stock-options, partnershipFounder of a startup or at least the idea owner asked me how we could work together? He would hire me as CFO for his idea, but can only pay 1/3 of the standard salary of an iOS develoler. But he would give me portion of the incomes we earn through In-App puchases. What do you think, what is a reasonable proportion I could accept from income? All income would come through App Store purchases. I am the only developer, his contribution is the basic idea and to help my work with new impression, provide the features, specifications to implement, testing the app, check out market and so on.
At the end I have to say / argue about a certain percentage i.e. 10%, 20% .. 90%. But I do not know which one is the most reasonable. I do not see / I can not say to much about my expectations / risk etc., so I need an easy approach, argumentation. Like: If I would get full salary available on market that 0% of the income I would ask for. Now I get only 30% of market salary, so I would ask for 70% of the incomes. Any opinion about it?
The amount of shares you can ask for directly relates to the amount of risk you are willing to take, and how many other people are taking risks. In your scenario you are getting a salary, while it is small, it is more than the founder is getting. He is banking on the return from the sales of your app. Given that, there are some general principles to keep in mind, I would recommend that you read Ben Collins' answer here Since it goes over much of what I will talk about.
The more risk you put into a company, the more you deserve of its profits. If you and the founder are both accepting equal risk, you deserve equal shares. From what you said in your question you are not accepting equal risk. You need to decide how much risk you're willing to put in the company. Do you want to split the profits 50-50 and not gain a salary? do you want to accept a lower amount, say 30%, and accept a salary?
Who is doing all the work in your company? Are you the only one actually doing anything? Is your friend going to his other job, and asking you to do all the work? While I doubt this is the case, you need to consider what kind of a time investment you are making. If your investment is significantly higher, then consider asking for a bigger portion of the company, ie you accept a salary, but you are the only one actually working so you still split it 50-50.
Is there an investor, or perhaps another founder who is helping with the app. This makes a huge difference in deciding how much you should ask for. still the same principles from above apply, simply determine what an equal share would be, then subtract that same percentage based on your analysis ie you accept a salary and there are two of you then you take half of a half of the company (25%)
This is a analysis of your belief in the company. While this may sound weird when asking for shares, remember that the amount of shares you take out of the company relates to what you are willing to put in, or your own personal investment in the company. If you aren't willing to give it your all, consider taking a smaller portion. If you are willing to stay up late, work weekends, sell the product to everyone you see, then you are going to be more invested in the company and therefore need a bigger portion of the stock. Basically what you take out is how much of the company you are directly responsible for doing. if its 25% you are doing 25% of all the work, at 50% you are doing half of all thats done at the company etc. Determine what you are willing to do, and ask for it.
After all that consideration (and potentially a little math) approach your friend, and propose to him you offer, and your explanation. He needs to understand why you feel you deserve what you do. Be sure not to get locked in a deal you will regret, that works both ways don't take more risk than you can, or undersell yourself.
I would also consider how much value the Idea Owner is bringing to the table. If all he has is an idea and you have the skill to make it real, he has the weaker hand. Your work will create the app, which will then enter the crowded iOS market to either sink or swim on the merit you give it. His ability to pay 1/3 market value for your time makes him 1/3 as desirable as any other potential employer.
If on the other hand, the Idea Owner is also an expert in the industry which will use your app; if he has celebrity status among his peers such that his name on the product will give it a marketable advantage in the app store; if he has an existing customer base who may purchase the app; or any other attribute which brings value to the venture; then and only then, would I consider trading your time and effort for a real percentage of the company.
Also, in the title, you asked “how many shares”… No number of shares has any meaning except as it compares to the total number of shares in the company. Having a million shares in a million dollar venture is worth less than pennies if there are trillions of shares in existence. What you want is a percentage of the company’s revenue and a vote in any future decision which might reduce your ownership percentage relative to the total value of the company.
Hope It Helps
It all depends on how you value your contribution. Would you be happy with 10%? 20%?
How likely is it that there will be sales? What is the suggested price of the app?
Would you be better off just saying no and finding a real job or starting your own app/company?
It’s really up to you. I would not take less than 50% if I even agreed at all.
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