Equity · Startups

Self Funded Startup Co-Founder Agreement

R Menon CEO

December 23rd, 2018

I am the Founder of a startup and have developed a MVP - this has been a full-time effort for me. For now, I am funding the startup. The development is being done by an external product development company. I am interested in bringing in a VP of Engineering and found someone who is willing to work on this part time (under 15 hours a week) for sweat equity. I hope to get to revenue generation in the next 3 months. I have looked at several startup agreements but need to factor that this is self funded. Any advice on how to structure this for equity and eventually as a hire?

Mike Moyer

December 24th, 2018

Answer: Slicing Pie. The Slicing Pie model is a formula for determining a perfectly fair equity split an early stage bootstrapped company. It is exactly what you need and will work perfectly no questions at all. Most equity models are fundamentally flawed because they rely on accurate predictions of unknowable future events. Slicing Pie, on the other hand, is based on unambiguous logic and reflux the contributions have each person relative to other members of the team, including you. Slicing Pie is used by startups all over the world and it never fails. You can download a Slicing Pie legal agreement from the website: www.slicingpie.com I promise that this is what you're looking for...

Curt Sahakian Attorney

December 24th, 2018

There are lots of ways to do this.

Consider keeping title to your software (either personally or in a second corporation).

Issuing a non-exclusive license to an operating company.

(you can share equity in both corporations with your helpers)

If you are self funding, consider issuing the funding in the form of loans, perhaps secured by the software.

Also make sure you set up an employment agreement between yourself and the company(ies). So that you get compensated for all your unpaid time in the future (there are many situations where the ability to assert such rights can come in handy,

Steve Owens

December 24th, 2018

I would not hire anyone until you are ready to scale. I have written a lot of bogs on this issue. CoFounder will not let me post them here, but just google my name and "startups" and you will find them.

Hire people by the hour - like you did with the PDC.

Raise money to pay for these hires through investors, with investment agreements.

There is no advantage to mixing the two in one person, and a lot of disadvantages (see my other blogs) to both the person working and the company hiring. The invention of money has obsoleted the bartering system, and is one of the primary reason we have efficient markets.

If you do decide to pay with stock, make certain you seek legal advice.

Charles McCormick Entrepreneur, Author, Investor, Advisor

December 24th, 2018

Take a look at the Founder Accord. Here are some links -- https://www.business.com/images/content/58a/da0ce2f87b1207f721285/0-0-/

and http://www.shakelaw.com/blog/start-business-right-founder-accord/

Rodrigo MBA Serial Entrepreneur | Angel Investor | Consultant | Professional Speaker | Board Member | Startups Mentor&Grinder

December 25th, 2018

I would also avoid hiring someone at this stage as a VP of Engineering. You are still trying to build your MVP and haven't launched yet, that means you are not sure about a lot of things including if such person will be the right one.

Oluwatobi Immanuel Techpreneur, Design ENthusisast

December 24th, 2018

Best, Oluwatobi. Oluwatobi Immanuel, *AGBELEYE* Kingdom Advancer | Product Designer Twitter: @emmabidem Linkedin: Oluwatobi A. Immanuel Facebook: Oluwatobi A. Immanuel

Anthony Dobaj

December 24th, 2018

I agree with Mike. Subscribe to a cloud - based time tracking tool (like Teamwork) and be sure to cap the equity. As with all R&D the time can rack up quickly. What are you looking for in a CTO?

Rajesh Balu Sharma Cofounder & CEO of Hexagon Inc. US An initiative by Rajesh Sharma

December 24th, 2018


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December 24th, 2018

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