Possible Duplicate: Forming a new software startup, how do I allocate ownership fairly?
I am one of three cofounders at an early stage startup. We have been working with an outsourced developer who developed a prototype for us and has been following us closely as an advisor since then.
Recently, since the technical development of the project has hit a stall, the three of us decided it was a necessity to bring him on board and we offered him the option to join as a cofounder. He is a senior programmer who would add much credibility to the team and, as we have found out, the connections that he has are very useful. He has agreed to join us, however, we are having some difficulty agreeing on the terms of his entry.
He would like 24% of the company vested over two years with a six month cliff, and he would work around 30 hours a week or more probably on it. (The three of us are vested over 4 years with a one year cliff and are fulltime and own equal amounts of the company) He would have to work on other projects, however, since he has a lot of debt to pay (kids in college, mortgage, medical bills, etc). Basically, he wants 1%/month for the next two years and he is pretty set on that. I have contacted a few investor colleagues for advice on the matter and we seem to all agree that it would be better for him to vest over 3 years at the least. From the research I've done and the advice I've gotten so far, I believe an investor will ask him to increase his vesting time later on in order to ensure that he stays with the company. We were thinking of maybe doing a deferred salary contract/incentive bonus to get him to agree to three years and 20% once we are able to raise a seed round. Once we raise a seed round we could pay him a small salary and he could work more on this. At the moment we do not have any other cash available to offer him. How should I continue the discussion with him and is what he is asking for fair? Will this cause headaches down the road?