Startups Stack Exchange Archive

how accurate is the calculator at foundrs.com?

hello and happy new year!

I am in talks with a potential business partner in creating a game/software company. He has spent the last 2 years in his part time fleshing out the spec for the game/app he wants to create. He is getting ready to sell his current digial media company to start this new one. I work full time and am very happy where I am making great money and plan to work part-time on the new business until there is funding or high probable path outlined to success. I am an experienced engineering lead with 10+ years. He has given an initial offer of 10% equity which is vested after completion of development phases which he estimated over a 5-6 year period.

I plan on countering him with a standard 4 year vesting schedule and also a higher percentage, as my research shows that 10% would be too lwo for a dev startup where I’m the only engineer (it’s just me and him). Considering I have experience with hiring and managing development teams, as well as obviously developing software I feel my value to be higher even though this is basically ‘his baby’.

I’ve done lots of reading on here and see freqwuently some posts pointing to the calculator at foundrs.com. I’m wondering: has anyone here with real experience in the startup world reviewed or looked at this calculator? Can you comment on its accuracy based on your experience?

For what it’s worth, the calc puts me either at 80/20 or 67/33 split in his favor depending how the questions are answered (there’s still some grey that needs to be clarified). I’m wondering if I should hard counter at 20 or 30%… but I’m not sure if that’s really accurate. Again considering that I am the dev and it’s a software company.. although he is taking much more risk since he would not be taking a new gig while I’d be still full time employed. Keep in mind: I am truly only looking for what is fair, and at the end of the day, this project isn’t about the money. I have a real passion for the proposed app and I feel excited at the chance to bring it to the world.

Thanks for any feedback!

Answer 11822

The numbers in the calculator are mostly arbitrary. You’ll find some here agreeing with it, others not.

Speaking personally, I resonate more with Joel’s approach to dividing founder equity. Two key points in it ring very true to my own ears (paraphrasing):

  1. If you are not committed full time on the project, then you are not a founder. Simple as that. If this is indeed your case then 10% is actually generous. (Do get paid, of course.)
  2. If you are a founder, then you are in the same boat as the other founders and get the same share. Because founders will argue with one another at some point and the startup will go to hell if there’s an “it was my idea” or what have you person around who feels entitled to have more say.

I’d add a third point, which he doesn’t quite insist on enough in my opinion:

Related useful reading as an aside for the founder agreement:

https://startups.stackexchange.com/questions/9060/tech-startup-ask-shareholders-to-commit-to-project-to-prevent-losing-equity/9062#9062

All content is licensed under CC BY-SA 3.0.