Equity Questions / Expectations
I've been working on a side ios/mobile project for 2.5 years with a partner. It has had various spurts of development & maintenance but nothing launched. I would say the blame is 50/50 between him and I.
This is my partner's project and idea. He has a decent email list, designs, and has done a smidge of bizdev around town. The design/code foundation was in place when I was approached, but I have a few hundred hours of development clocked for migrating from deprecation, features.
My concern is that I still have no equity and so far the discussion is that if I get the project to a beta state, I would maybe be looking at 7-8%. I'm all for milestones, but I feel like when all is said and done that this is low for the work already invested and the work that will need to be invested?
Is my thinking off? I feel like I should be in for 10% and another 10% at beta, at the very least, but I'm just a code monkey... :)
Hello @dboots.
Code monkeys get peanuts, you haven't even got that.
This stuff should have been sorted out before you guys started working together, expectations, milestones, number of hours, equity vested with a cliff, assurances that if he decides to depart the startup continues, if continued slackness then decisions need to be made, etc, etc.
Was there an agreement that you would get 7-8% for the Beta milestone? If so, why did you agree with it, and what assumptions did you make at the time of the agreement?
What is the equity on offer after the Beta milestone? For what milestone?
How much has he clocked in?
What is decent email list? Numbers please.
Email list on what, LOI's of early users, relevant potential audience, etc?
What has been his response to the suggestion of increased equity?
What is his allocation of blame for the 2.5 years, 50/50 or something else?
What was the projected project duration?
Why has it taken 2.5 years?
Cheers, Ace.
There is no equity value for an idea.
Equity is determined on how much work needs to be done and who is doing it.
if its something that would be bootstrap over raised; and the work is equal, where one person is coding/tech and the other person is marketing/sales/bizdev - this is 50-50. If the person is doing marketing/sales/bizdev AND is going to raise funding - then, this is not 50-50 as they are doing more.
have a simple conversation on expectations, find out why it wouldnt be 50-50, if they focus on "the idea" being valuable., then walk.
Thats a lot of red flags imo. I did the same 6 years ago, felt ridiculously guilty after the work my cofounder put in and said that we would split to 50/50 from 95/5. It was pure greed from my side. Now I only work on equal equity with cofounders, equity is not worth anything until it is. The chance it becoming worth anything is small because startups tend to die by default.