4 ms·

How should I split equity?

• bitfield 7y ago
  Without the app, he has no business. I'd say you're in a strong position to ask for at least half the shares (not options). If you don't get them, take your app and sell it elsewhere.
  • lineket 7y ago
    I did sign an NDA, so not sure about selling somewhere else. but thanks
• PragmaticPulp 7y ago
  > The App is almost done I assume you've learned the importance of discussing these things up front. :) At this point, you should do your best to drive for clarity and written contracts before you continue your efforts. Your cofounder doesn't sound necessarily unreasonable, but just in case: Make sure you get everything in writing. Don't allow for infinite delays or vague future promises. Most important question right now: What, if any, agreements do you two have in place? Did you make any agreements, written or otherwise, before you started building the app? I assume you used some of the assets he provided (wireframe designs, branding, logo) in the process, so it's too late to completely separate your app from his reach. Unless you're geared up for potentially years of legal challenges, ignore any advice to cut and run with the source code. Second: What are your expected roles in the company going forward? Will he be running the company by himself and acting as President/CEO? I know you put a lot of work into the app, but an app alone is usually not sufficient to be a functioning business. If most of your work is done and his is just ramping up, then a 70%/30% split doesn't seem unreasonable. I suggest you clearly define roles and expectations for both of you going forward. This will clear up a lot of the split. > I believe a fair split is where I have at least 50% of the company Greater than 50% means you're in charge of the company, effectively. Are you interested in running the company yourself? If not, pursuing greater than 50% ownership is not for you. Even in situations where cofounders agree to be equals, it's still often recommended to have one founder at 51% and the other at 49% to make it clear who gets the final vote. Do you want that to be you? Would he still be onboard if that was you?
• gus_massa 7y ago
  How much time did you use to write the app? Is it possible to just burn the code and forget about the project? As other comment said, get everything in written. Get a layer to read the agreement before signing.
• partisan 7y ago
  Split the shares 50/50. Convert the 20k into senior debt that will be repaid on a schedule. If he believes in the vision then he will have his investment back and will have the benefit of your unpaid work.
• _ah 7y ago
  Technical people tend to overvalue their own contributions. User research, hiring, and leadership is a very real thing and has real value. Your friend recruited you, not the other way around... a very big value he provided is that he convinced you to join, and will presumably convince others to join in the future. When you say I believe a fair split is where I have at least 50% of the company., you're saying that a split of 51%, 75%, or even 90% to you feels equitable. To state the obvious, if you have more than 50% it is no longer your friend's company, it is your company. That's not going to happen. Let's turn this around for a moment: What if your friend got some VC money. Let's say he got a tiny seed round: $200k for 20% pre-money ($1M valuation). Now let's assume that you've invested 3 solid months building this app at $100/hr as a contractor (so, $50k -$60k dev work all-in). This implies that you've earned 5%-6% equity in the company for work already done. Your friend wants you to stay, to he offers an extra 5% for a round 10% equity. But wait you're a founder! you need more than that! You argue and thumb-wrestle or whatever and he agrees to 20% on a 4-year vest. This is probably fair. By that analysis, 30% over 3 years is incredibly generous. But only you know your own situation.