Nobody enjoys the equity conversation, which is exactly why founders put it off. The trouble is that waiting makes it harder. This post covers what to talk about and which terms to understand. It isn't legal or financial advice, so talk to a qualified professional before you agree to anything.
Why have it early
Unspoken assumptions turn into fights. If you assume an equal split and your partner assumes one based on contribution, you'll find out at the worst possible moment. Better to find out while you can still sort it out.
What to talk about
What does each of you contribute now: time, money, ideas, relationships, existing work? What will each of you contribute over the next few years? Who's full-time, and starting when? What happens if someone leaves after six months, or two years? Who has the last word in a disagreement? And how will new hires and investors change ownership?
Terms worth knowing
Vesting means equity is earned over time instead of handed over on day one. A cliff is a minimum period before any of it vests. Dilution is what happens to your percentage when new shares are issued, such as for investors. A founders' agreement is the written document that sets out roles, ownership, and what happens if someone leaves.
Equal or unequal?
Both are common. An equal split signals partnership but may ignore real differences in contribution. An unequal split can reflect different roles or commitment, but it can breed resentment if it isn't discussed openly. There isn't a formula that fits everyone. What matters is that both people understand and agree.
Mistakes to avoid
Agreeing to a split before you've worked together. Skipping vesting. Leaving the deal verbal. Avoiding the topic because it feels awkward.
A sequence that tends to work
Talk through the vision. Run a small shared project (Cofounder Trial Projects). Then discuss roles, commitment, and equity openly. Finally, put it in writing with professional advice.
If you're still looking for someone to have this conversation with, you might meet candidates through communities, events, or Omnitwine, where members are suggested with a briefing and both people approve before messaging. The equity talk comes later, once you know each other well enough to trust it.
Should cofounders always split 50/50? No. It's common, not required.
Do I need a lawyer? For anything involving ownership, yes. Paying for advice costs less than a dispute.