Cofounder Equity percentage

New Gabbie
Mar 12 13 Comments

I am currently a sole founder of a startup, which has not even been incorporated. I have a good idea of market fit and have developed a simple prototype so far. Still a side project but have started looking for some angel funding. I am technically competent but would like to bring on board someone with niche and specialized knowledge. Of course he/she will be a cofounder , but I am really hesitant in sharing 50% away. Reason is : I am soon going to be full time on this, but the other person might not be. Also can never be sure of his sustained contributions.

In general I am concerned about what if things don’t work out with him , about the exit options etc.

The other option is to just get part of the work done on upwork etc. and stay solo.

Thoughts?

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TOP 13 Comments
  • Compass / Eng
    FUPayMe

    CompassEng

    PRE
    Google
    FUPayMemore
    You don’t need to give 50% away or have a cofounder. You can hire people in equity. I’ve done this and am currently doing it again.
    Mar 124
    • New Gabbie
      OP
      Is it no pay - Equity only ?
      How do you decide the Equity percentage to be granted / timeframes when it would vest ?
      Mar 12
    • Compass / Eng
      FUPayMe

      CompassEng

      PRE
      Google
      FUPayMemore
      Feel free to dm me
      Mar 12
    • Compass / Eng
      FUPayMe

      CompassEng

      PRE
      Google
      FUPayMemore
      I currently have 7 people working for me with a total equity of < 15%. All are working for free.
      Mar 12
    • New Gabbie
      OP
      Are they working full time / part time ? What is their vesting schedule - over 4 years ? How do you get these people - interns ?
      Mar 12
  • New SVUz53
    I would highly recommend using Gust Equity Split Calculator to determine how much exactly you should give away from ur startup to another co founder... There is lots of ways to calculate each co-founder equity shares specially at the beginning, and both of you should agree on it before stepping any further to avoid crashing later
    Mar 120
  • To establish equity identify 1. What the business person will contribute. 2. You can vest it in a yearly structure. 3. Create a board where you have ability to control other cofounders but build trust in them. 4. There is no product market fit without having paying customers or at least substantial customers using it. 5. Bottom line: have you diminished some risk already, if so how much and how much will the person contribute will determine equity. Good luck!
    Mar 120
  • Workday hgchsgs53
    How many paying customers ?
    Mar 123
    • New Gabbie
      OP
      0
      Mar 12
    • Workday hgchsgs53
      Is it b2b or b2c ? If b2b too early to think about founders and such. Try getting one or two customers
      Mar 12
    • New Gabbie
      OP
      It’s B2C
      Mar 12
  • At least don't give 50%. Give 49.9% and keep control. And only give half if the other person is going to be a real co-founder
    Mar 120
  • OpenTable Meliodas
    Why 50%?

    Equity isn’t given away, it is exchanged for something of equal value.

    Any agreements you enter into should have buy back provisions, etc.

    Talk to your lawyer before making any promises around equity.
    Mar 120

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