Guide
How to Split Startup Equity Between Co-Founders (Australia)
The most consequential decision of your first month — and how to get it right.
Splitting founder equity is the single most consequential decision made in the first month of a startup — and the one most founders spend the least time on. Get it wrong and you either resent your co-founder for years, or your Series A investor asks you to reshuffle the cap table before writing the cheque.
The Two Wrong Answers
"Let's just do 50/50." This is the default for co-founders who don't want an awkward conversation. It works if you have real deadlock provisions in the founders' agreement. It fails when one founder is doing 80% of the work and the other holds veto rights over every decision.
"We'll figure it out later." Later means after you have raised money, when changing the split triggers CGT, needs investor consent, and requires the founder losing equity to voluntarily give it up.
A Framework That Works
Score each founder on five dimensions. The relative totals become your rough split.
| Factor | Weight | What it recognises |
|---|---|---|
| Idea / opportunity | 5–10% | Who conceived it — a small premium, not a controlling one |
| Commitment (full-time vs part-time) | 30–40% | Full-time founders carry the real risk |
| Role and responsibility | 25–30% | CEO takes fundraising, hiring, legal exposure |
| Capital contributed | 10–15% | Cash in at day one, calculated at valuation |
| Pre-existing IP or traction | 10–15% | Code, brand, customer list, patents brought in |
Common Australian Splits
- Solo founder + technical co-founder (later): 70/30 to 80/20 in favour of the original founder, adjusted for how long the tech co-founder waited
- Two full-time co-founders, CEO + CTO: 55/45 or 60/40 in favour of the CEO
- Three full-time co-founders: 40/30/30, or 45/30/25 if roles differ materially
- Two co-founders + a part-time third: 45/45/10, with the part-timer's equity fully subject to vesting
Vesting Is the Safety Net
Whatever split you land on, all founder equity must vest. Standard is four years with a one-year cliff. A co-founder who walks in month six with 40% of the company on a handshake is a company-ending event. With vesting, they walk with zero. See our founder vesting guide.
The Dynamic Equity Split (Slicing Pie)
An alternative popular in bootstrapped early-stage teams: equity is not fixed at incorporation but tracked as contributions accumulate. Time, cash and IP are all logged as "slices" and equity re-calculated when the company incorporates or raises. It works well for very early pre-product teams; less well once you have external stakeholders.
Investor and Diligence Reality
By the time you raise a Series A, investors want to see:
- Every founder on a four-year vesting schedule
- No single founder with less than 10% (or they are not really a founder)
- The CEO with enough equity post-dilution to still care in five years (typically 20%+ pre-Series A)
- Clean IP assignment from every founder to the company
Frequently Asked Questions
Is a 50/50 co-founder split a bad idea?
Not automatically — but it needs strong deadlock provisions in the shareholders' agreement. A pure 50/50 with no tie-breaker mechanism is where most co-founder disputes end up unresolvable.
Should the CEO always get more equity?
Usually yes — the CEO carries fundraising, hiring and legal risk. A common split is CEO 55–60%, CTO 40–45% at incorporation, adjusted for who put in the idea, capital or existing IP.
What if a co-founder joins six months later?
They should get materially less than day-one founders and their equity should vest from their start date, not the company's. A common late-joiner grant is 5–15% depending on role and stage.
Can we change the equity split later?
Yes, but it triggers CGT and requires unanimous shareholder consent. It is 20x easier to get it right at incorporation than to redo it after a raise.
Next Step
See our shareholders' agreement service to formalise the split, or book a 15-minute discovery call to talk through your cap table.
Talk to us
Ready to talk it through?
Send us a note about what you're working on. We'll respond within one business day and, if we're a fit, book a free 15-minute consultation with a senior lawyer.