3 ms·

How much does a co-founder get when joining later

3 points by xyzabc 16y ago

I have been working alone on this project for a year now. Now I want to make a startup out of it, and found a co-founder. What is a fair deal, how much shares should he get? To explain it better, most things technologically and conceptually are figured out. Now it's all just straightforward implementation. Given no further information what do you think?

sagacity 16y ago
> Given no further information what do you think? Even with further information, it'll ultimately have to be what both of you are comfortable with. Granted, you've done a lot of hard work single-handedly but do not underestimate the value/importance of implementation, especially in a startup environment. Also, if you all are going to need/raise funding, you should give some consideration to the currently prevailing norms of founder - co-founder ownership patterns acceptable to the funding sources and keep that in mind while deciding on this. HTH
- xyzabc 16y ago
  Until now I was working as part of research for term projects, now as a side project. I am sure I can get traction without any investors, until I get some users on it. So it's a side project for both of us, we both have full time jobs. Can you give me some numbers? 70-30 or 80-20 split?
  - sagacity 16y ago
    From purely an investor's perspective, I believe the more even a split, the more attractive it would be. However, since you're not seeking funding at this stage, I'd say it is pretty much your own call - between the two of you. Have a frank discussion, try to work out what value you've built so far and what he brings to the table and go from there. I'd say anything, 80-20 / 70-30 is okay, as long as both of you are comfortable with it. HTH
brk 16y ago
Seems kind of late-stage to be bringing on a "co-founder". For any new employee (and you don't need to get hung up on the titles), they should generally get an equity grant that is proportional to the value you intend for them to bring to the business. If you can't grow the business to the next level without this person, they get a stock grant similar to yours. If they are going to implement some "really important stuff" but generally not be involved in the business management they'll get somewhere between "quite a bit" and "a pretty good chunk". Generally speaking, it's not a good idea to allocate 100% of the stock. You should think up front about what other employees you'll need to hire, what you might have to allocate to investors and so forth and make grants accordingly now.
- xyzabc 16y ago
  You are right, but I can't pay him much. So I have to give him some equity, or are there other schemes?
RiderOfGiraffes 16y ago
Here's another discussion on a similar subject that might be relevant. http://news.ycombinator.com/item?id=874859 http://news.ycombinator.com/item?id=874859
smoody 16y ago
As the saying goes, half of something is better than all of nothing. If he'll make the difference between the project being a hobby and being a real business, then my take-it-or-leave-it advice would be to be generous with the stock, but that's just the way I roll, your milage may vary. That said, one way to think about splits is to look at the number of hours you've invested, assign a dollar figure to those hours, and treat it like you've made a capital investment and use that as a basis for determining/justifying a split.
Dnguyen 16y ago
The hard part of any startup is execution. How will this person contribute to your execution? What is your plan to finish beta 1 and get users to sign up? Will this person get you there sooner? As with any project, you have to have a plan and milestones. Then you can start this person out with a small percentage. Give additional percentage as incentives to complete milestones. Make sure you leave some behind to attract other people to join you!

3 points by xyzabc 16y ago

sagacity 16y ago

> Given no further information what do you think? Even with further information, it'll ultimately have to be what both of you are comfortable with. Granted, you've done a lot of hard work single-handedly but do not underestimate the value/importance of implementation, especially in a startup environment. Also, if you all are going to need/raise funding, you should give some consideration to the currently prevailing norms of founder - co-founder ownership patterns acceptable to the funding sources and keep that in mind while deciding on this. HTH

xyzabc 16y ago
Until now I was working as part of research for term projects, now as a side project. I am sure I can get traction without any investors, until I get some users on it. So it's a side project for both of us, we both have full time jobs. Can you give me some numbers? 70-30 or 80-20 split?
- sagacity 16y ago
  From purely an investor's perspective, I believe the more even a split, the more attractive it would be. However, since you're not seeking funding at this stage, I'd say it is pretty much your own call - between the two of you. Have a frank discussion, try to work out what value you've built so far and what he brings to the table and go from there. I'd say anything, 80-20 / 70-30 is okay, as long as both of you are comfortable with it. HTH

brk 16y ago

Seems kind of late-stage to be bringing on a "co-founder". For any new employee (and you don't need to get hung up on the titles), they should generally get an equity grant that is proportional to the value you intend for them to bring to the business. If you can't grow the business to the next level without this person, they get a stock grant similar to yours. If they are going to implement some "really important stuff" but generally not be involved in the business management they'll get somewhere between "quite a bit" and "a pretty good chunk". Generally speaking, it's not a good idea to allocate 100% of the stock. You should think up front about what other employees you'll need to hire, what you might have to allocate to investors and so forth and make grants accordingly now.

xyzabc 16y ago
You are right, but I can't pay him much. So I have to give him some equity, or are there other schemes?

RiderOfGiraffes 16y ago

Here's another discussion on a similar subject that might be relevant. http://news.ycombinator.com/item?id=874859 http://news.ycombinator.com/item?id=874859

smoody 16y ago

As the saying goes, half of something is better than all of nothing. If he'll make the difference between the project being a hobby and being a real business, then my take-it-or-leave-it advice would be to be generous with the stock, but that's just the way I roll, your milage may vary. That said, one way to think about splits is to look at the number of hours you've invested, assign a dollar figure to those hours, and treat it like you've made a capital investment and use that as a basis for determining/justifying a split.

Dnguyen 16y ago

The hard part of any startup is execution. How will this person contribute to your execution? What is your plan to finish beta 1 and get users to sign up? Will this person get you there sooner? As with any project, you have to have a plan and milestones. Then you can start this person out with a small percentage. Give additional percentage as incentives to complete milestones. Make sure you leave some behind to attract other people to join you!