4 ms·

Ask HN: How much Equity should I give my co-founder?

• MrAnderson92 10y ago
  What do they bring to the table? Business knowledge? Marketing? Anything? That would decide what they are worth.
  • max_ 10y ago
    He's a smart creative guy and fantastic networker.
    • sharemywin 10y ago
      Good article on vesting schedule. I would put something like 15-25% for the first year then 5% per year up to 4 more years. But certain quotes need to be met. https://www.entrepreneur.com/article/231044 https://www.entrepreneur.com/article/231044
    • brudgers 10y ago
      1. If the company was already funded would the candidate be the first hire? 2. What is the candidate's industry experience? 3. What are their technical skills? 4. What is their track record? 5. Have they already tried to do a startup by themselves or others? If not, why? Otherwise, what did they learn? 6. Why have they founded a startup with cofounders they know? This has two aspects: is the candidate really prepared for the work? are the people who know the candidate best uninterested in working with them? It is particularly relevant for someone whose expertise is in networking. 7. What has the person created? 8. Who is in their network [other than the potential investor]?
• onion2k 10y ago
  I wrote the the whole backend and front end of my application(alone). Cool, but the technical aspect of a start up usually fairly irrelevant. It has little impact on your business's success. There are times when it's important (if you're solving a hard problem) but if your app is essentially a CRUD app (users register, enter data, get data out, maybe with a process in the middle) I wouldn't get too hung up on who wrote the code that's there now. Is co-founder necessary (an investor is insisting it is)? if yes? how much equity should i give him? <10% ? 50%? what is ideal? The investor wants you to have a cofounder so that the business will move forwards when you can't put time in (eg if you get ill). That lowers their risk. Plus, when you're both working on it, things go faster. How much equity that person should have depends entirely on what you negotiate with them - there isn't a generic ideal that works for every startup. One thing to note though, while the work you've already put in represents some value, it's not very much compared to how much you and your cofounder will put in during the life of the business. If it takes 10 years to get to an exit then you'll each be putting in a vast amounts more work than you've put in so far, so there's no good reason why the work you've done to date should have any significant impact on the reward you'll take away at the end. To that end, a 50/50 split is quite fair.
• brudgers 10y ago
  Is the person insisting on a cofounder an actual investor or a potential investor? An actual investor is someone who has already provided money. A potential investor is anyone else from an Angel with a track-record to the cashier at the local Waffle House. My gut reaction is that the process of bringing onboard a cofounder is significant. A context in which it is done so reluctantly is one red flag. A context in which it is done hurriedly is another. The acceptability of these distractions is a third. My basic heuristic is that unless someone brings 50% of equity's worth of value and is 100% trustworthy, it ain't worth cofounding. Obviously, if a person meets those requirements then their worth 50%. To put it another way, I think unequal shares are a liability to a cofounder relationship. The ideal is an organic partnership and there is no giving. It's worth reframing the event as founding a new company. Bringing on an additional employee as owner is a pretty big term on the term sheet. This may be a case of a poor fit between your company and the potential investor. Good luck.