equity, intellectual-propertyI am in a team where we are developing a web application. I am the main and only coder available in the team. Company is not registered yet and will be registered in about a month. I didn’t join based on any agreement for salary or anything. My only goal was to make this startup successful and I had to work a lot to present our crude product to one of our future clients (They were happy). We have not discussed about splitting of shares among us. What should I push for, I own the IP of the whole code and I don’t want to cause any differences among us by claiming that I need higher share than them.
I advise against going for equal share in almost all cases, especially if you plan on raising money. Savvy investors know that not everyone contributes the same amount to a given product or team. In addition, if you have written up all the software, then determine precisely what each of your other cofounders are bringing to the table: domain expertise, their network, business experience, etc. Also keep in mind that an idea is actually worthless, so "this is my idea" is not a good basis for negotiations*.
From past experience, I highly recommend you settle on a shares agreement as soon as possible, as splitting shares is going to be the first fierce discussion you'll have within the team. This crucial step will also allow you to see whether the team can work together.
If you want a rough estimate on how the equity should be split, you can have a look at the following: foundrs.com . I have used this checklist as a negotiation basis in the past.
Finally, I'll remind the five keys criteria used at TechStars to select startups:
Yes, team is there three times, because without an extremely solid team where everyone knows each other well, there is no way they can develop a product which will reach any market.
(*) People have ideas all the time. In the startup world, it's not about the idea, it's only about the execution. Examples include the following: Uber came after several similar companies, AirBnB came after Homestead, "Yo!" isn't such a great idea, but the execution is amazing, hence their success.
Sources: past experience as a cofounder and before that working in a startup with a dysfunctional co-founding team.
Well, if everyone is working full-time then, indeed, you don’t need higher share.
If there are 3 of you, you should go 33.33% each.
Always go fo equal share, always. This will save you from trouble since the beginning.
No matter who is the smarter (it seems that would be you =] )
All content is licensed under CC BY-SA 3.0.