how should we divide shares for our startup?

[Total Shares] / [Number of Founders]

Dividing equity is different and unique for each startup. There are many factors to consider. Dharmesh's Post on onstartups was extremely helpful for me. Ill try to summarize some of the key takeaways here.

It is important to distinguish who came up with the actual idea in the first place. Did any of the founders put in any work before meeting or creating the group, or was it an entirely joint venture? Did you all invest an equal amount of money when beginning the venture? If investment was uneven, it is very likely that equity should reflect that. Do you all invest an equal amount of effort and time when working on the project?

It's a difficult concept to address, especially among friends, but it is very important to discuss it early on so problems do not arise later. Remember that if you ever need to take on funding, shares will be diluted, etc etc. Theres plenty of resources online where you can get advice from experienced startup founders. I would recommend checking VentureHacks or Start Up Company Lawyer for some more relevant information.

This is been an issue since the first 3 cavemen split up the first mastodoo's meat after the hunt.

1. Nearly always there is a senior partner, and junior partner(s). The senior partner is the one who had the idea, but more importantly they have the determination to see this through. The senior partner, IMO, should get more/controlling interest.

2. Vest over time - pay for performance. Spell out what each partner is putting in: X hrs per week, existing codebase, strategic relationship, $$$. If that consideration does not happen, they don't get the shares.

3. Check out using FairSoftware.net as a "pre business formation agreement" It will hold up, and you can use it for free.

4. This is an issue you will ultimately want to get an attorney for. Matter of fact, I'd say a leading cause of startup sudden death is did it themselves partnership agreements. If you're partners are committed, they will agree this is a business expense that needs to be spent. That said, there're a lot of options out there now for securing startup affordable legal services.

If you're planning to approach VCs early, note that some VCs don't like an even split between founders. In these cases they want to know that one person has final say and can make the executive decision when tough situations arise. As Bob mentioned, there's usually a senior partner and the others are junior partners.

This venturehacks scoop might answer some of your specific concerns re: founder contributions http://venturehacks.com/articles/co-founder-interview

And if you want cold, hard empirical evidence of startup splits, check out Noam Wasserman's studies: http://founderresearch.blogspot.com/2006/11/equity-split-results-part-1-when-do.html