what percentage of ownership is fair?

bcamp1973bcamp1973 subscriber Posts: 2
edited August 2008 in Business Planning
a coworker has recently brought me on board for his startup. It`s an excellent idea and I think it may end up being *very* profitable. so far there are four of us. i`m the information architect so i`m responsible for the UI and usability of the application (web application). we all work together to vet the basics of the application and what it`s features and requirements are etc. we`re working on patents, business plan etc so we can go for private funding. 
Long story short, we`re just about to start discussing the details of stocks and ownership etc. How in the world do I determine what my ownership in the company should be? The basic idea behind the company is my coworkers concept, but i (and others) have all contributed considerably to it`s development. I have no reason to think i`m going to be taken advantage of, but i want to be prepared to discuss it intelligently. Any suggestions? Any good references that you can recommend? 


  • robertjrobertj Tampa Bay, Floridasubscriber Posts: 0 Member
    I like to look at the issue in three parts:

    Compensation - for work accomplished
    Opportunity - for future return.
    For compensation, I would look for "equal" value if you are not receiving (or will not be receiving a salary for a long period of time).
    With four of you involved, I recommend some professional advice.
    Send me a PM if you want to discuss specifics.
  • DeenaEsqDeenaEsq subscriber Posts: 0
    Please, please, please make sure that you and your "partner" sit down and put everything in writing now.  Don`t wait until there`s a problem....
    Just my $.02...
    Any opinions are offered without knowledge of the specific law of your jurisdiction and with only the limited information provided in your post.  No advice given here should be reasonably relied upon by you or any third party without consulting an attorney who is aware of all of the facts and law surrounding your situation.  Any advice given here is not intended to create an attorney-client relationship in any way.
  • bcamp1973bcamp1973 subscriber Posts: 2
    Excellent advice, thanks to all of you. One "partner" has already been tasked with finding a lawyer and setting up the details of the business structure/shares etc. So we`re definitely doing this "right". However, I wanted to do a little research on the side for my sake so I would know what`s really "fair". I thought there might be some standard equations or other such "templated" approaches to this, but maybe not?
  • robertjrobertj Tampa Bay, Floridasubscriber Posts: 0 Member
    I can`t give you a definitive suggestion on percentages without more information - starting with the basic structure and what (if any) compensation you will receive for "overseeing" the project.
    Send me a PM if you want to discuss specifics.
  • infiniqueinfinique subscriber Posts: 0 Member
    Try to explore that of a listed firm. It's probably the best structure.
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