My friend had a fantastic idea for an iPhone game. I am currently working on it, as he lacks the technical expertise at the moment to work on such a large project.
Here's my problem: what is an ideal revenue split if he's doing no technical work but is the idea man? Since I'm doing 100% of the programming work I am biased towards myself getting a majority share of profit. What do you guys think? Is there any precedence for a situation like this?
I do understand I will need to get both parties to agree to terms in a contract.
As the resident expert on co-founder equity split, here's the answer :-)
You are in one of two situations:
A) The idea person told you the concept once: "this game would have monkeys flying". Ever since, you have done everything by yourself, he hasn't really contributed anything since. Thank you, here's 5% equity.
B) Every two hours, you call your idea-friend because you need to know what decision to take: should the monkeys be blue or red? Can they also swim? You feel that without him, you'd be lost. This could be up to a 50/50 split.
Or it's something in between. Hopefully you get the idea.
Everyone has ideas. Even fantastic ideas, but they are all useless until someone turns them into something real.
And there are millions of programmers who can turn an idea into a program.
However, there are few people who can come up with a great idea, turn it into something real, and then successfully market that product. (And note a program is not a product- it's the start of one.)
So what parts of this are you providing? Do you do everything except the idea? Or does the idea man help market, test, etc?
Sounds like he should be getting ~5-10% if he only came up with an idea
Mark your hours and pay yourself for the development work out of the business. Anything left over is the profit which you can split 50/50 or whatever you decide.
Like most said here. I'll based it on how much work beyond bringing the idea to you your partner does. I've been in similar situations but from the start I try to make sure each of our jobs are clearly defined.
Me: Development, Implementation, Design
His/Her: Marketing, Sales, Administration
First keep everything on paper and understand the core function of the product and then see what are the contributions you are doing and create a prototype and then go to investment bankers and then valuate the product and then from there take your partnership :)
It is the best method which every one should follow as we need to evaluate the product first in order to discuss about the shares .
When you don know how much your product valuates then how can you go for shares?