How much more equity should a founder who has to quit his/her day job get compared to a founder who doesn't but still does an equal amount of work?

Equal work for equal pay. 40 hours in, and no draws out, should result in equal shares, all other things being equal.  Draws change that, and so does whatever else was put in (say, one founder has a patent he assigns to the start up.. that has some value). Getting this in writing early seems key to minimizing later resentment. Thanks for the A2A.

I agree with Justin, its not about how much risk you "assume" is associated with a start-up you are working at, but how much you actually contribute to the company. so they should get equal equity. On a separate note, the second founder seems more efficient if he/she can squeeze in 2 full time jobs and still contribute equally to the person who is only working for the start-up. if anything, he/she needs more appreciation.

There are a few aspects to the question which need addressing, so let me break it down. 1/ Equal equity for equal hours Some favour equal equity for similar levels of commitment, in fact, this is an approach I prefer, but not because it is right, but because it minimises the possibility of breeding future resentment should the startup become successful, and a certain group feels hard done by for what they consider a similar amount of effort. The alternative, and more often favoured approach is that equity splits take in many more factors including:  - Amount of effort measured in hours (as above)  - Individuals value to the business  - Level of investment  - How much you are taking out 2/ Your time is your own What you do in your own time is up to you - the business does not own you. Providing you are not doing anything that is a conflict of interest, or could bring the business into disrepute, then it is nobody's business what you spend your time doing. I would be concerned about someone's ability though to hold down a fulltime job, and to give a further 40 hours a week to your business. I do not believe this is sustainable, and it will have to be affecting the quality of work. 3/ What is your cost to the business? In a bootstrapped, or unfunded startup, it is important that the founders only take what they need to live in terms of cash, until such point they can secure funding, or that the business can afford to pay them more. If you need to take money out to live, but the working partner does not, then you may wish to take this into account. Ignoring other factors, the non-burdening partner may believe they should have more equity than the partner who is draining the bank account. I would add, that this is the only period in a company's history whereby someone's external circumstances should have any impact on their cost to the business. 4/ Level of risk You are clearly taking a higher risk than the founder who has not quit their job, but does this mean you should have a potentially bigger reward? Unfortunately, no. The amount of equity any founder receives should not be dictated by their personal circumstances. If this were the case, wealthy millionare investors should receive reduced equity because their personal risk is extremely low, compared to the founder who is willing to use his life savings to bootstrap. 5/ Commitment Is the working partner really committed to the cause? It sounds like they may be hedging their bets, which in itself is not wrong. However I would be concerned that they are more likely to quit in the future than you, and for this reason I'd ensure you have proper equity vesting in place. There is no need to discriminate, you can both have the same vesting schedules, even if the level of equity is different.

I don't think that there is any "should" here but rather that which both parties can agree upon. That said, if you can build up your case for a larger than 50% share by appeal to fairness then all well and good. As Justin points out,  according to the usual rules of capital markets, investors are rewarded equally, irrespective of their wealth. I think that contribution is the way to go, however, the greater risk that you have taken may be an indication of a greater contribution. 1) Is there reason that the other founder can continue to do their day job because they are more efficient or because they are less tired, less mentally involved, with the start up than you. Would the other founder, or anyone, been able to do what you do without giving up their day job, and taking that risk. 2) If so -- in other words if you are contributing more -- then the lost income that you were required to forsake to make your 'greater contribution' might be fairly reimbursed by equity. I guess that the other guy will be hard to persuade, saying things like no, I am just more efficient, that it was he that encouraged you to take the risk, that it was his risk too since he would have felt obliged to bail you out had the startup failed, and that he is the ideas man that provided the all important spark of initiative while you are a self confessed "grunt." Good luck persuading the other founder, but, if it were me I might be happy with 50%. Keep grunting and make that 50% worth more and more. Demand that now that the business is successful your partner gives up his day job and puts his all into the startup business.

Equal split. If they do the same work for the start up then they get the same compensation. What they do outside of those 40 hours has nothing to do with anything.

I do not think equity of founders is measured by risk but by contribution and impact. Just as employees are also paid differently, equity grants often reflect the value and impact of shareholders. That is also true for investors. Do not set your startup up for issues if both these members will be there. As you state the time is much the same, how about the effort and the effect?

Answering such questions never easy, Here is my 2C Basic rules: 1. Never 50 - 50% : one should have 51 - 49 % ; that means whoever is having 51 is going take final shot on a issue 2. Not hours of working but contribution is to be discussed 3. (as earlier pointed out) any payouts ; payout will reduce the share; 4. what is long term plan? that is when this person (who is not joined) will join the startup? 5. Founder who is not joined will get his share only when he/she joins the startup Coming to Q: If all others are equal that is 1. Contribution 2. Investment  3. hours spent  4. expertise in that area 4. payouts  5. definite commitment of joining date I will put : 60  (full time in start-up) : 40 (part-timer)

I disagree completely with some answers here... How important for the business is it to have a fully dedicated worker? And most importantly... Would the business prosper with both founders doing a part time job? If the answer is NO then obviously the founder taking the higher risk to make it happen should have a bigger part of the pie. I say this without a moment of doubt. (Having said that the other founder should also have the right to leave his job for a higher percentage) If the business really doesn't need a full time worker then I agree with the 50/50.

As idealistic as it is, Ethics, risk and fairness have no real relationship in what happens inside a startup. It's all about negotiation, as much as the market can bear. That said the greater the imbalance the more the likelihood of things falling apart. It's equally fair/unfair to be overworking 2 jobs and having cash, vs not working at all and no cash. If you are the one giving up the day job, I'd suggest you reevaluate if that's really a good idea, startups carry incredible risk on average, and as much as being "all in" can help get you to the finish line,  if you can't do it without killing yourself, then perhaps it's not the best business to be in.