Don't Split Equity by Gut Feel: Run Five Dimensions
Last lesson was structure; this one is how the ratios come from. Numbers bargained by gut leave both sides feeling shortchanged later. Split contribution into five dimensions, weight each, then negotiate—the fight shifts from “who's more important” to “who owns this dimension.”
These weights are a reference frame, not the answer key. Their job is giving negotiation a shared table.
Overall capability
Who can lead. Core skills, getting things done, efficiency at people and ops. Highest weight—it decides whether the company can actually ship.
Capital contribution
Real money at risk, seed funding for the project. Money matters, but it's not the top item—treating it as the only yardstick is a common way equity talks collapse.
Opportunity cost
What they gave up for this. A high-pay stable job left behind, a window missed. Easiest to overlook, and a hard signal of how serious someone is.
Startup idea source
Who initiated, who defined direction, whose core creative and strategy. Counts, but shouldn't dominate—turning an idea into a product is nearly free now.
Ownership of responsibility
Who carries legal liability, who calls and signs key decisions, who owns the fallout. Another most-skipped item, and the core of entrepreneurial ownership.
Opportunity cost and ownership of responsibility together are about 40%—exactly the two least often put on the table. Counting only money and idea is cutting the heaviest two blocks.
Pick how many cofounders, assign each dimension, and get suggested ratios.
This result is a negotiation start, not the end. If it drifts far from your gut, you and your partners see a dimension very differently—pull that one out and talk it alone.
“Whoever puts money in takes more”
Capital is only 15–20%. Investors take cash risk; full-timers take opportunity cost and responsibility. All by money means the people doing the work get nothing—the team won't survive the first hard stretch.
“My idea—I take the lion's share”
Idea source is 10–15%. After AI flattens build cost, ideas are worth even less. Your real claim to the lion's share is overall capability plus ownership of responsibility—not the first spark.
- Write the five-dimension conclusions into the shareholders' agreement—who got each item and why. Future complaints look at the record, not memory.
- When the math fights the 70% control line, keep control first; make up the gap with dividend ratios, titles, options. Voting rights and economic rights can be negotiated separately.
Three of the five dimensions change over time—locking once forever isn't realistic.
- Overall capability and ownership of responsibility depend on who actually carries the next year. Vest over time—safer than granting all at once.
- Capital contribution can track paid-in progress—rights attach when the money is in.
- How to implement: next lesson covers nominee arrangements, options, and exit terms.
Five dimensions: overall capability 30%+, capital 15–20%, opportunity cost ~20%, idea source 10–15%, ownership of responsibility ~20%.
Opportunity cost and responsibility together are ~40%. Easiest to skip—and skipping them cuts the heaviest two blocks.
Capital and idea are both smaller slices. “Money takes more” and “my idea takes the lion's share” both fail.
When scored ratios fight control, keep control. Make up the gap with dividends, titles, options—split voting rights from economic rights.
Note: Five-dimension weights are a practice reference frame, not statute, and not investment advice. Rights and duties among shareholders follow the shareholders' agreement and articles of association; mandatory voting-rights rules are in Company Law of the People's Republic of China (2023 Revision), Article 66. Verified 2026-08-10.