Most of the answers you will get to this question will be based on some form of guessing about future valuations and doling out equity in fixed chunks. Please ignore these answers. They are wrong. These answers will base equity on what people say
their going to do, not
what they actually
The right answer is to use the Slicing Pie model
. Slicing Pie is a simple formula that bases the equity split on the fair market value of each person's contributions of time, money, ideas, relationships, facilities, supplies, etc. It is the only way to get the split right. ALL other models lead to conflict.
Think of your startup as a game of Blackjack. You and a partner want to play together and split the winnings 50/50. You each bet $1 on the same hand.
The dealer deals two Aces. Hmmm... you didn't expect this, but you want to take advantage of the hand and split the Aces and double down. Your partner is broke so you bet $2 more.
Does 50/50 still sound fair?
Of course not, you deserve 75% and he deserves 25%. No matter what you agreed to, it's logical that your share of the winnings should reflect your share of the bets.
Startups are the same thing.
When you contribute, you are betting the fair market value of your contribution.
You have already bet a lot. Your freelancers have not, but they have bet a little. They have bet whatever part of their compensation you didn't pay them.
Just keep track of the bets and apply the Slicing Pie formula. When you raise money or reach breakeven the formula will show you the right split.
I've written a book on the subject and you may have a copy if you contact me.