equity, mobile-apps, co-founder, team, revenueI came up with an app based startup idea (An online food ordering and delivery platform), I developed the 2 android apps, talked to restaurants owners and i got their menus, then I executed the idea and it generated revenue by delivering the orders by my own car, but when i got car accident, I stopped accepting orders and started looking for business partners in order to grow. I found one who has a car and ready to commit with me, and another one has a car and connections related but he has his own delivery business. How do I split equity fairly for me and both of them?
There are too many unknowns to answer how much exactly you should give. But a few remarks:
Congrats for bootstrapping your business. Most entrepreneurs don’t get that far and you deserve something for that trouble.
You’ve just run first hand into what’s called bus factor. That is to say, the big question of what would happen to your business in the event anyone within it - in particular yourself - gets hit by a bus. I cannot stress the importance of this enough, because you’re observing first hand how your company is basically unsellable at the moment unless you’re actually part of it, and you should take the opportunity to learn how to eliminate it. (Hint: demand documentation for everything employees do and ensure there’s redundancy of know-how everywhere.)
One way to split the company is to consider what your company might be worth without you operating it, figure out a price. (Aside: prepare for a cold shower, because it might be lower than you expect; think in terms of how much your spouse or family would earn if you were hit by a bus.) Then make an offer whereby you share the company on a basis you’re comfortable enough with (it could be as much as 50/50 with the right partner) and slap an IOU on top whereby the company owes you something for the idea plus the execution so far. That way you get a partner and you get paid for setting it up. (Alternatively: develop it yourself alone up to the point where you can readily hire someone to replace you. But will you succeed?)
Don’t forget to vest interest in the company. A couple of companies in SV are currently doing something like 10/20/30/40%. It is and should be an option rather than the usual 25/25/25/25% over 4 years to guarantee commitment while protecting other early stakeholders.
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