Hi guys, thanks for all the great feedback to my post 'What else can you do to be as attractive as possible to a tech CoFounder?' - I may have found that person. Here's my next questions:
If I've spent 3 months full-time doing nothing but coming up with idea, validating the market, wire framing, paying a designer, getting the MVP coded and building a customer network and delivering proposals, and constantly talking to prospects…. how do we structure the equity to make both parties happy? He suggested 50/50 and I responded with 60/40. The discussions have been very healthy so far. Here's the situation:
He is showing great interest and is becoming emotionally connected by the idea, even suggesting an additional direction within my target market (its a B2B product) which I hadn't thought of and sounds great. He is qualified, great experience, Top 25 school MBA grad, certificate from Stanford etc, startup experience and big corp experience. Lately he's more a CTO / infrastructure type tech-person, big on strategy and gets the big picture, less a coder. He has an offshore dev team for his current business, but is confident he can code the thing himself.
1. Yes there is no '100% complete product' as of right now, but with paying clients I could fund development (or part of it) myself if I had to. I certainly don't feel comfortable giving up 50% to someone I just met, having put 3 months full time into it (without salary) and paying a designer. Am I justified at 60/40?
2. Should I have him commit to a 'cash injection' to match my time and cash payments made to the product so far, in order to be an equal 50/50?
3. I don't want to de-motivate either. But yet, I feel strongly about maintaining control. I can't see myself going anywhere less than bare minimum 51/49 if it came to that.
4. Am I greedy, am I over-cautious, am I stupid? Would love the thoughts. Whatever we proceed with, I need to make sure this person can 'get it done' and in 'reasonable timeframes' otherwise I could be locked in to something taking forever to build. So am considering a performance-based equity operating agreement which I can have an attorney friend put together.