Alleviating Big Development Costs

NovashunNovashun subscriber Posts: 4
edited July 2009 in Startup Funding
Ive thought of some different ways I would like to fund and build a few applications and scripts for my business. We are a small company - Our business is Web marketing, develop some apps/scripts, and own about 43 Web Sites. Im trying to avoid a partnership at this stage.
1 Division of the company I have created is software/development. I have a programmer (Freelance/Contractor) that Ive been using and starting to get a little close to. Hes a bright guy, and I think it would be in my best interest to offer something for the scripts/applications he`s developing for me. My intention and reasoning are these. (Please help me if Im wrong or need some more information )
a) If I offer him a percentage of the Development Division within the company, say 4% of anything he has built for me, he has to agree to support the scripts until sold completely or if I should sell the business. So any fixes, version changes, or bugs throughout the life of the scripts and apps - He will do this.
b) Im not a technical guy, so if I were to pitch these scripts and applications to companies... I could do so.. But not the Techincal.. He would have to come along and pitch the technical. 
I think this would motivate him with a 4% share per year... If I were a programmer I would want to discuss, explain, answer questions, and support my product I developed. The more money generated from the sales of this app - The more money I would make. Hes not quite an employee, Im not an employee owned company, and Im just a SP entity.
This has actually kept development costs down by offering him something other than thousands of dollars... We have discussed, nothing in writing yet.. And I dont know how or what to put in writing if I did.
Any Thoughts?  
How could I do this, has anyone ever did this, why is this good or bad? Would this be considered a Limited Partnership? If so, Im American, hes is from another Country.   
Novashun7/16/2009 1:35 AM


  • robertjrobertj Tampa Bay, Floridasubscriber Posts: 0 Member
    Enabling him to participate in the results (sales revenue/profit generated) of his development efforts is a good way to keep him involved. I can`t speak to the percentage - but if you both agree that the exchange is value for value then it`s probably the right number. Be sure the agreement spells out ownership and rights.
    However, before you move forward "officially - I`d suggest giving some thought to your business structure.
    If you`d like to discuss your specific situation, send me a PM or contact me directly.
  • NovashunNovashun subscriber Posts: 4
    Is this considered a Limited Partnership? Whats this actually called?
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