees and co-founders. The best founders I know encourage differing points of view and are willing to change their own opinions when presented with stronger options than their own.

Obviously, I don't know you so or the individual(s) you were involved in but ultimately, every move a startup makes is the Founder's responsibility.

Happy to talk in a call if you have any questions.

Answered 8 years ago

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