Cofounder on a salary


1

I'm looking for a startup opportunity in London. I was given an offer to be a startup cofounder. B2B app for finance market. The team will be me an a business guy. He is giving all the money for initial stuff (hardware/desks/software/hosting) as well as my salary. The offer is 24k (50-60% my market value) and 10% with standard vesting schedule. He is not going to take salary.

Risks:

  • Don't know him very well
  • He is not technical
  • He's first motivation is to have a company that produce cash rather than sell
  • He knows the market, but I don't - Possible regulation or data issue (don't know if we can store it on Amazon)

Let's break it down. After 4 year I will have 10% change to have 3% of 20m?. That gives expected value of 60K in stock and 100k in salary which is 40k a year. Assuming I'm going to work 80h a week that gives me 20k a year for a risk free corporate job.

Is it a good deal? Should I ask for more? Maybe different deal when he's money will be company's liability? Should I get a layer to advise?

Co-Founder Equity Salary

asked Nov 16 '13 at 03:00
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Lukas
110 points
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1 Answer


2

Assuming you can easily get a job at the market value mentionned, no, this doesn't look like a very good deal, IMHO:

The only way this is worth yourwhile is if you are so excited about what you will do that you're willing to do it for free or if this start-up is very successful.

Otherwise, you are simply working twice the hours for half the income and no safety net.

You seem to be mostly concerned with the financial reward, so I will assume that what you want is to make money.

It all rides on the success of the start-up. Can you succeed?

You don't know the market and the product, so you have to rely on his ability to draw picture-perfect specs, BUT he is not a technical guy and therefore probably has no clue how to design an application. That means you will have to be the one picking his brain and designing the application.

You will have to discuss which features to implement and which features not to implement with a client who will be, for all intents and purposes, your boss, and he WILL overrule you regularly even though he has no idea of the amount work involved behind every feature.

You will completely rely on his connections and his ability to sell the product to the end customer. Does he know anything about selling software to financial institutions? I take it he "knows people", but can he sell stuff to them?

And his priority is to make cash, not produce a product to solve a problem. Nothing wrong about wanting to make cash, but if you are going into business with a "co-founder/boss" who doesn't care about the product you are going to work on...

And finally, you don't even know the guy and have no idea if you can trust him.

Given those conditions, I think your start up will fail, and if it does, you will have worked long hours for half pay.

That said, it might still be worth it for the sake of experience (developping a product from scratch, finding the requirements, etc.) and who knows, maybe he does have a workable idea. If you have nothing else on the horizon, you might as well add "start-up co-founder" to your resume.

answered Nov 17 '13 at 05:36
Blank
Sylver
146 points
  • Thanks for a great answer. My biggest motivation is to build something awesome. Having said that my second goal is to make some "freedom" money in foreseeable future. – Lukas 10 years ago
  • @lukas Glad it helps. – Sylver 10 years ago

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Co-Founder Equity Salary