Hi I am the founder of a new startup which is based/dependent on an online platform with some bespoke features and algorithms. I am from a strong tech and business background so I was lucky to have to skills to design develop most of it myself. I am head of global development for a large multinational on some very high profile projects. But I did spend approx 10k on freelance developers to assist me with the development as I needed to release some of my time to work on the "business" side. I am at the point where the MPV is live and gathering a very small amount of traction with users. I am not at the revenue stage yet. But I now need to build a team and find some people/partners with strong marketing and business skills to take it further and help make it a success. So, I bumped into a person at startup event recently that is working on almost the same idea but is only at the idea stage. She has suggested working together instead of us both competing against each other. She has no experience in the domain nor has she any marketing, technical or sales experience nor has she any customer base. But she wants us to to enter into a 50/50 partnership with me being the CTO and using my platform and her being the CEO. She has ran into difficulties getting her platform developed and doesn't have the funds. So she is looking for a tech founder to handle this side. Her background is in accounting. Do you think her suggestion of a 50/50 share is fair? She wants her role to be in raising money and building the business so I have no idea yet what her capabilities are. Its not sitting well with me at all as I feel ultimately I am bringing a lot more value at this stage. Whilst I like this person and feel we could work well together I am just not sure on what level or how to negotiate this. What drew me to her was her passion for idea. She also suggested rebranding my platform to hers. I find this suggestion strange too since she is only at the idea stage. So I am just looking for some advice or opinions on this? Thanks
You have legitimate concerns. I would give her 2 options: A) Pay for 50% of what you already spent in return for 50% share or B) Hire her on a temporary status (employee or commission) and see how she does and if it goes really well, then you can offer a mix of compensation with some equity. It should be a win-win situation, not one sided. This is my opinion. Best of luck.
When someone talks to me about 50-50 split, it clearly is a sign that they have no idea how the equity in a startup ecosystem works. It's not that the founders has everything to themselves unless otherwise you plan to boot strap it all by yourself and not looking for funding from angel investors and VC. I am not judging anyone here, from the little information that you have articulated, If you are already having traction with users all by your own and by employing freelancers, why would you join with a person who has nothing complimenting to your MVP or to scale it up, for a 50% stake? And the other concern for me is that, this person you are interested in, she wants you to re-brand your platform into her?? And straight away she wants to be CEO? Really?
You have to seriously introspect on why you like this person in the first place? And if you can answer this question genuinely, you can always hire her as business development manager, rather than jumping to half stake of a company.
I would not enter in 50/50 sharing deal. It could be 49/51 or similar.
As you can be a CTO, it means that you will in-charge all technical department. So you know what you are doing.
Her, ... she needs to find out what she can do best, focus on it and implement it in the business.
As she is best in accounting, she should focus on Financial department.
As you also need CMO, CSO and CEO, you can NOT share 50/50 in anyway. You need/could/should fill in those positions asap by sharing reasonable amount of equity with your co-founders.
Also, need to reserve reasonable amount of % to future investors (in needed).
More info (it may help you)
I agree with the others. Sounds like you're bringing a lot more to the table that is tangible, she is bringing a promise of (?) - needs to be quantified a bit and she hasn't proven she can deliver. Ask her to put at least as much sweat equity that you feel is equivalent to what you put in. BTW - CoFounder agreements can be structured in many ways... I am looking for a technical CoFounder, I'm at a similar stage to yours and there's no way I'm giving 50% after carrying this startup on my back on my own for over a year.
if it's a good idea, why fight over the split of the company? I am in the early stage of development too. I have no issues with my co founders on the split. The problem I have is all of us is working without pay. This is taking a toll on us. We all have family expenses and mortgage to pay. If you have issues with the split or who is in charge, your company is doomed from the start. Finding another co-founder.