Shared partnership?
mach777
subscriber Posts: 1
Hello,
I am a system developer/designer who just got contacted by a friend who has an idea for an internet based startup company. His idea is really great, and it would be so cool to see it done.
I would be creating the site, which I calculate would take about 300-400 hours of work initially, and perhaps a few days a week to maintain, to begin with. He would do the other work, such as advertising, logistics, and so on. I`m pondering what is reasonable to ask for. I`m mainly interested in a 50% partnership, since from my point of view, I would be doing most of the work initially, and thus (in my point of view) taking most of the risk. He is not interested in shared ownership.
He does not have the capital to pay wages or pay me a set sum, so we have to solve compensation in some other way. There is, of course, a high risk this business doesn`t take off and the hours we put in will be "lost", so what is really reasonable for me to ask for? Based on what I charge as a professional in my normal daytime job, I`d be putting in ~$40k or more to get the idea up and running.
How are these things usually solved? :]
Andreas
I am a system developer/designer who just got contacted by a friend who has an idea for an internet based startup company. His idea is really great, and it would be so cool to see it done.
I would be creating the site, which I calculate would take about 300-400 hours of work initially, and perhaps a few days a week to maintain, to begin with. He would do the other work, such as advertising, logistics, and so on. I`m pondering what is reasonable to ask for. I`m mainly interested in a 50% partnership, since from my point of view, I would be doing most of the work initially, and thus (in my point of view) taking most of the risk. He is not interested in shared ownership.
He does not have the capital to pay wages or pay me a set sum, so we have to solve compensation in some other way. There is, of course, a high risk this business doesn`t take off and the hours we put in will be "lost", so what is really reasonable for me to ask for? Based on what I charge as a professional in my normal daytime job, I`d be putting in ~$40k or more to get the idea up and running.
How are these things usually solved? :]
Andreas
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Comments
Matt
Your friend contacted you. Wants you to help get the business off the ground. He has no funds to pay you. He doesn`t want to give up an equity position in this upstart. Someone will have to compromise.
You have to decide if you are willing to discount $40K worth of work. I think an equity position exchange is a reasonable request. Why does your "friend" not want to give up equity in the business? Do you really want to be in business with this person? Do you think you can be a partner with this person long term?
Weigh your options. Write down the pluses and minuses. Make a decision. $40K is enough of an investment for some piece of the pie - IMHO.
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Best regards,Andreas
trust you with talking about his idea with you. Second I have read the
posting in this thread and we are not looking at all the options. First
the facts.
Work to be done around 40k value.
Potential business revenue for the first year?
Amount of work your friend will be doing in the first year?
Ok these are the need facts. However we can still come up with some
negotiations without all the facts.
First, you "loan" your friend the 40k in services, with monthly
payments beginning when work is completed. Have a business risk interest
rate somewhere between 10-20% on the loan. (This is probably a good
option if he doesn`t want long term partners)
Second, You take a look at potential revenue for the first year in operation.
You would take X cut of revenue, you would probably want the potential opportunity
of somewhere between 100-150k because of the risk.
Third, You agree option some equity split, example: 70-30 example. The question
you have to ask yourself with a 50-50 cut is do you want to be liable for this
business debt if things do not work out. It does not sound like you will
be doing the day to day work and so I would assume the answer is no.
There are several other options but this post is long enough, go a head and
email me if you would like to talk more about this topic.