Many entrepreneurs decide to start their new venture in teams to increase available resources. In doing so, they must choose how to divide the ownership (equity) among the founders. They can opt between an equal split of equity, for example a 50:50 split in a team of two, or an unequal split, for example, of 75:25.
Both equal and unequal splits are frequent in practice. For example, 67% of North American technology startups are opting for an unequal split. This early decision has important consequences for startups’ future performance : in our latest research article published by the European Management Journal, we show that new ventures with an unequal equity split grow faster and are, thus, economically more successful than companies whose founders have chosen an equal split.
