Hello all, i choosed to hire a team of developers to help me set up a very unique and complex web application, because i believe it has great potential. I pay all the costs for the setup and operations. I am not afraid of sharing equity, because i want the project to be successfulI. Since i have no experience as CEO and i am not a native english speaker, i just wanna to act as co-founder/initiator. What equity would be recommendable for the CEO an CTO without being afraid , that they kick me out of the project, but giving them maximum motivation. Is a contract a viable solution ?, but i can´t afford a lawyer. Thank you
P.S.Thanks for all the helpful replys, sorry i can´t answer without premium membership
It is critical. They need to lead the business that supports the business you are in. Developers and engineers are excellent at what they do. Corporate governance and strategy are not what they do but done wrong will kill a company.
It is huge requirement for your project to have experienced people on high positions if you personally don't have experience or knowledge. You need to create quality and maintainable product on first place. Today, in 21st century, there is no such thing as "unique" product. Your idea is maybe unique, but when you release Beta of your product, competition will start showing up and then the real battle begins. If you create application with a lot of bugs or application that you cannot easy scale, competition will soon overtake your share on the market.
It depends of the phase of the project. If the project is in the early (definition phase) then equity should be higher (up to 15%-20%). In this phase there is a high risk of failure and as I understood, you are short with money, so equity should be very alluring.
If the project is in the production or Beta phase, equity drops extremely, because there is no need to give large equity to someone who wasn't struggling with you from the beginning and who came on the project when it is almost finished or half finished.
Equity also should depend of CEO and CTO experience and how good they "selling" them self. You should decide about equity same as you are choosing your employees and salary for them. For some CTO with little experience, you will stay below 1% of equity.
One more advice, try hard to afford or consult with lawyer who has experience with startup companies. Price is maybe high from your current perspective, but good (or bad) decision right now will have huge impact in the future.
Honestly it depends on your project and forecasted rate of growth. I am a strategy consultant that works on solving issues regarding organization development and strategy. Contact me and I might be able to help you. Since you are a fellow co-founder I wont even charge you for it. You might not even have to give up any part of equity if your strategy is refined and practical.
As mentioned by others, it is imperative to have individuals in positions where they are the expert. A CEO is key to your ongoing success. Engineers are great at developing systems and software but someone has to direct the ship and get the product to market.
As far as equity, it depends on the individual and your expectation of growth. As a rule at least 10% would be a good place to start. Or you could have a scale of say 10% going in with an additional percent as the company grows and meets their goals.