Three sentence history: I was brought in on an opportunity by the original "idea" person. After trying out a few others, there ended up being a total of three of us. The initial project was going to require significant capitalization from external sources (none of us had real money for the materials needed), and being my first negotiation I accepted a very small stake (with strings for a couple more points if profitability didn't turn in the first two years).
After a few months we realized the idea just wasn't going to work and settled on one that requires (related to the first project) trivial startup money.
My question: As we're settling into researching and codifying a business plan, I feel I should be renegotiating my stake in the startup before we get too far along. Should I be shooting for a third of the company or is that unrealistic?
I would shoot for a third, or close, because to some degree you are starting over at this point. If you all are adding equal shares of everything you should get an equal share of the stake in the company.
However, someone should have just a larger enough amount of the business so that he is more liable than the rest. That would technically make him the boss, but sometimes executive decision will need to be made. The outcome will be his responsibility and he needs to know that when they get more of a share. Could do 30/30/40 as an idea.
It seems like you might have made a bit of a strategic mistake
We've all put in about the same amount of time.What I mean is that if the guy was the owner, shouldn't he have been the one to be pumping money into the organization?
We'll all be investing about as much as each other.
The original owner might think: From a leverage stand point, I own this piece of property, you give me money to support it. If you are just giving it to me or the corporation, I don't "officially" owe you anything.
I guess what I'm saying is that it might have made more sense to say I'm giving you this money for some share of the company. He probably might have said no way and you might have then decided not to give him the money. Most people won't turn down "free money"
From a "fairness" stand point, I think you would be expect to be reiumbursed for the money you put in or get some sort of ownership rights. However, I don't think the has any obligation to do either right now.
I would use what you bring to the table as leverage or walk. I think it's fair for you to ask for some ownership in the company if you have equally contributed. However, if he holds all the cards, you would need to be prepared to walk.