Bringing an additional founder in...
Hey all
I've been building an mvp for a travel startup within a specific travel niche as a side project through 2023.
Rather than building fast and validating, I've been using the time to brush up on some of my technical skills and focussed in on building a basic featureset before seeking further validation.
Moving in to the user research phase, I recently spoke with a well recognised operator in this space to gain some further perspective of the problem domain.
The call was really productive and validated that I'm building the right thing, and it solves a particular problem within this niche.
Basically first client won!
Following up this week, the operator has come back to me and expressed an interest in getting involved with helping to build the product from a business development perspective.
Rather than committing to anything, I've suggested we catch up next week to discuss further.
As of today, the product isn't launched and isn't generating revenue.
With their help and involvement, I feel that we would be able to get the product in front of more people and improve chances of success.
Proposed structure would be:
- Co Founder 1 (Me) - Original idea, technical development and ongoing operations.
- Co Founder 2 (Operator) - Business development and sales.
Part of me feels that we should do a straight 50/50 split, given the business is currently valued at the square root of nothing and we'd be both taking all the risk in building this side by side.
That said, I also feel that I'm potentially being slightly naive offering this straight up off the back of a single conversation, particularly as I've already done quite a bit of work to build the initial mvp which would the starting point for any business development.
Looking through some other startup equity calculators I'm seeing alternative splits like:
- 65/35
- 60/40
Has anyone started out with these types of equity splits and then adjusted up to 50/50 after acheiving certain targets?
Or am I just over-thinking things and move forward at 50/50 and not look back.
Be interested to hear other perspectives on this.
I think you are going waaaay to fast with this. Slow down.
I had multiple of these discussions in the past and what really helps is to have some sort of process for figuring things out, something like this:
Note: I met a few people who actually preferred to have a smaller stake in things. Then I met guys who wanted to have the majority of shares, no matter what. Some people did not want shares, but a slice of revenue guaranteed. Others just wanted to invest, or help as angel investors.
Lots of potential ways this could go, so don't limit yourself before you even started.
Thanks for the balanced and grounded feedback Jan.
You're right, I'm guilty of often getting ahead of myself too quickly.
I've posted this as a thought experiment to try and get out of my head what type of scenario I'd be comfortable with.
Having slept on things, maybe things aren't as black and white.
Instead I should keep all of these options open, and look to focus on building a shorter term working relationship to see how we operate together.
I agree to slow down in the equity until you know you can work with the operator and they do good work but release that MVP ASAP!
If the operator agrees then you can do a tiered equity structure that kicks in over time like you said.
Yes, I think the first stage should be nailing down the final parts of the MVP and test running it on their operation.
This will be a good platform to assess each other and determine if we can work together.
Mike, it's so hard to give you an advice. Both options can work and many others. My view, let him demonstrate he worths 50% through vesting triggers.
+1 you are going wayyy too fast with this.
I had almost the exact same conversation just today, a guy I tried to contract offered to join as a cofounder, asking if I'd be willing to do an equity offer. Instead I offered 30% affiliate sale on the MRR he bring in for presspulse.ai. If it works well Im open to getting a cofounder but it can be a great risk that could destroy your company. So proceed with caution.
One other lesson I learned is that you should NEVER do a 50/50, always do 51/49, one person can pay for that additional 1%, or you can end up in a deadlock down the line.
From personal experience, I think it is best to first get to know this person and if the person is even committed to working without equity. If not, what you could do is offer the person SAFE's or a very structured equity which states that if he hasn't actively worked in the startup for more than a year that equity percentage becomes null and void. If you need advice we can have a conversation in private.
Hey bro, take your time. Forming a partnership is like marriage. Jumping in on day 1 can be fatal. There's a proper process—think of it like going on a date first. Before my first startup, I joined 5-7 side projects lasting 1-4 weeks. Crucial to assess capabilities and work style (or value you may name it). Even with long-time friends, working together reveals a different dynamic. Work experience first, always. You will figure out the right spilt.
I think you should go with 60/40 if that's your first time going with partnerships.
This comment was deleted 3 months ago.
Indeed, the advice makes a lot of sense.