Founder’s Equity: How Much Should You Own?
Founder’s equity determines how much ownership the founding team retains when starting a business. Striking the right balance ensures control while leaving room for growth and future investment.
When starting a business, one of the most important decisions is how to divide equity among the founders. Founder’s equity refers to the ownership stake distributed at the formation of a startup, and it has long-term implications for control, motivation, and fundraising.
Key Factors That Determine Founder’s Equity
1. Contribution and Role — Equity is often allocated based on the value each founder brings, whether it’s the original idea, capital investment, technical skills, or execution capability.
2. Number of Co-Founders — The more co-founders involved, the smaller each individual stake will be. However, multiple founders can also strengthen the leadership team and improve execution.
3. Future Investments — Retaining enough equity early on ensures that founders still hold a meaningful stake after several rounds of funding and dilution.
4. Vesting Schedules — To prevent issues when a founder leaves early, equity is often vested over a period of time, keeping commitment aligned with ownership.
Examples from Indian Startups
* Nikhil and Nithin Kamath of Zerodha own nearly 100% of the company, split roughly 60%-40% between them.
* Ritesh Agarwal’s stake in OYO stands at about 32%.
* Peyush Bansal of Lenskart owns around 8.21%, as reported publicly.
The Takeaway
Founder’s equity is a balancing act. Too little ownership, and you risk losing control of your vision; too much, and you may struggle to attract investors and build the right team. The goal is to retain enough equity for influence and motivation while leaving room for future growth and funding.
