How much equity should my partner get?


Im currently in a situation where me and my co-founder are determining equity shares. To give a background, I came up with the idea and approached my co-founder (who is a dear friend and was a freelance developer when i approached him with no active projects) to develop my idea. My idea is basically a real estate portal in a middle east country.

Initially when i approached him in September 2012 he asked for 5,000 a month as a developer hence i told him instead of paying him a fee as a developer i will take him as my partner since i have no experience at all with developing being a senior financial consultant. My experience is in business and finance focused on real estate. He agreed but he requested to pay of some of his debts 2,000 and pay him pocket money of 400 a month which i agreed to and explained that these amounts would effect his share lower. I currently work full time and have continuously been involved in the development stage in terms of functionality, user testing, and user requirements since I did the market research and am involved in the real estate business. My current salary is around 11k per month. I also incorporated a company (paying the required license fees and office rental needed, its 100% owned by me now but will change it, consider it a shell company for now).

In January 2013 we decided to appoint third part developers to assist and i paid them around 17,000 then we decided to let them go. We are now 14 months down the line and are expected to launch in November where i will leave my full time job to concentrate on business development and grow the company's operation. We both agree in terms of role that I will be the CEO and he will be the CTO.

Based on the above how much equity should i give him? Keeping in my mind that once we start operations any cash shortage will be funded 100% by me with his pocket money still being paid.

To add some more beef to this question, i used the grunt fund model used in the slicing pie book inputting the above numbers with my contribution in the form of cash and time and his time minus the cash he received it gave me 63% - 37% for me. Does this sound reasonable?
This off course excludes the additional cash i need to inject once the business starts estimated at around 40k, including conservative estimated revenue.


asked Sep 20 '13 at 19:30
6 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans

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