3 ms·
If it's going to be a startup and you have roughly equal abilities in your relative domains and you're going to work equally hard on it, you should tend to spli
by pg 17y ago
If it's going to be a startup and you have roughly equal abilities in your relative domains and you're going to work equally hard on it, you should tend to split the stock evenly.
Don't forget vesting.
If he then also finances it, pick a valuation and dilute accordingly.
- BobbyH 17y agoHere's an example of how the math works: * You decide upon a $5 MM pre-money valuation for the company, and you agree that you both get half of this * He invests $1 MM, which makes the post-money valuation 5+1 = $6 MM * Let's say you will be unpaid for a year. You might treat that like an investment of $100,000, which takes the post-money valuation to $6.1 MM In this example, you would own: * $2.5 MM in founder shares + $0.1 MM sweat equity * $2.6 MM total out of $6.1 in total equity * your ownership would be ~43% Vesting would apply to founder shares (over, say, 3-4 years) and the sweat equity would vest over the year you sweat. No vesting would apply to his $1 MM cash investment.
- johnrob 17y agoYou're assuming that the financing partner is taking a salary, which he probably would not do. Thus there's no need to factor in that virtual 100K investment.
- BobbyH 17y agoTo clarify, I was assuming that the 100k (or whatever number) is salary that is not taken by the technical cofounder who posted the question. However, if the technical cofounder takes a full salary, there would be no need to factor that in. I agree that the financing partner should not take a salary.
- prefernow 17y agoSplitting evenly might not be an option at the time being (the business founder is opting for contractor rather than a cofounder).