Family Business · Spin-Out

In an incubated business, how do you reflect the participation of the parent entity?

Vijay MD Founder Chefalytics, Co-owner Bite Catering Couture, Independent consultant (ex-McKinsey)

January 29th, 2015

We're in the process of creating a startup that has emerged from tools and consulting built for another entity owned by our family (I'm building software tools to automate catering food production planning/ ordering/ staffing, with the alpha customer being our own catering company)

Co-founder is on board with leveraging a strong internal test to work out the bugs and create a compelling case study, and sees value in taking a bit longer to develop the product suite against one customer to drive up the value story.

Should my wife be listed as a founder/ company executive? (she'll be spending a lot of time implementing the software and using it daily with full transparency of results to our team and some operational headaches for her as we work out the kinks) 

As we talk to angels and Vc's will they see the same opportunity? Do I need to protect the original business by writing in code escrow in case anything goes wrong? Will they see profit improvements in the parent company as a compelling sales story / proof point or a misalignment of incentives?

Any thoughts?