You guys. Cap table allocation is so important.

See, when you're building a company, equity in the business is a highly valuable asset. In the early days, you don't have much (or any) revenue, probably don't have a big audience, and may not even have a fully built-out product yet.

Equity is the one thing you can offer to potential investors and employees.

(Friendly reminder that equity = ownership in the company. So if I have 25% of the equity in your business, I own 25% of your company.)

It's super important that you don't give away too much equity in the business, especially in the early days.

Partly because any equity you give away means that you (the founder) will have less ownership over your own business. Equity will translate to dollars when you IPO or get acquired, so you want to maintain enough equity to stay motivated to keep working on the business.

But prospective investors also care deeply about how many people are on your cap table. If you give a bunch of equity to someone who isn't working on the business full time, that's a bad look. It means there will be less room on your cap table for more strategic partners.

It's best to save that equity and allocate it to people who can meaningfully help push the business forward -- like investors (through capital and strategic help), key employees, etc.

Now, back to the question. If you have a co-founder who is not working full-time on the business, it doesn't make sense to give this person a ton of equity in the business because they aren't 100% focused on the success and growth of the company.

We view part-time co-founders as akin to an active advisor. Therefore, we recommend allocating equity in the 2-15% range.

• 15% would be incredibly generous
• Super active, hands-on advisors are typically granted < 5%
• Non-active advisors are typically granted < 1%
• Former co-founders who have contributed about 1-2 years typically end up with ~10-15% equity since they didn’t vest their full potential.