Founder Equity Allocation

MartinE0786MartinE0786 subscriber Posts: 1
edited January 2015 in Business Planning
Hey guys,

So I'm co-founding a new company with others and I'm having an issue considering the equity allocation.

The main founder has allegedly spent ~1000 hours (40 hrs/wk x 6 months) doing research on the idea and strategy of the new company. I have 'relatively' shallow knowledge of the plan and idea, but I understand the concept, which is why I'm on board.

I agree that he should be compensated for the work he has done, but at the same time, there is no prototype, no patent, no trademark, no business plan, and basically no tangible evidence.

The prototype is to be developed by another technical co-founder (CTO) and a small tech team hired on very low equity, which is fine by me.

I will be handling various duties that fall under COO, CFO, marketing/user acquisition, etc. (For this post I'll just use COO/VP)

Founder 1 will take on the CEO position.

His proposed split is this:

CEO 35%
COO/VP 15%
CTO 15%
Tech Team 15% (total)
Options 20%

In this split the CEO position gets the same as the other core founders, plus an additional 5% for the increased role of CEO (reasonable), plus 15% for the idea/info brought to the table.

The 'CEO' insists that his 6mo of research work has provided a detailed knowledge of the correct path of the company and that is the value in the idea. To me, this 'knowledge' just means that he will be a good CEO and is more fit for the position because of it, and the increased equity to that position is sufficient. I don't believe it equates to a larger equity share by itself. If I study a market and become well versed to the point that I believe I can make a good product (and I have an idea) and steer a business, does that earn me equity in-and-of itself?

Any input would be appreciated! Thanks.
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