legal, finance, incorporationSo, I am building a robot product with a partner. I am currently financing the venture, while my partner is using his connections to have access to lots of expensive machinery for fabrication of said robot. My first thought was to become financially organized by incorporating as a Delaware C-corp, because we hope to secure investors at some point, and hope to be high growth, etc. This way we could open a company bank account and track things through that. However, the legal complexity keeps deterring me from doing so because I don’t know how much I can go back and change once we have the entity formed. I want to avoid legal expenses, since we don’t have a prototype/MVP yet and there is a fair bit of development that will happen before we have anything tangible.
So, how should we keep track of each partners’ investments and expenditures in the company, so that we can avoid issues down the road?
Talk shares and investments through beforehand. It doesn’t matter what solution you chose, but you should agree on what your expenses and his expenses are worth talking shares. And you should agree how you split expenses and how future expenses might affect those shares or how they get paid back and with what interests (from future company money or your partners money).
Put everything in writing. Make sure you both understand that this is important. You cannot measure the value you two brought to the company to a “correct” amount, so you have to reach an agreement. Reaching an agreement is a necessity before the facts happen, because afterwards its to late to pull out.
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