Business planning · Entrepreneurship

Just Equity or some cost + Equity

Nitul Mehta Cofounder & CEO of, looking for sales cofounder

December 13th, 2017

My company is dealing with software product development. Till now we have developed products for more than 50 customers and almost all product is success.

Recently, I got a chance to interact with one of the people from Europe. He is having an excellent product idea but lacking finance. The offer I have is to work with him on equity sharing.

Now, my problem: I am not sure how much he is good at executing an idea and how much he will invest (in terms of efforts) for that product once it is finished.

I have asked him to go for min Cost + Equity (this is normal practice at my end). But he does not looks "ok" with this option.

If anyone has such scenario, please advice what should I do?

Dave R

Last updated on December 13th, 2017

This is an excellent example for which Mike Moyer's Slicing Pie approach is an excellent way for participants come up with a dynamic equity allocation that accommodates ongoing contributions. Check it out:

Under this model, if one of you stops working on it, the other can go forward and both are protected for at least getting a bit of the pie appropriate for their work or (in his case) the conception of the idea.

Xinhua Zhao Founder at Exciting New Venture

December 13th, 2017

I would expect him to put more skin in the game. Otherwise, it's not clear if he is committed to the idea.

How much is your minimal cost? Maybe it's a bit too close to a full price? If you keep it below your cost and take some equity, it shows commitments from both sides and this would be something worth trying.