My start up died, it was agonizing but I have moved on. Some of my early investors were amazing- some were terrible. I want to reward my great investors with some equity in my new start up because I never would have gotten my start with out them.
How do I decide how much equity to give and to whom?
I am a bit worried about giving equity in a way that is not evenly distributed.
Not to say your approach is wrong, but the other way to look at this is that they should have expected to lose that money. Investors investing in start-ups know there's a strong chance they will lose their entire investment. Investors aren't expecting anything for free. If your new venture seems like a good fit for them, they will invest again. To give them a %, for the hope that they'll re-invest later seems pointless, if you have the goods, they'll be there.
I would be much more worried about how much equity it would take to get a solid partner/team around me.
Don't "give" them the equity. Offer them an opportunity to invest at a low valuation but cap the amount they can invest in. This way you can be a dick to the bad investors by saying you're not giving them a chance to invest.
I recently had one of my portfolio companies implode and while it took a bit of time for me to get past some residual ill-will I had towards the founder, I would still seriously consider investing if she approached me with a new venture. I would not expect to get any free equity since I'd made my previous investment with full knowledge that this is high-risk stuff. Moreover, I'd be pretty suspicious of her state of mind if she did give away free equity or equity at some serious discount. It would strike me more as an emotional response to a previous failure and not in the best interest of her new venture. Sure, securing and rewarding useful investors for a new venture is very important, but this is a business and I want to see a calculated and clinical approach to the issuing of any freebies.