Fair revenue share for my idea?


0

I've got a new business idea, for which I have already written a business plan, a feature description, a communication plan and have 2 testsites with "feature level 0" up and running based on standard tools.

Now I want to get partner(s) involved to bring in capital, to develop the real phase 1 SW, start advertising, refine the business plan together, etc.

To keep everyone motivated, I would consider an equal equity split. But I want to "license" my idea to the joint company and get some reward for my initial input.

Would you demand a share of revenues or profits? What would you consider a fair share? What's common?

Licensing

asked Apr 1 '10 at 06:43
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User2387
111 points

1 Answer


2

It's all about what you're bringing to the table. You have three things: an idea, plans, and prototype software.

The street price of an idea these days is $0.02, so don't expect to get much for it. The real question is, what level of effort has gone in to your plans and software? 10 hours? 100 hours? 1000 hours? How competent are you are at writing plans and software?

The more skills and more time you spent in development means the further your idea is to fruition. The further you are to fruition, the lesk risk an investor by partnering with you, and therefore the less return can be expected. If you put in 10 hours and are looking for 10M, expect to own .001% of the venture. On the other hand, if you put in a thousand hours and need $10K, you deserve a large chunk of the pie.

Either way, the notion of licensing your idea to yourself seems stupid. Just work to get a fair share relatve to the mutual investment (development time for you, money for your partner, etc).

answered Apr 2 '10 at 13:27
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Alex Papadimoulis
5,901 points
  • I've put in a few hundred hours and I am skilled in writing business plans. Thanks for your thoughts. I was planning for a larger share, but the other guys don't want to put in their money and effort if I have control on my own, which I can understand in a way. That's the reason of the "licensing" alternative. – User2387 9 years ago
  • Forgot to mention: I know that, when you license an invention (a product) to a company, you can expect between 1% and 7% of the revenues, depending on the originality and the company size. But I'm not sure if this is a comparable situation. – User2387 9 years ago

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