Ask YC: Startup crisis. Out of money and tech co-founder has bailed.

In the words of Frank from Everyone Loves Raymond, HOLY CRAP!!

Advice 1) Read Getting Real by 37 Signals at http://gettingreal.37signals.com/toc.php

Advice 2) Hire a decent lawyer, and attempt to recover the money you have paid to this "developer". There is a saying in hindi called "Lato keh bhoot bato sah nahi manti" meaning... Ghosts who need a kick in the ass don't agree with words. I think you owe your investors to pursue every route to get the money back. Talk to your investors. They might be able to help on the legal front. Yes, it will take swallowing your pride and admitting you f*ed up by bring this person into the deal but honesty will take you a long way with good people.

Advice 3) Decide on the right development plan from here to launch. I'm assuming you've got a business model that focuses on generating revenue not eye-balls. If not, quit now!

Your primary options seem to be a) develop yourself b) outsource to offshore c) outsource to students at nearby university.

From what you've mentioned so far, I wouldn't recommend developing it yourself. Learning the language is a good idea to know what a good job looks like.

Outsourcing to offshore is fine if you find a good team. A client of mine has had some serious problems with his India team. Proceed with caution. You need to be clear on deliverables and get constant "back-ups" of the code. This way you can tell if real work is being done... and have an early detection system of getting screwed.

There are university juniors who may be knowledgable enough to take your code and run with it. You may pay them or offer a equity share. Students usually have expenses even if they are low. So expect to cover them. Also, use all your resources in rewarding them. It's obvious that you are personable and have interesting friends. Help your developers get connected. So regardless of whether your startup succeeds or not, your people will have a strong future.

The fourth unlisted option is to find a quality company who has a reputation for getting shit done and paying them a fair amount to get your product live. This will take money. And this could come from money recovered from your ex-partner.

Advice 4) Start selling. Yes, start selling before you have your product. If you have a purchase order for $10k, your investors will probably match it. You'll need to get creative.

Most of us, both developers and entrepreneurs, have been screwed at one point... or will be at some point in the future so I feel your pain.

Just remember: "A diamond is just a hunk of coal made good under pressure." ~ Rod Weckworth

I wish you the best.

I am on my fourth start up and have completed the entire collection of Murphy's Law.

As much as I hate to say it, you need to find a decent attorney to discuss the entire situation. He will file a suit against her and you will most likly get part of your $$$ back. The cost to meet and file will be probably 2K.

She must be held accountable for her actions.

PMCM

Is this an application that will run on your own web servers, or do you intend businesses and individuals to install it on their own machines? If the latter you might consider whether your business can flourish under a GPL license with the option of a community interest to improve the software.

My immediate suggestion would be to get the code checked into a private repository, hosted at github or elsewhere. Then with a high volume laser printer on hand, get into a routine where you print out your code base on a weekly basis.

At that point its just a matter of hiring some folks to take a look at what you have, as far as the code base goes, before deciding who to pay next to advance the project.

  I refuse to give up on the idea, and I know that the window of opportunity is only a few months.
  I am considering outsourcing the development to India, so I can get it to a releasable state.

Since the window of opportunity is only a few months, i would strongly suggest not to look at the outsourcing option to India (or anywhere else). One, you would have a difficult time in finding out the right set of people (skill wise). Two, establishing a good working relationship takes a bit of time, especially working across geographies. A small startup pushing towards it's first beta is probably not the right time to start using the outsourcing model. (Side-note: I am a developer based out of India)

You have got a lot of good suggestions on the way forward from here. I would also endorse you seeking out the Django experts on this forum who have offered help. At the bare minimum, they can review the code and tell you where exactly you are and how much more effort it would take to make a beta release.

Alongside, you can get some legal advice on getting out of this partnership with the least possible damage to you and your ethics.

Learning to code obviously would be helpful, and it really ain't that difficult.

Don't worry about this temporary setback, just get back up and give it a shot again. Being in the medical field, am sure you would have seen people fighting and coming out strong from far more difficult situations.

Good Luck.

I see a couple of mistakes right off the bat.

Write the contract so that no ownership interest is achieved until a Series A funding event. For every hour that the technician works, they accrue the same hourly rate figure in an options account. This way when the startup is funded, the developer's percentage is determined by the value of their options account against the VC's valuation, not some arbitrary point like 6% It's much harder for someone to walk away from $100,000 in equity than it is a theoretical 6%

Should have included a clause whereby the equity would disappear if the developer quits.

35% is rather outrageous for any founder in a company that has raised significant amounts of funding, let alone a well paid one.

To echo other comments, 12 months to create a prototype in Django seems like a very long time. Either the developer sucked or was working on other projects on the side. It is also possible that the requirements kept changing mid-flight and this was a management problem.

Outsourcing to India may work or it may not. Regardless, at this point you need to pay based on results instead of time.

Good luck.