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Forming a new software startup, how do I allocate ownership fairly?

Here is how our startup is dividing equity among Founders and Investors: 2 Founders (43% and 25%), Investors (200K investment, 1M valuation, 1% for every 10K up to 20%), Advisors (5 at 1.5%), and Developer 4%. Is this reasonable?

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marked as duplicate by JonnyBoats, Michael Pryor, Nick Stevens, rbwhitaker, Zuly Gonzalez♦ Feb 27 '12 at 15:46

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Is your developer working with you full-time? If so, I'd look at getting the dev a bit more equity, especially if you see them doing more than just prototype work. If this is a tech startup (i.e. web-based system, mobile system, etc) then I would at least double the amount of equity for the dev. If the developer is NOT full time (i.e. has a "day job") then I would recommend exchanging some of the equity for cash. The last thing you want is dead equity.

Best of luck!

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Yes, he's part-time and has a fulltime job. We had considered a monthly stipend and 4% equity, but I'm not sure he will come aboard later. – Ray Feb 23 '12 at 1:47
The issue with giving him equity is that he may not be around as you guys grow. Unless he's committed to seeing this through you'll have 4% of your company wrapped up with someone that has moved on and this may be unfavorable when/if you go to the table with investors. It's not the end of the world. If that is the case, you could buy him out when it gets to that point. – mdinstuhl Feb 23 '12 at 16:29

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