Founder equity · Business

What would you prefer the most, equity splitting or profit sharing?

Rostyslav Gurevych Software Tester

October 9th, 2016

The founder and CEO believes that your position as a CTO will further enhance the business of the company. What would be your preferred choice, equity splitting or profit sharing?

Rod Abbamonte Co Founder at STARTREK / @startupHunter / @startupWay / @CoFounderFound / @GOcapital / @startupClub / @lastminute

October 9th, 2016

Equity splitting without profit sharing could be foolish. Profit Sharing without equity splitting could be naive.

Christoph Ranaweera validate early, pivot and kill fast instead of feeding a zombie

October 9th, 2016

I personally consider profit sharing very tricky. Well, it depends how exactly it is defined.

When it comes to sharing the annual profit of the company this might lead to conflicts how much money to give out as profit and how much to reinvest in the company (platform, business development and so on).
If you have profit sharing you are more short term oriented than having an equity split.

So my recommendation is equity split.