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Just as a gut check: 25% of the company for 200k is a lot of equity for a low price. That's a yellow flag to me. It says to me that the investor doesn't think t
by trjordan 6y ago
Just as a gut check: 25% of the company for 200k is a lot of equity for a low price. That's a yellow flag to me. It says to me that the investor doesn't think the company will grow huge and/or there should be room for future investors.
I'm not sure what you product or idea is, but companies where technology is the core tend to have all founders (or N-1) capable of building product. You have 1 of 3, so what are those other two folks doing? Again, a yellow flag. In terms of the business, I'd worry this is going to be low margin, if it takes 2x as many sellers to sell as it takes builders to build, from day 1.
Technology is leverage, and you're the only one building the lever that lifts this company off the ground. My advice is to make sure your founders understand this and to make sure all three of you are focused on building a true MVP. You need to build something that is easy to set up, easy to use, and delivers true value. Your cofounders will smooth over some of the rough edges, but push hard on making sure you're aiming for product-market fit in a good market.
If not, you'll end up as the IT group for a consulting business. It's not a bad gig, but it's not the startup journey you've probably come to this website to talk about.
- eximius 6y agoIt sounds like OP is keeping 25%, with 75% going to the three new guys. For 200k.
- AnonHP 6y agoThat’s far worse by the GP’s comments and becomes a big waving shiny red flag considering the other points there (what are the other two bringing to the table?).
- p1esk 6y agoYes, giving up 75% of the company for 200k looks like an extremely bad deal.
- trjordan 6y agoI read it as 75% of the company being split among the 3 founders. It's not clear to me there's a real company here with only the OP. I don't think it's unreasonable to assemble a founding team in the way it's been described.
- simonebrunozzi 6y agoIt is not safe to assume that this idea has the potential to become a billion dollar company. We also have to take into account that OP, as a founder, might inspire more or less confidence, and hence influence the "valuation". 200k for 75% of a business might be a good thing, depending on what type of business we are talking about. We'd need more data for a more meaningful evaluation.