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I'm a business-minded, action-oriented guy. I feel I'm good at team building, marketing, selling, partnerships & strategy. The real business side of things.
He knows the technical side. What is fair 15%? 45%?
This is what I ask myself whenever I think of this question.
You need him or else you do not have a product. No product means no company.
No reasonable developer would take anything less than this...If they're going to be putting their energy into developing your product for the next 1-3 years (minimum) then you need to split the equity with them equally.
50% no questions. You need him or else you do not have a product. No product means no company. No reasonable developer would take anything less than this...If they're going to be putting their energy into developing your product for the next 1-3 years (minimum) then you need to split the equity with them equally.
You want all co-founders to be equally engaged in the company. Anything less than an even split at the very start sets up a structure where one feels they are getting less than the other.
You mention the things that you're good at and call it the 'real business side of things'. Does your 'co-founder' find this insulting?? Is he really just a code monkey? Somebody who can build YOUR product? If so, he isn't a co-founder.
If you are building a technology company, all your 'real business' skills are worthless without a person who understands the technology. BUT your technical co-founder should be well versed in the market also. Together you will be making the product market fit. Together you'll be making partnerships/sales work. Together you'll be building and managing the team.
If you aren't feeling the 50-50 split, I'd ask, is he really a co-founder?
If you're building a mass-market offering (eg. facebook or SAAS), then they are worth a lot. New crypto product? New search engine....time to pony up.
If you are in a space where sales and marketing is more important than technology (eg. a groupon clone or anything where you're reselling an existing framework), then I'd retain the lion's share of the equity. You aren't going to win on technology.
Are you putting capital into the deal or raising a large chunk of capital to get started? Are they drawing a salary of some sort? I'm not giving 50% of the equity away to an employee or someone who I'm otherwise supporting.
Finally, while this is usually a bad idea, what are the alternatives to adding a tech co-founder? Can you outsource? Use consulting help?
While the latter is usually an express route to total stupidity (most startups with outsourced development quickly become comical), if you could truly run the operation without a dedicated in-house tech person, I'd retain a larger share of the pie.
Finally - I disagree that "business is easy for smart people" - a good business person can add a lot of value to the team, particularly if you're targeting large companies. Many entrepreneurs make significant mistakes in their deals and delivery process that put their company at risk - a good business guy should be able to reduce those risks and accelerate the pace of execution.
And no..I'm not a MBA...I straddle the two camps (business guy who can code and codes a lot).
There is no single answer to this question - it's totally dependant on the relative value of your contributions to the company's success. Where is the secret sauce going to be? If you're building a mass-market offering (eg. facebook or SAAS), then they are worth a lot. New crypto product? New search engine....time to pony up. If you are in a space where sales and marketing is more important than technology (eg. a gro…
I have the same question as the OP.
Also... How can you differentiate between a technical entrepreneur and a coder? Because I'd really be willing to give lots of equity to the former, but none to the latter.
The technical co-founder already has experience and pretty much knows the issues he's going to face, and how he's going to handle them. If you haven't built a business before, then you do not know the issues that you'll face or how you're going to handle them. So his value probably far outweighs yours, even though it's your idea.
85% Tech Founder, 15% Business Person. It's not the idea, it's the execution.
For example: what if the bulk of your product is copy (writing) or design? All it needs is a simple account system and framework built around it - the majority of the work is nontechnical. That's not to say that it is easy or simple; rather, the work is just not technical in nature.
Technical execution deserves 85% in a tech-heavy startup. Technical execution deserves far less than 85%, probably even less than half, in a non-tech-heavy startup.
The OP didn't specify "what" his site is about, but regardless.