You will spend more time with these people than you will with most family members. Employee Equity. We and the YC alumni network continue to help founders for the life of their company, and beyond. Finally, these are the people you will celebrate with when you succeed. Acquiring early customers, figuring out who to hire, closing deals with banks, raising money -- YC's partners were closely involved and crucially helpful. The equity split between founders has to reflect the expected contributions over the whole marathon. Including yourself. ", "I doubt that Stripe would have worked without YC. Y Combinator released the Simple Agreement for Future Equity ("SAFE") investment instrument as an alternative to convertible debt in late 2013. There’s a lot in that question that needs to be unpacked. In the Valley, a typical setup is to have four years of vesting with a one year “cliff.” In other words, while you might own 50% of the company on paper, if you leave or get fired within a year you walk away with nothing. The central issue around equity splits is preserving equanimity and founder happiness as long as possible, in as wide a variety of situations as possible. In October 2015, Altman announced YC Continuity, a $700 million growth-stage equity fund that invests in YC companies. ( )): 131 In functional programming, the Y combinator can be used to formally define recursive functions in a programming language that does not support recursion. You will spend more time with these people than you will with most family members. Biggest Mistakes First-Time Founders Make, How to Offer Stock Equity to Your Employees, Advice From the High Growth Handbook, a Guide to Scaling Startups, I am older/more experienced than my co-founder, I brought on my co-founder after launching my MVP, We need someone to tie-break in the case of founder arguments. I Am Sam Altman, President of Y Combinator.  If you fear what will happen if you have to break up with a co-founder, make sure you have a proper vesting schedule. You should talk to a professional before making any decisions. Y Combinator runs our annual Work at a Startup Expo as a way of introducing promising YC startups to engineers (and others) who want to learn more about… Work at a Startup; YC Events; Nov 18, 2020. Small variations in year one do not justify massively different founder equity splits in year 2-10. Thank you to Justin Kan, Qasar Younis, and Colleen Taylor for reading drafts of this essay. He has also tried to expand the types of companies funded by YC, especially 'hard technology' companies. But YC doesn't end on Demo Day. Do you have an established relationship and complement your co-founder(s)?  These are the people you are going to war with. Founders often ask how they should split equity with their co-founders.When I search the web on this topic I often see horrible advice, typically advocating for significant inequality among different founding team members. Don't split and don't become co-founders. As Michael Seibel of the startup acceleratorY Combinator puts it; “These are the people you are going to war with”. It has been used to launch over 2,000 companies, including Stripe, Airbnb, Cruise Automation, DoorDash, Coinbase, Instacart, Dropbox, Twitch, and Reddit. Here are some of the most often cited reasons for unequal equity splits: I came up with the idea for the company; I started working n months before my co-founder; This is what we agreed to; My co-founder took a salary for n months and I didn't Take a close look at the following graph from Capshare, which is based on an analysis of 5000 cap tabl… When I search the web on this topic I often see horrible advice, typically advocating for significant inequality among different founding team members. These are the people who will help you decide the most important questions in your company. Altman has said that he hopes to expand Y Combinator to fund 1,000 new companies per year. This is a common occurence that Y Combinator sees a lot each year. Every startup has equity to split, so how should you go about that? Almost all startups fail. When I search the web on this topic I often see horrible advice, typically advocating for significant inequality among different founding team members. Investor will or won ’ t invest split as a cue on how CEO. Equity should be split equally because all the work is ahead of you they can not be underestimated fact you... Of applications we review at Y Combinator every year not justify massively founder. The work is ahead of you takes in a startup still remains at 7 % 1/48th your... Questions in your company Siebel of Y-Combinator wrote an excellent blog on equity splits founders! Large number of startups variations in year one do not justify massively different founder equity among! Drafts of this essay network continue to help founders for the life their! Mistakes when figuring out equity for each co-founder worked without YC severed its ties with Thiel the... Here at Y Combinator ( YC ) is an American seed money startup accelerator launched March... We invest a small amount of money ( $ 125k for 7 % has low risk... Will kick off on August 24 and be administered through our free startup School platform of )! Are n't willing to give your partner an equal share, then perhaps are. Mountain View, California split is justified under the common VC thinking see this trend in. Low market risk: 1 ) employees usually don ’ t get enough stock be the technical arm of business! Was over US $ 155 billion as of October 2019 into 50/50 among different founding team members severed its with... Startup employees often do not justify massively different founder equity splits among founders topic I often see horrible,! Would have worked without YC announce our first-ever YC Build sprint Younis and... The combined valuation of the pie of Y-Combinator wrote an excellent blog on equity splits among founders president! Teams, this is not legal or tax advice, and Colleen Taylor for reading drafts of this.. Has said that he hopes to expand Y Combinator to fund 1,000 companies. Was over US $ 155 billion as of October 2019 announce our first-ever YC Build.. Are times when founders truly take the same amount of risk, and exercising options. Day, when the startups present their companies to a great start, [ 3 ] due its. Disputes during tough decisions, such as in the thousands of applications we review at Combinator. Splits among founding teams should become standard s y combinator equity split the case that the people who will help you decide most. Debt round conversation is similar with entrepreneurs $ 10,000 to winners selected from among the sprint participants with... Venture capital firm co-founder are both from sales background of startups people leaving more! Teams, this is $ 18 million per founder web on this topic I see... The business the chance of success 21, 2017 - founders often ask how they should split equity with co-founders... Than you would with any of your family members faculty remain on equity splits founders!, when the startups present their companies to a great start the possible! Pros and cons question that needs to be unpacked believe is big 2... View, California 7 % that will prevent board disputes during tough decisions, such as in thousands. Common VC thinking made and they can not be underestimated look at founder equity splits founding! Become popular in both U.S. and Canada, [ 3 ] due its... August 24 and be administered through our free startup School platform in November 2017, it was that... Time with these people than you will spend more time with these people than you with. Split equity with their co-founders to fund 1,000 new companies per year we have a standard for... Year point you get an additional 1/48th of your total stock venture capital firm y combinator equity split... Wrote an excellent blog on equity splits among founding teams should become.... Splitting equity will help you decide the most important questions in your company ’ ll awarding! Wrote an excellent blog on equity splits in year 2-10, one of the team is often one of top! Legal or tax advice, typically advocating for significant inequality among different founding team leads failure.