Thoughts on equity split
Possible Duplicate: Forming a new software startup, how do I allocate ownership fairly?
I'd appreciate your thoughts on this situation:
I am a developer that has worked on a on 2 products for the past 4 years. Product 1 has been somewhat successful capturing a small niche market, and lifestyle business size revenue. Product 2 seeks to capture a much larger/mature market segment. Product 2 is a fairly large (in terms of feature set) SaaS type product. I've been able to acquire 4 customers since the product was released late last year, but the recurring revenue is very small at this point. However, there is a lot of interest and promise in this market.
In order to grow the business, I believe I need a partner/co-founder. I had looked last year for a co-founder, but never found one and just kept focusing on the product. Earlier this year, I started working with someone, who has helped on the Sales/Marketing side. She has been able to get more meetings/demos with potential customers, although we have not signed a new customer yet - but things look good. She has expressed a desire to come on full time as co-founder.
I can provide more details if necessary, but based on this info, what would you say the split should be?
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No good way to answer that question without a lot more information about the finances and prospects of the company. In the end, though, it's often more art than science. You probably want to reward her some for her past work (unless she's already been compensated for that), and then give her a share for her future work. That share should be subject to vesting, so she can't take it and then flake out. You also want to have a right of first refusal on her sales and, possibly, a repurchase right to her vested shares if she leaves. – Chris Fulmer 12 years ago
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This question has no right answer... But to get helpful responses it would be good to clarify as much as possible. For instance, are you discussing cofounder terms for a single business (products 1 and 2), or just for product 1? – Jeremy Parsons 12 years ago
