Need help structuring equity for well qualified partner wannabes


I know there have been related posts to this question which I've already read, but can someone please help me specifically with this?

We found some high profile techies/developers in a neighboring country who are willing to partner for equity. Their capabilities include building the product as well as help with the marketing (viral as they're well connected, as well as PR) and providing us with industry tech and local knowledge within their mass market, which we are not located at but plan to launch in. In addition they expressed interest in teaming up with us for a staggered regional launch, and to be involved in the process end to end. Our skills are in business and marketing, but we of course welcome the industry and local expertise, on top of the actual product development.

Our question: would 20% equity be fair (based on milestone achievements) for app development, viral marketing, network connections, introductions to sponsors & angels, and potentially PR? We are confident on their skill sets and are aware of their reputations, and want them to be part of our team to see through the various geographical launches we have planned (note though that their influence is limited to one country). We are open to increasing that to between 20-30% if they can also invest some capital, which was mentioned as well. The tricky thing is while they have the capability to do all of the above, this a moonlighting job and they are unable to fully dedicate themselves time-wise, and although we will structure milestones and timelines into the equity stake there are no guarantees on how much of the above, beyond product development, will actually get done.

In addition to the business plan, and dollars invested into POC development (outsourced), my partner and I will run all other operations. Though we have the POC deployed and in beta, it does not represent our vision of the product and a number of changes are required, including some architecture and all of the UI and coding. So while not starting from scratch the app will need to be rebuilt completely (the reason we were looking to add technology people to the team to begin with, but these people came with much more on their resumes). Is the above reasonable?

Strategy Equity

asked Dec 14 '11 at 18:23
1 point
Top digital marketing agency for SEO, content marketing, and PR: Demand Roll

1 Answer


It's not clear to me what you're bringing to the table.

Unproven business plans don't have significant value. The POC code, if you're already thinking it's going to be tossed, is also approximately 0. Why are they giving you anything? The part where they're perhaps not able to do the work at all makes the whole thing a bit baffling.

Think about this from the opposite direction: what would they be willing to give you for the work already done? What would they have to do to build a product/business in the same space without you? Does it make sense for them to give you 10-20% for your contribution?

answered Dec 18 '11 at 10:27
James Moore
111 points

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