Dear SaaStr: A Co-Founder is Asking for More Equity Post Fundraising. What Should I Do?

Listen.

It usually means something is wrong. Or at least, off:

  • If you got the equity splits right at first, usually, big issues don’t come up later. This may be a sign you need to fix things here.
  • If your co-founder isn’t willing to take the dilution that comes with raising capital and you are— that could be a sign you are misaligned here on how — and if — to Go Big. This is much harder to fix.  Still, it’s better to know now.

In any event, it’s not the right time to bring the topic up if you guys are communicating well. So I suspect you aren’t. You aren’t aligned and “thinking as one” co-founding entity. And it’s on a super important issue.

So listen. Right now.

Adjusting founder equity ratios later is tough, but sometimes it does make sense.  But when I see the issue come up in stressful times, or at the wrong time, it’s usually a sign of a founder that isn’t 110% committed.  Not always.  But usually.

……

And some good data on founder equity ratios at IPO here:

 

 

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