Here'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 inve

Here'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.