Structuring

Why equal works: When co-founders start at the same time and commit the same opportunity cost, unequal splits signal distrust before the company has done anything.

When unequal is appropriate: A founder who has been working for 12+ months, has traction, and brings on a co-founder later. The key variable is time already invested, not perceived future contribution.

The Title Trick

Titles are free. Equity is permanent. If a contributor wants recognition but hasn't earned a co-founder equity stake, grant the "co-founder" title freely. It costs nothing, satisfies psychological needs, and preserves equity for when it matters.

Vesting ensures equity reflects actual contribution over time, not just promises made at formation.

Why Longer Founder Cliffs Matter

Standard 1-year cliff: Co-founder leaves at 14 months, walks away with ~25% of the company. With a 2-year cliff: same departure results in zero equity retained. The longer vest also protects against a co-founder who stays just long enough to fully vest, then leaves with 50% of a company they stopped being passionate about years earlier.

Early Employees Are Not Regular Employees

The first people who join your startup in the first 6 months are taking founder-adjacent risk: no brand recognition, high failure probability, below-market compensation. Treat them accordingly.

Every founding team needs these four documents before writing a line of code or accepting a dollar. Battle-tested templates exist — don't draft from scratch.

Additional Documents (When Needed)

Top-tier startup law firms offer free startup formation kits with deferred billing until your first funding round.

A Simple Agreement for Future Equity: the investor gives you money now; they get equity later when a priced round sets an actual valuation.

When SAFEs Work

• Bridge financing immediately before a priced round you're confident is coming
• Very early stage when setting a valuation is genuinely impossible

When SAFEs Create Problems

The rule: A SAFE should convert within 12–18 months. If you're not confident a priced round is coming in that window, question whether a SAFE is the right instrument.

Your cap table is every person or entity that owns equity. It starts simple and gets complex fast.

A clean cap table accelerates fundraising. Investors review your cap table before writing checks. Messy structures — unclear vesting status, unresolved SAFEs, undocumented grants — can kill deals entirely.

Best Practices

1. Use professional cap table software (Carta or equivalent) from day one. Not a spreadsheet.
2. Every equity grant = a cap table entry. Each vested employee requires tracking and documentation during future raises.
3. Document everything at the time it happens. Reconstructing verbal equity promises 2 years later, during a funding round, is a nightmare.

International Complications

Some countries require employees to purchase options at fair market value upon departure — this can mean $20K–$100K+ out of pocket. Tax treatment of equity differs dramatically by jurisdiction. If you have non-US founders or employees, get jurisdiction-specific advice early.

Top-tier firms offer more than legal work:

The Wrong Investors Are Worse Than No Investors

Due diligence goes both ways. Verify reputation. Check founder references — not the ones they suggest, but ones you find independently. Understand their timeline. Assess their behavior under stress.

"If this company is worth $100M in 5 years, will this investor be celebrating with me or suing me?"