joining a startup, question about equity


(also posted on The Workplace )

A friend of mine (no tech bg, but lots of business xp) is planning to found a startup and has invited me to be the CTO.

I have some background working in IT and in coding some odd projects on the side; I currently work for a pre-IPO startup as the internal tools and metrics guy for the support team. I have a background as a quant for a think tank and having worked for the federal government, though not in a tech capacity.

I think that my friend has an interesting idea, and after we raise enough capital he's offered to essentially match my current salary, if not the current perks as soon as we obtain sufficient funding.

Normally I'd be very interested to consider this offer -- I think that it would be an interesting portfolio of tasks (i.e. work with another friend to develop the MVP, establish our stack and support platforms, do support and dev ops, bring on additional hires as needed) and a good resume boost in the worst-case, but I have two reservations:

One, my friend (who would be the CEO of this company) recently exited as CFO of another company in a similar space. The other founders of that company (a CEO and a CTO) were clearly not the right people to execute this idea, but the fact that my friend exited that venture in sort of less than ideal circumstances has been weighing on me.

Additionally, my friend assures me that my equity compensation (25% to his 70%) is fair given my position/responsibilities and lack of experience in these roles (as well as the fact that we will be leaning on his connections for financing), but I'm not certain that it is, especially given that my friend doesn't have much experience as a CEO, is non-technical, and may be underestimating the technical requirements of the company. The money isn't just the issue here -- I also don't want to cede decision-making to him on all business matters.

I could be interested in this position, but I also want to make sure to structure things in a way that is equitable and sensible up-front. Is there a best practice for this sort of a thing?

Getting Started Co-Founder Equity Partnerships Shares

asked Jun 2 '13 at 06:14
1 point
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans
  • Welcome to the site! Please take a look at the linked question, which has some great advice on equity splits for founders. Also, please don't cross-post the same question on multiple Stack Exchange sites, as that is greatly frowned upon. You can ask similar questions on multiple sites, but they should not be exact copies of each other. Make sure the questions focus on different aspects, which should be specific to the site you are posting the question on. – Zuly Gonzalez 11 years ago

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Getting Started Co-Founder Equity Partnerships Shares