Tool Gate · How it works
How the Co-Founder Equity Health Check gate works
How the Co-Founder Equity Health Check scores a co-founder's equity structure across six dimensions: a dead-equity kill-chain forces DEAD-EQUITY RISK when a founder holds a material stake with no vesting — the unvested-equity trap a healthy-looking cap table hides.
How the gate works
This tool grades a co-founder's equity structure before an unvested stake becomes dead equity. Each control is marked from your own evidence and weighted into a 0–100 score — and then the score is run past a gate that can only make the verdict worse.
The 6 weighted controls
| Signal | Weight |
|---|---|
| Vesting schedule in place | 24 |
| One-year cliff | 14 |
| Size of the stake at risk | 18 |
| Acceleration clause | 12 |
| 83(b) election filed | 12 |
| Documented in a founders' agreement | 20 |
| Total | 100 |
The verdict bands
A founder who holds a material stake AND has no vesting schedule owns that equity outright — it can't be clawed back if they walk. Both together force DEAD-EQUITY RISK regardless of the score; either alone is only a gap.
In the worked sample it scores 6 out of 100 and still reads DEAD-EQUITY RISK — This co-founder holds a material stake and has no vesting schedule — the equity is owned outright and can't be recovered if they leave. With handshake terms, no cliff, and no acceleration, the structure scores just 6. The dead-equity kill-chain fires: DEAD-EQUITY RISK. Only a material stake and no vesting together are fatal — and both are present. The one thing to fix first: Put the founder on a standard (roughly four-year) vesting schedule and paper it — with counsel, since re-vesting an already-owned stake is a legal and tax matter..
Common questions
Can something score well on the How the Co-Founder Equity Health Check gate works and still fail?
Yes. The weighted score is run past a worsen-only gate — the Dead-equity kill-chain — that can only make the verdict worse. In the worked sample it scores 6 out of 100 and still reads DEAD-EQUITY RISK, because this co-founder holds a material stake and has no vesting schedule — the equity is owned outright and can't be recovered if they leave. With handshake terms, no cliff, and no acceleration, the structure scores just 6. The dead-equity kill-chain fires: DEAD-EQUITY RISK. Only a material stake and no vesting together are fatal — and both are present.
What is a worsen-only gate?
A dispositive rule that can only lower a verdict, never raise it. One fatal flaw overrides an otherwise-good score, because a single disqualifying gap shouldn't hide behind a high average. The tool also names the one thing to fix first — here, "Put the founder on a standard (roughly four-year) vesting schedule and paper it — with counsel, since re-vesting an already-owned stake is a legal and tax matter.".
Grades an equity structure, not a deal or a person. Not legal, tax, or investment advice — bring the specific numbers and the irreversible 30-day 83(b) deadline to a startup lawyer.
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<iframe src="https://redhub.ai/visuals/tool/co-founder-equity-health-check.html" title="How the Co-Founder Equity Health Check gate works — RedHub AI" width="760" height="1734" loading="lazy" style="border:0;width:100%;max-width:760px"></iframe>
<p style="font:14px/1.5 system-ui,sans-serif"><a href="https://redhub.ai/visuals/tool/co-founder-equity-health-check">How the Co-Founder Equity Health Check gate works</a> — by <a href="https://redhub.ai">RedHub AI</a>, the AI that tells you when to doubt it.</p>Image + link — a static picture for any blog
<a href="https://redhub.ai/visuals/tool/co-founder-equity-health-check"><img src="https://redhub.ai/visuals/tool/co-founder-equity-health-check-share.png" alt="Diagram of the Co-Founder Equity Health Check: six weighted dimensions scored to 0–100, a dead-equity kill-chain gate, and the verdict reading DEAD-EQUITY RISK on a material stake with no vesting." width="760" loading="lazy" style="max-width:100%;height:auto;border-radius:16px"></a>
<p style="font:14px/1.5 system-ui,sans-serif"><a href="https://redhub.ai">RedHub AI</a> — the AI that tells you when to doubt it.</p>
This is how Co-Founder Equity Health Check works. More diagrams in the Visual Field Guide.