How much equity is going to waste?
Dead equity is ownership held by people who stopped contributing. Calculate what it's actually costing your startup.
1 Your company
2 Each person's equity and contribution
Total dead equity
0%
Dollar cost at exit
$0
Active equity
0%
Effective dilution
0%
to active founders
Equity breakdown
How each person's equity compares to their actual contribution.
| Person | Equity % | Contribution % | Gap | Value at exit | Fair value | Status |
|---|
Equity vs. contribution
What this means
Dynamic equity prevents dead equity
With contribution-based equity, ownership adjusts automatically when someone stops contributing. No awkward conversations, no dead weight.
What is dead equity and why does it matter?
Dead equity is one of the most common and least discussed problems in startups. Here's what every founder should know.
How dead equity happens
A co-founder joins early and gets a meaningful equity stake. Months later, they leave, reduce their hours, or stop contributing. Without vesting or contribution-based equity, they keep their full stake while contributing nothing.
Why it kills startups
Active founders get demoralized working for someone else's equity. Investors see it as a red flag. And the cap table becomes a mess that's hard to fix later. Harvard research shows co-founder conflict is the #1 startup killer.
How to prevent it
Vesting schedules protect against sudden departures. Dynamic equity goes further by adjusting ownership based on ongoing contributions. Both approaches are better than a fixed split with no protection. Use our equity calculator to model alternatives.
How to fix it
If dead equity already exists, options include equity buybacks, restructuring the split, or converting to dynamic equity. The hardest part is always the conversation, not the mechanics. Our equity review matrix can help structure that discussion.
Signs your startup has a dead equity problem
Dead equity rarely announces itself. It builds gradually until one day the resentment is obvious. Here are the warning signs.
One person is working nights and weekends while another checks in once a week
The most common pattern. One co-founder goes full-time while the other keeps a day job or quietly reduces their hours. The split stays the same. See our guide on what happens when a co-founder stops contributing.
Someone left but their equity stayed
Without vesting, a co-founder who leaves after three months can walk away with the same equity as someone who stays for five years. This is the textbook dead equity scenario.
You avoid bringing it up because the conversation feels impossible
If you're reading this page, you probably already know something is wrong. The longer you wait, the harder the conversation gets. Our equity review matrix can help structure the discussion.
An investor asked about your cap table and you felt uncomfortable
Investors run the numbers. If 40% of your equity belongs to people who aren't building the company, that's a problem they'll flag immediately. Read about what investors look for in cap tables.
Dead equity by the numbers
of startups fail due to co-founder conflict, with equity disputes among the top triggers (Harvard Business School)
of founding teams split equity within the first month, before anyone knows who'll contribute most (Noam Wasserman, The Founder's Dilemmas)
of co-founders choose equal splits, the structure most likely to create dead equity when contribution levels diverge
higher failure rate for teams that don't adjust equity after a co-founder's role changes (Wasserman research on founder dynamics)