Founder Agreement · Founder equity

Bringing on new co-founder. Currently a solo founder with an MVP. What should we be looking at for the equity split?

Max Founder

Last updated on March 1st, 2018

I am a solo founder looking to bring on a co-founder. I am looking for advice on the equity split.

My original idea came to me well over a year ago and I've worked on it evening and weekends. This meant refreshing my software development skills, creating a business plan and building the product.

Four months ago, I left my job to work on my startup full-time.

I'm in my early 30's and my background is in investments and software. After I left college, I worked as a software engineer for two years before moving into asset management in a front office role.

My product is built on the domain knowledge I gain in this area. It's B2B SaaS with target average revenue per customer of ~$30k (with room to grow). I've finished my MVP and am about to go full tilt into sales mode.

I have three advisers who I brought on in a semi-formal capacity. Two are senior investment managers and one is a serial entrepreneur having started companies in the same area. I speak to them maybe 1-2 a month to get advice and they are listed on my website.

I found building a startup on my own hard work and I would love to bring on someone to do business development/sales.

I'm in early stage discussions with a potential co-founder. I worked with him in asset management. He's in his late 20's and recently completed his MBA at a top school. His background is in business strategy and analytics (sales focused). He hesitates when it comes to sales because he does not see himself as a sales person. Having said that I think he could do it and his role would evolve over time away from direct sales into more of a management role.

I feel like he would be a good fit for a cofounder because we get on socially, he's well educated and has decent work experience. He is very interested in working at a startup and told me he wants to jump in with both feet. He doesn't want to make a rash decision so is holding back a bit.

His initial thoughts are that he would work one day a week + weekends (his work situation is flexible). I would love to have him full-time. He has a one month notice period on his contract.

Vesting on equity would start once he is full-time over a 4 year period (standard terms with 1 year cliff).

If he starts full-time in one-month, how much equity could I give him?

If he continues to keep his full-time job and goes full-time with me in X months, how could I think about the equity split?

Dane Madsen Organizational and Operational Strategy Consultant

March 1st, 2018

I am confused why you want a co-founder, especially this one.

Having a common background, past work experience, and getting along socially sounds like you want company in this effort, not a co-founder. You are looking for a core BD/Sales type and he has told you he is not comfortable there. You see him long term moving out of that role, but he does not see himself short term in the role. This is not a good fit. You would not hire a sales person to code your platform, do not hire an asset manager to sell.

Before you even get to equity, you need to reevaluate why you need a "co-founder", what that person looks like, and critically, how they think they fit the role. I have worked with many an MBA from many good schools who could not sell their way out of a wet paper bag. If sales and BD is what you need now, you need a warrior, not an analyst.

Tia Rokele Former GM-Start Up

March 1st, 2018

Hi Max. To keep my answer short, I do not think this is a good idea at all. Firstly, if someone tells you that they cannot do sales, you do not force them to do it. You need to re-evaluate your idea of a co-founder and what exactly you "need" from your co-founder , in the long run. What you need is a new business development executive , or a sales hunter , who has experience , and is fearless when it comes to hanging out new business for start ups. Be careful and take your time on getting a co-founder . I have seen and heard so many horrific stories of bankruptcy, losses, betrayals etc that it is never something I would just jump into. I have personally been asked to partner with others , or had people ask to partner with me, but I have declined until now. When the time is right and if there is a need for it, I will take my time and be very through and careful with who I decide to bring on board. Protect yourself. All the best 😊

Protagonist Founder

March 1st, 2018

Hi Max, I encourage to pick up "Slicing Pie" by Mike Moyer. You can get it on Amazon. One of the best books that you can find on slicing equity pie. Read that before you make any decisions.

Max Founder

Last updated on March 1st, 2018

@Vince Martinez - Who are you? What is up? I'm not sure if you're confused or trolling. If something is wrong, let please provide a full explanation and maybe contact the site support staff. I can't work out want you want from what you've written. Did you post your comment in the right section?!?