I have two questions about partnership. If I get a partner that has experience in the business world and the industry and little or no cash maybe $15k-10k, for a new service I’m starting up. What equity is fair? I think 5% is ok.
I want to remain a silent partner I will still run it I just don’t want to be publically known as the owner. So that’s it 10-15k, business expertise, experienced and skilled in the sales/negotiation department, and he represents the company should it need to be represented publicly if I decide to sell it or take it public at a later date.
Partnerships are hard!!! But sometimes, if you have the right people, and you take the time to work out all the details regarding who does what and gets what, and you write it all down, and you get a little lucky... it's still hard but the partnership can accomplish way more than either partner could do individually.
You and your partner can work out ANY arrangement you both can agree to. But to improve your odds enter these discussions looking out for your partner as well as your own interests. And hopefully your partner will be looking out for you too.
Discuss all kinds of scenarios and contingencies - like what happens when you don't agree? What if one person wants out before you are successful, or after? What if one person gets sick, dies, divorces, etc... Who decides how much debt you can have? Who is on the hook if you can't pay it back? Discuss every scenario you can imagine and write down everything you decide in an operating agreement.
There's no single answer. What's fair is what you both agree is fair. Make sure you have vesting so that if he loses interest, he doesn't still own a chunk of your company.
As usual, it depends.
If you give me 5% to do nothing, that sounds like a good deal to me.
But if you expect me to work hard for you and I handle all the customers and all I get is 5%, I won't be happy.