Business Development · Cofounder

How much cash should I offer my ex-cofounder now that I'm about to close a round?

Anonymous

Last updated on October 14th, 2017

The ex-founder, who worked on this part-time while in grad school, vested 5% for his one year of contribution before exiting amicably for a full-time job. He's open to selling most, if not all, of his equity after I close a round, which will happen shortly - $5M at a post-raise $15M valuation.


He worked on this at the idea stage and isn't aware of how much further along I am today, nor does he know the details of the upcoming term sheet offer. I clearly don't want to pay based on the valuation. Suggestions on a number? General suggestions on how to approach this?

Hugh Proctor Hard working, dedicated and innovative CEO / CTO

October 15th, 2017

Does he have equity in the business?


If you were to decide to build a house and a friend came to help lay a few bricks in the house foundations... does he own a part of your house?


It's very very difficult for him to sue you and expensive, and almost impossible to prove his sole intellectual property and copy write over the code.


I'm no lawyer, but I don't believe you owe him anything.

He has a copy and ownership of the code that he has done... if he so chooses he can create a competitor business to yours and put in the sweat equity... but for this, your business and sweat equity, he has no ownership sadly.


Unless of course you have a written contract with him or he has part ownership in a legalised business.


That's just my take on things.

Abs Centre Abscreation@widget becoming a global leader to inspire people to do better

October 16th, 2017

I am start up entrepreneur. I Dont really have much experience about business

I need help setting up my business

That is why I seek knowledge from elders