I am a first time solo entrepreneur, working on building a B2B SaaS startup. As it’s a technology product and I come from Product Marketing background, I will probably need a technical founder going forward.
As I am not able to find a suitable technical person to become my partner, I thought to start with outsourcing the MVP version and at the same time validating the idea and market. I came across a very sound technical person who runs a own software development firm (came to know him from close contact) and fund his technical expertise to be really good and what I was looking for.
So the deal we discussed initially is
1 His firm will take care of product development and I will pay for the costs and marginal profits to make this sustainable for his team. (The cost will be 30-40% lesser than actual costs; basically he will make little profits but cover all expenses and overheads of team)
2 He will spend his own time as a technology partner to build product, architecture and also giving all the necessary consulting in exchange of 5% equity. He basically invests his own personal time and the equity is basically combination of his own time and discount he is giving for development costs.
As I don’t have any other founder with me yet, I will be holding remaining 95% equity and might need to dilute some when I find the right person onboard. I plan to allocate 10-15% equity for those early employees who will be joining the team (as a part of motivation and long term commitment)
Do you all think it is ok to give 5% equity for this technology partner because without his support the produce development work may not be that fast as I am not a technical guy to make any technology decisions here.
I am totally bootstrapping this startup right now and probably will need do it for another 1-2 years till it gets traction and then looking for outside investments