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I think there are no hard and fast rules about equity sharing. What matters is not so much what each has done as what each will do. So the question is not so m
by pegobry 17y ago
I think there are no hard and fast rules about equity sharing. What matters is not so much what each has done as what each will do.
So the question is not so much what each side has done but the role you see your new partner taking in the future. If you two see each other as partners in the venture, the split should probably be something like 60-40.
If you see him as someone who will do a bit of front-end dev and then move on to other things, you should give him less.
Although of course, it's always a negotiation and is based very much on intangibles: how much you guys like each other, see yourselves working together in the future, how talented you think he is, i.e. if you think he's a star you should give him a big share of the pie to entice him and keep him involved in the project.
In general though, the guy who started the company (i.e. you) should get a majority of the equity and the people who come later should get equity/options based pretty much on an asymptotic curve with equity on the y axis and time joined on the x axis.
This might be a bit complicated for a side project but you should think about founder options to avoid the "YouTube syndrome" of one founder bailing early and still getting a big payday if it comes to that, and give your partner an incentive to stay involved over the lifespan of the project.
So basically, if you think of him as a full-fledged partner, it should be something like 60-40, and if you see him as less than that it should be something less, and you should think about founder options.
- code_devil 17y agoI am OK with the fact that if he is an equal contributor in this project that I would be happy to divide the revenue( or equity) equally. However, I think I need to make it clear to him that I am taking a personal expense on the server cost as of now and into the future till if/ we make any money or just leave it behind as a fun project that we both collaborated on it. I think 60/40 sounds fair and reasonable. [I would love to hear other people's opinion on it] A few questions further into it: 1. Say we do it 60:40 (informally say over email records), what happens if he works on for a while and ... a. does a good job and then decided to not continue for X reasons. b. does not get anything done for X reasons and decides to move out of it. 2. This is a pure fun project on the Social Networking platforms. So, it may or may not work like N other applications. Is this the right time to talk about it and how to bring this revenue sharing idea into the discussion without loosing the other parties interest?