Taking on a co founder


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I have been trying to start my own tech startup for a year and half. During this time i built significant IP and invested my time and effort. I have a database of users and mailing list. I have decided to pivot and pursue a different idea which based on my experience will be more feasible and scalable. About 80-90% of the IP is still relevant, so are the domain, database and other assets etc.

I have been talking to 2 people who agreed to join me but part time (20hrs/week). One is a technical person who I haven't worked with so I need a clause to evaluate him. He stated that he will join full time in a few months (or when we get funding). The other is a recent MBA graduate with technical/project management background and she will join part time as an intern marketing (and possibly project management).

Initially I considered having a 15% non diluted for what I have done but after reading about all the negative comments about non dilution clauses I decided against it especially since VC's might ask me to cancel it or request it for themselves.

The equity split I am considering is this. Vesting only begins and continues as long as the founders are working full time (40+ hrs/wk) on the venture. All shares in terms of the company's initial fully diluted capitalization.

Founder 1. (Me) CEO, 15% preferred shares, fully vested
+ 31% common shares vested over 4 yrs

Founder 2. CTO, 31% common shares vested over 4 yrs

Founder 3. (Mkting intern) 15.5% common shares vested over 4 yrs

Angel investment: 7.5% for $50K (based on a good local investor)

Further investment will be done by issuing additional shares with equitable dilution. No founder or investor will have a anti dilution protection.

Does this seem reasonable? Do you think I can achieve this with a shareholder agreement for now without incorporating?

Co-Founder Equity Vesting

asked Aug 19 '13 at 13:48
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Kris
1 point
  • Welcome to the site! There are quite a few questions regarding fair division of equity - the suggested question should help guide your decision. Also, search "equity" to find additional questions. – Jim Galley 6 years ago
  • Hi Kris! I wrote a book on this topic that will tell you exactly what to do to figure out the exact equity split that will be perfectly fair. It's called Slicing Pie (www.SlicingPie.com). If you email me at mike@slicingpie.com I'll send you a copy! – Mike Moyer 6 years ago

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Co-Founder Equity Vesting