Should I throw away 60% of my cap table to grow my startup?

There's no guarantee that this guy will do what he says. There are a lot of people that are looking to take advantage of desperate entrepreneurs by offering them awful deals.

If you have traction, raising seed money shouldn't be that hard in this environment. If you can't get meetings, you should take that as a sign that you still have work to do.

Perhaps you should think about getting a job until you can prove traction.

Don't take the deal. That's a terrible deal. Screw that guy. He's one of those snake oil salesmen.

Don't be too quick to dismiss the deal. Basically have you exhausted your options? Is your next option to shut down or mortgage your house for the startup? The key is to make sure this guy is trustworthy. Do your due diligence on him. If the alternative is unacceptable to you, and this guy is the next best option, I'd seriously consider it.

There is no right answer in things like this. Why do companies discount products by 90% just to get rid of it and not just throw them in a garbage dump? Because 10% is better than nothing.

Crowdfund your product, you can't lose this way. You receive national exposure, make money, investor offers and receive valuable fee back. I would use Indiegogo as my crowdfunding base.

It all boils down to how much you trust this guy.

If he has a good reputation and a good portfolio, this might be a good sign for you. Because, frankly, it's the first time someone has paid attention to your startup isn't it? If you are not sure, go for crowdfunding. You'll have a good idea where you stand from the kind of response your pitch fetches.

Best!

Is he a trustworthy guy ?
Does he add value to your startup ?

You should explore and consider the situation in depth.

The 'original founder stake' can vary greatly.

A deal whereby you retain a minority stake may be appropriate, in that it helps you move forward on something where you'd otherwise be stuck.

A deal which brings you appropriate protection can be structured, so that the business operates on agreed guidelines in which control shouldn't be a major issue.

<a href="http://glvr.com" rel="nofollow">I'm happy to not be anonymous, and welcome sensible contact.</a>

A) 60% is theft, f_*k that guy. His ego (why does he also need to be CEO?)

b) 60% means you work for him immediately, not eventually.

c) 60% is a ripoff because it is for a non-guaranteed outcome - your startup will have supposedly better <em>chance</em> for funding and growth, still much work to do in future, which he may not stick around for.

If you must:

* Roam the net (HN, quora, etc) and find examples of partnerships where solo founder gave significant but not ridiculous amounts of equity. Show them to him to frame your discussion.

* Regardless of what you agree to, MAKE SURE YOU USE A VESTING SCHEDULE with a 1yr cliff.

* Draw up an agreement to specific milestones he must achieve for 0-6, 12, 18 months, etc

** Section 1 of agreement: he brings in X funding at decent terms within Y time or else partnership's dissolved.

Do you want to be an "employee" at the mercy of this guy?

Did you start a company to have someone telling you what to do?

Get traction and revenues and find investors by yourself.

Don't take the deal.

It's not just about trustworthy-ness.

Have a founder friend in a very similar situation. Investor brought in a few hundred K of his own capital and was made the co-founder & CEO. The new CEO played his role, and raised another $500k+ seed.

This new co-founder/CEO/Investor knows the investment side, but is not skilled in any other part of the business. His ideas are off track so he splits the employees' loyalty when he proposes something without mentioning it to the other, original founder (the specialist in the product/market). This has slowed down development dramatically.

This new CEO has been great for bringing in cash when needed, but that ship has now sailed. To get a Series A they have to hit traction and/or revenue and it's all on my friends' shoulders, no one on his team can help.

Cash is great but it doesn't solve the problem.

you must put the guy on a vesting schedule! 4 year vesting, 1 year cliff.

like others said: maybe this guy doesnt deliver, you need to be protected in that case.