I have started a website along with my friend and now its running successfully. While we started we did not decide upon who would have how much stake and all.so now it became quite difficult for me to decide upon this.
Here is how we started,considering all this..please provide your opinion.
The idea was mine and i had the domain knowledge,i wanted some one to do a website for me. I asked my friend to do this and he did that,i designed the marketing strategy, pooled up resources to implement it,spent some money which is required.My friend helped me though to some extent in some of this.
From now on,the work only involves marketing & day to day processing which i have to look after,where as my friend is only good at technology.
Considering all this things,can you broadly suggest how would we do this? or in general how this thing happens in general?
Some couple of questions to decide:
1) Are you giving salary to your partner ?
2) While developing the website...did he asked for payment...or paid him amount to get it developed?
3) He is participating in sourcing and customer support ?
Venkatesh, what I can see a majority should rest in your hand...as technology is important part however to drive business marketing and other operation is needed. If he is only taking care of technology then anything between 20-25% is more than enough (or should be less) + There is a salary which you can offer him and you can negotiate on this.However keep a majority decision rights in your hand.
If he has taken amount to develop website and only offering tech support now...then don't go above 15-20 or even less...its on you how to negotiate. But don't offer too less...as while starting a tech company when you have less or no tech skills...you need a technical person to support you and stick with you.
Its good to decide such things in advance or now, else it create mess.
Thanks for the response neeraj!!
To answer the above questions,no neither of us did not take any salary.He did not ask for the payment,as we thought we are partners & we did not decide upon the stake
and thought this would be proportional to the amount of work we do.
Technology was a important thing & he did that for me,thats the reason i pulled him in..but apart from that i did every thing,day to day opeartions,marketing and all.
I told him that it would be 70-30 , 70 for me , 30 for him..but he was expecting 40-50% as he was also one of the founder .Just because that we founded together ,does that mean that we have to share equally? i want to settle it now as i am planning to scale up and would have to offer some stake in the near future for potential investors/partners to take it to the next level.
Dont want any problem in the near future,so want to settle it down now.Also please suggest some links which describes the Equity sharing mechanism etc so that i can convince him.
Just because you founded a company together doesn't make it mandatory for you to share the equity equally. However, unless and until you can logically put your point forth, relationships will go bad, even long term and stronger ones. By normal logic, I would propose nothing more than 75:25. However, it depends on the industry. I am assuming that it is not a purely technology oriented business. Happy to elaborate more if you haven't yet sorted this issue out.
Sasikanth Chemalamudi, www.thefirstcrore.blogspot.in
Thanx Sasikanth for the reply!!
I am trying to sort it out with 70-30..this business majorly involves one time set up of a website and the rest entirely depends on process & marketing.
Will let you know soon once i fix this with my partner. :D
I would suggest you attend this LearnSocial session on "Structuring Equity in a New Venture" by Vijay Gummadi (Founder and CEO of CarZ). This is a Live session which you can attend online. http://learnsocial.com/courses/159
Disclosure: I am the cofounder of LearnSocial, but genuinely felt this would be a useful session to know what the structuring of the startup equity should be from the time of formation till a very late stage. This session has been conducted once earlier on LearnSocial as a physical session and we received great feedback on it. Best of luck!
Thanks for the link,would try this :)