Should co‑founders use a dynamic equity split?
A dynamic equity split can follow the work while co‑founders are still part time. A fixed equity split sets one number when the team is ready to commit and hand it to a lawyer.
Use a dynamic equity split while you're still part time and uncertain. Use a fixed equity split when you're ready to commit.
The conversation is awkward either way. Nobody wants to be the person who brought a spreadsheet to a friendship. If you're looking for a Slicing Pie alternative, compare that well-known dynamic model with a fixed founder equity split, and choose the one that matches the commitment you already have.
Pie Divide is the process of record for founder equity. You agree what counts, score each other privately, see one result, and approve it together. That is a fixed split reached on purpose, with a timestamped record. Pie Divide does not issue shares, and the record is not a founder agreement.
#What is a dynamic equity split?
A dynamic equity split keeps adjusting ownership as contributions are tracked over time.
It can fit at the very start, when the company is still a guess. Two founders keep their day jobs and test an idea on nights and weekends. The hours swing. One week is almost all one person. The next week flips. They may want ownership to follow the work until they know the thing is real.
The tradeoff is the tracking, and the question of when it stops. Someone has to keep a log both people trust. When a lawyer needs a number, the team decides which day the adjusting ends.
#What is a fixed equity split?
A fixed equity split sets the numbers at a point in time. You agree how much each kind of contribution counts, and you approve one result to hand to a lawyer.
A fixed equity split usually pairs those numbers with a founder vesting schedule, so an early exit doesn't keep a full share. Your lawyer writes that timetable.
An equal number is one possible fixed result. It still has to be reached on purpose. About 1 in 3 founding teams split equally, in a study of 1,476 founders across 511 ventures (Hellmann & Wasserman, "The First Deal," Management Science 63(8):2647-2666). Whether an equal founder equity split fits is a separate test, in should co-founders split equity 50/50.
#When does each kind of split fit?
Match the model to the commitment you can already make.
#Dynamic equity split
- When it fits: Very early and uncertain, while people are still part time and want ownership to follow the work
- What it asks of the team: Ongoing tracking, and a decision about when the adjusting stops
- What you hand your lawyer: The figures on the day tracking stops
#Fixed equity split
- When it fits: A team that is ready to commit and wants one number for a lawyer
- What it asks of the team: Agree what counts, score in private, and approve one result. Every phase needs every founder
- What you hand your lawyer: One stored result, a category breakdown, and timestamped approvals. Your lawyer writes the documents from that record.
Three full-time partners opening a landscaping company have equipment to buy and a season of work ahead. Their lawyer needs a number before the first contract. A fixed equity split fits. A disagreement about cash, customers, or daily work belongs in the weights, before anyone is scored.
#What does a fixed equity split need so it stays fair as the company changes?
A fixed equity split is easier to live with when people can see how the number was built. Perceived justice of the split predicted whether team interactions spiraled up or down (Breugst, Patzelt & Rathgeber, JBV 30(1)). A figure nobody can explain is a hard figure to trust later, when the meeting is a blur.
Keep a record you can pull out when memory starts editing the meeting: weights agreed before scoring, private scores, one result with a category breakdown, and timestamped approvals. Pair the amount with a founder vesting schedule so an early exit doesn't keep a full share. Your lawyer writes that timetable. Pie Divide records the amount. If the picture is wrong before you finalize, dispute and run another round. The earlier result is kept. Finalizing is one-way.
The longer guide is how to split equity between co-founders.
#How do you reach a fixed split on purpose?
Pie Divide runs the conversation in one order. Every phase needs every founder. The mechanics are on how it works.
- Agree the weights first. Weights must total 100%, and every founder approves them before anyone is scored. On the free run, the weights are the standard weights, and they stay fixed: Investment 40%, Execution 21%, Core Idea 19%, Technology 5.5%, Culture and Values 4.5%, Growth Planning 4%, Legal 3%, and Human Resources 3%. Custom weights and 12 industry templates come with the $49.99 one-time upgrade per project. No subscription. The details are on pricing. If the standard weights already describe your company, the free run gives you the same split.
- Score in private. Each founder scores themselves and every co-founder. You can't see anyone else's answers, and nobody scores on someone else's behalf. Peer assessment counts more than self-assessment.
- Read one stored result. The result is computed once and stored, with a category breakdown.
- Approve together, or dispute. The split waits for unanimous approval. Approvals are timestamped. Anyone can dispute, give a reason, and run another round. The earlier result is kept, including who approved and who objected. Finalizing is one-way.
Then take the record to your lawyer, who writes the company documents.
#What happens when circumstances change after a fixed equity split?
Sometimes the approved picture stops matching real life. Someone goes back to a job, a founder leaves, or a new person wants in. The finalized result stays the result you approved.
Run a new project with every founder who's in the split. If the change is a late co-founder, that person is in the new project too. How much equity for a late co-founder is the conversation for a late join. Your lawyer papers any change. The old record stays, so the new conversation starts from what you actually agreed.
If you're still part time, a dynamic equity split can follow the work. If you're ready to commit, agree the weights, score in private, and approve one result.
Pie Divide is not a law firm and does not provide legal, tax, or financial advice.
Frequently asked questions
What is a dynamic equity split?
A dynamic equity split keeps adjusting ownership as contributions are tracked over time. It fits a very early, uncertain, part-time team that wants the figures to follow the work. The tradeoff is ongoing tracking, and deciding when that tracking stops.
What is a fixed equity split?
A fixed equity split sets the ownership numbers at a point in time and is usually paired with a founder vesting schedule so an early exit doesn't keep a full share. Agreed weights, private scores, one stored result, and unanimous approval are how Pie Divide reaches a fixed equity split. Pie Divide does not issue shares, and the record is not a founder agreement.
When does a dynamic equity split fit, and when does a fixed equity split fit?
A dynamic equity split fits co-founders who are still part time and want to track contributions as they go. A fixed equity split fits co-founders who are ready to commit and want one clear number for a lawyer.
What does a fixed equity split need so it stays fair as the company changes?
A fixed equity split needs weights agreed before scoring, a category breakdown, and timestamped approvals. It also needs a founder vesting schedule, written by your lawyer, so an early exit doesn't keep a full share. Before finalizing, any co-founder can dispute and run another round. The earlier result is kept.
What happens when circumstances change after a fixed equity split?
When circumstances change after a fixed equity split, the founders run a new project with every founder who's in the split, and their lawyer papers any change. A late co-founder joins that new project. The finalized result on the earlier project stays as approved. Finalizing is one-way.