A great founding engineer may not be the right person to be CTO of a larger team. Recognizing this misfit can lead to a mutual, amicable departure where the exiting co-founder retains their fully vested equity, preserving the relationship and acknowledging their early contribution.

The General Partner (GP) agreement, which governs the firm's internal operations, must be finalized before launching the fund. Delaying it until after the capital is raised gives the founding partners immense leverage to impose unfavorable terms on the rest of the team.

Don't default to a 50/50 split on day one. Instead, agree to formally discuss equity only after reaching a predefined milestone, like $10,000 in revenue. This allows you to base the split on demonstrated contribution and commitment, avoiding the resentment from premature, misaligned agreements.

Don't give away half your company to a "business person" who handles administrative tasks. A non-technical co-founder must possess and execute on the most valuable skills in a SaaS business: sales and marketing. Otherwise, they don't deserve co-founder level equity.

To predict the future health of a partnership, intentionally have difficult conversations before any investment is made. If you can't productively disagree or discuss serious problems before you're formally linked, it's highly unlikely you'll be able to do so when the stakes are higher post-investment.

Don't call someone joining your two-year-old, revenue-generating startup a "co-founder." They are a business partner joining a de-risked asset. Their equity stake should be far from 50/50, reflecting the significant value and progress you've already built, such as achieving initial product-market fit and revenue.

The founder's partnership allowed him to build a company without shouldering the initial financial risk. This "halfsies on risk" structure meant he never had true control or ownership, ultimately capping his upside and leaving him with nothing. To get the full reward, you must take the full risk.

A 50/50 equity split should not be the default. The conversation must focus on what unique, "unfair advantages" each founder brings to the table. This could be a significant pre-built audience, a deep professional network, or personal capital. The idea itself is rarely worth any equity.

The desire to avoid awkward conversations with business partners, especially friends, leads to vague agreements. This inevitably results in costly and lengthy lawsuits later when stakes are high. Front-load the discomfort of detailed contracts to save millions and years of your life.