How to divide shares among startup founders

At the start, it seems logical: a group of friends comes together, an idea is born, and why not split the company equally? Equal shares on paper look simple and fair. But life brings adjustments. One person leaves, another loses motivation, and the third ends up carrying the project alone. What should you do in such cases? What is fair, and what is a strategic mistake?

Mistakes in unequal or too early share distribution

Many entrepreneurs try to justify unequal share distribution with the following arguments: "It was my idea," "I started three months earlier," "My co-founder received a salary while I didn't," "I am older and more experienced," "I already attracted the first investments."

But all these arguments lose significance in the long term. Building a truly successful company takes some time. A difference of a few months at the start does not justify a huge gap in shares years later. Moreover, equality stimulates. The higher the share, the higher the motivation. And without team motivation, a startup cannot survive. A startup is not an idea, but execution. The product is built not only by the person who came up with it, but by those who work on it daily.

Why it is important to sign a vesting agreement

In reality, circumstances for co-founders may change. Someone moves away, someone burns out, someone switches to employment. So how should one fairly approach the issue of share ownership?

The solution is a vesting agreement.

What is vesting

Vesting is a mechanism for gradually acquiring a share in the company. For example, a 25% share may be assigned to a founder, but they will receive it fully only after four years. At the same time, after one year, they receive the first portion — say, 25% of their share, then quarterly or monthly — another portion, until they accumulate all 100%.

If the founder leaves early or stops fulfilling their duties — they receive only the part they have already "earned." The remainder returns to the company.

How this works in Kazakhstan

Kazakhstani legislation does not currently provide for vesting directly, but does not prohibit its use by agreement. Such conditions can be specified in the founding agreement or a separate agreement between participants. 

The main thing is to clearly define the responsibilities of each co-founder, establish that the acquisition of shares occurs in stages, and specify a dispute resolution mechanism.

Example

The company has four co-founders. Each potentially receives 25%, but according to the vesting agreement, they must work for four years to receive their share fully. One of them left after a year and a half — they receive only 37.5% of their share, i.e., ~9.4%. The remaining 15.6% is redistributed among active participants or reserved for new partners.

Conclusion

If you plan to build a company for the long term, start with trust and equality. Split shares equally or almost equally. But be sure to protect yourself and others with a vesting agreement. This is a modern, fair, and flexible tool that helps take into account each person's contribution not only in the past but also in the future.

If you are not ready to share a share with a person, perhaps you have chosen the wrong co-founder.