Co-founder wants new equity structure after going full-time and bringing in an investor

AAnonymous ·April 19, 2018 ·3 answers

For the past year, i’ve been working with my co-founder on a start-up. We split the company 51%-me and 49%-him. Both of us were employed until now, doing the startup along with our job.

My co-founder brought in an investor now and wants to go full-time on the startup while I will still be working in the other business. (My opportunity cost to leave my current business would be much higher than his.)

While he is going full-time, he would get a fair wage from our company (which is part of the investment). At the same time, I wouldn’t get any compensation since I’m still working for the other business and doing the startup on the side. That to me is fair and the way it should be.

He informed me that he and the investor want to change the equity structure from 51/49 to 60-him/30-me/10-inv.

I don’t feel that’s fair since he gets paid for the job he is doing at our company. Am I wrong? Any advice?

3 answers from the community

AAnonymous· Apr 19, 2018

So this investor was bringing money, and there were no agreements on what he would get in return ?!? Or did the investor not yet bring the money ?

About your partner wanting 10% more: I also want 10%, haha. Why not use the slicing pie method ?

To bring in a new investor who buys 10% is worth a commission, maybe another 0.5% or 2 % of the total equity (that would mean 5%..20% commission), but certainly not another 10% of the total equity (that would mean a commission of 100%).

If your partner wants a raise, and if that seems justified, then ask whether he wants it in the form of equity or salary. In any case, that would mean that he gets a small fraction each month, not all the 10% at once.

AAnonymous· Apr 23, 2018

you bring your investor, and ask for 10% more.

AAnonymous· May 21, 2018

I no world is double the equity+ salary a fair deal for getting an investor. I mean unless this co-founder just negotiated like a boss, doubled your valuation, and got you a billion-dollar exit, then ask him to stay easy with the current cap table

Co-founder wants new equity structure after going full-time and bringing in an investor

3 answers from the community

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