3 ms·

We are currently splitting the profits 50/50 and he did join an already working startup.

neximo4 11y ago
I think the 50/50 profit arrangement sounds good, but your co-founder probably knows its not built to last (not as future proof as equity is). The key thing with the incentives is whatever s/he may be getting now is less than his/her expectation of future value of other things s/he may be working on. If s/he needs to work, and has nothing saved to live off, s/he will value a certain piece of cash component more than stock today and will prioritise the bare minimum first before your project with him/her. If your co-founder is neglecting duties currently, it's likely s/he is not getting enough today. If the company does well in the future naturally s/he will work better in the future when the company performs better, this is what your arrangement incentivises him/her to do.
estefan 11y ago
From experience though, I have worked at one place for 5% (which did nothing to motivate me), and one for 30%, which also did close to nothing to motivate me. I think 50/50 is the way forward. You could write an IOU from the company to yourself to compensate you for the extra work. E.g. if you think you've put in the equivalent of £100k in time/energy/value/whatever, agree that the company owes you that when it can afford to pay you, but that going forward the equity will vest fairly. "Fairly" vesting equity could mean that you both agree on metrics/deliverables that need to be achieved to receive the full amount of equity in a round. Split your 100% over say 4 years, and each year 25% of the total is on offer. That way, if you both agree up front on what each of you would be happy for the other to achieve to receive 12.5%, you should be happy if you both deliver. This approach means that: - equity will be split in whatever way you both deem fair - receiving equity is objectively decided based on performance - equity doesn't vest immediately Also consider what should happen to vested equity if one of you wants to leave early (e.g. buyout clauses because some investors don't like large chunks of equity being owned outside the current team).

I think the 50/50 profit arrangement sounds good, but your co-founder probably knows its not built to last (not as future proof as equity is). The key thing with the incentives is whatever s/he may be getting now is less than his/her expectation of future value of other things s/he may be working on. If s/he needs to work, and has nothing saved to live off, s/he will value a certain piece of cash component more than stock today and will prioritise the bare minimum first before your project with him/her. If your co-founder is neglecting duties currently, it's likely s/he is not getting enough today. If the company does well in the future naturally s/he will work better in the future when the company performs better, this is what your arrangement incentivises him/her to do.

estefan 11y ago

From experience though, I have worked at one place for 5% (which did nothing to motivate me), and one for 30%, which also did close to nothing to motivate me. I think 50/50 is the way forward. You could write an IOU from the company to yourself to compensate you for the extra work. E.g. if you think you've put in the equivalent of £100k in time/energy/value/whatever, agree that the company owes you that when it can afford to pay you, but that going forward the equity will vest fairly. "Fairly" vesting equity could mean that you both agree on metrics/deliverables that need to be achieved to receive the full amount of equity in a round. Split your 100% over say 4 years, and each year 25% of the total is on offer. That way, if you both agree up front on what each of you would be happy for the other to achieve to receive 12.5%, you should be happy if you both deliver. This approach means that: - equity will be split in whatever way you both deem fair - receiving equity is objectively decided based on performance - equity doesn't vest immediately Also consider what should happen to vested equity if one of you wants to leave early (e.g. buyout clauses because some investors don't like large chunks of equity being owned outside the current team).