90 days and $XXK to get to the finish line?


1

This is a related question to another post I made here: Partnership agreement advice -- I have the idea & ops, he has the marketing investment and industry exp. But here's a critical issue that I may not have made clear in my earlier (very long) post and after reading TONS of posts here about picking a partner/co-founder and being committed in the long-haul that I want to ask.

When I successfully pitched my potential partner it was basically that I had a fully cooked idea that was very relevant to his existing industry (driving leads), had developed the website, and was prepared to staff the ops full time from (before) day one.

What I needed was a marketing budget of $XXk/mo. He agreed and said "let's do it as a three month project -- you got the $XXk."

That was enough to get me excited but as we've discussed the business, the idea has settled into his mind, and he has thought further about how it could fundamentally evolve his existing business he has begun to express that he sees the idea as his future and that he dreams about selling his existing business and making my idea into where he wants to be.

While we are just getting our lawyers involved to develop a partnership agreement and term sheet (literally this week) the 90 day thing is sticking in my head as a issue that is like a time bomb.

I am beginning to question his value as an investor/partner, despite his industry experience, if he is not willing to commit to more than 90 days (we believe that the business will reveal it's ability to bootstrap the marketing budget by 90 days... but what if it's close but not all there by that point). Is this simply a negotiating point in our contract or should this be a red flag?

What are your thoughts here? Thanks -- love the site!

Co-Founder Equity Partnerships

asked Jul 26 '11 at 02:19
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Springster
23 points
Get up to $750K in working capital to finance your business: Clarify Capital Business Loans
  • He's funding 100% for 3 months with no strings attached and you're worried about his commitment? – Jeff O 13 years ago
  • Thanks for the reply, Jeff. Well not exactly "no strings". while we are hammering out a partnership agreement this week, we have a verbal agreement to form a 50/50 partnership based on my sweat equity manning the ops full time during the same 3 months. This does not take into account my development work to date to get the solution developed and to market -- all of which I have done on my own. My concern was more about the 91st day when, say, we're hitting 50% of our revenue target and he suddenly decides to pull the marketing lifeline. But I think Joseph's answer helps address that. Thanks! – Springster 13 years ago

2 Answers


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I understand your fear and concern. The time is becoming real as the details take shape.

This would not be a red flag for me.

Someone taking a chance for 90 days and fully funding your marketing. If the assumptions are proving accurate and there is traction I am sure that he will continue his investment. He is testing it out and see how it goes.

You need to be able to demonstrate real sales progress in those 90 days.

answered Jul 26 '11 at 05:19
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Joseph Barisonzi
12,141 points
  • Thanks for the reality check, Joseph! I wonder your advice though, is this something that I should seek to structure in our emerging partnership agreement or is it better left addressed simply by continuing to put our heads down, working toward success, and bootstrapping the issue away? Many thanks for the reply! – Springster 13 years ago
  • @Springster I would focus on delivering something of value. This will put both you and your Angel is a good mood to negotiate further growth of the company. – Joseph Barisonzi 13 years ago
  • Thanks again, Joseph! – Springster 13 years ago

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For lead generation you really need to focus your efforts on SEO, you'll go broke paying for traffic.

Make sure to pick the right company, since the SEO industry is filled with scammers.

answered Jul 27 '11 at 03:47
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Alex
11 points

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Co-Founder Equity Partnerships