Correct me if I am wrong, I think there is no right or wrong answer to this. It's all come down to how much you think the venture needs him/her. Equity split depend a lot on negotiation. Using Paul Graham's calculation, http://www.paulgraham.com/equity.html , basically, the question become: "Do you think his contribution can double your chance of success?"
Hope that helps. From: Elias Bizannes Sent: Friday, October 02, 2009 10:21 AM To: silicon-beach-australia@googlegroups.com Subject: [SiliconBeach] Re: Startup shares... how to divide up a company... The blog venturehacks has a ton of advice on things like this. http://venturehacks.com/articles/debt-or-equity More here: http://venturehacks.com/archives You're better off with $100 in coffess with entrepreneurs than $100 in a lawyers billable hour (if you're that lucky). Work out what you want. *Then* spend money on a lawyer to draft it. Elias Bizannes http://eliasbizannes.com On Thu, Oct 1, 2009 at 4:42 PM, David Jones <david.jo...@gmail.com> wrote: I don't disagree with any comments gone before but why don't you go for a convertible note that becomes an X% discount off series A? At that stage the value is slightly less subjective because its gone from idea to substance (even if its raw). So that comes back to the question, what is X? I'd argue it doesn't matter, because either the Series A valuation makes you happy or the deal/idea is dead. Your SeriesA investors are incented to ensure you are happy. That means the % are way less speculative than the stage you are at now. I read somewhere this morning that ideas should be "free" and I think most founders would agree that the idea is worth less <1% unless its got some seriously IP backing it. Do some reading on various investments terms (the internet is awash with such FAQs). A lot of suburban lawyers arn't really going to have a lot of experience with startups so do your homework first and save your money - but you should always consider getting competent advice once you head toward a binding deal. d. On Fri, Oct 2, 2009 at 7:43 AM, Niki Scevak <niki.sce...@gmail.com> wrote: I would say seeking legal advice at this stage is completely useless. Unless of course the lawyer handles early stage financings on a day to day basis and is happy to share recent valuation data. It's very hard to say if 85/15 or 50/50 split is fair to either side because you've declined to disclose the amount you are looking to raise. If it's $100k then 85/15 is fair, if it's $1m then 50/50 is fair. As a general rule an idea stage startup might attract a pre-money of $300k-$1m. Post launch with some idea of the metrics of the business might be $1m-$3m. That is of course if you are attacking a large or quickly developing market. If you are giving up 50% of your company at the seed stage, there is very little chance for you to retain a double digit percentage if you decide to raise venture financing. On Oct 1, 6:20 pm, Shaneel Mudaliar <shaneel.mudal...@gmail.com> wrote: > Isaak, > Seek legal advice...I have attended to so many clients who got > improper advice from friends and open forums, who have lost their hard > earned investments in products/projects and have no action to recoup > their loss. > > As a contributor of SB, I suggest seeking professional help. The final > decision is yours. > > Kind regards > Shaneel > > Sent from my iPhone (0413502191) > > On 01/10/2009, at 11:59 AM, Isaak <isaakd...@gmail.com> wrote: > > > > > > > So here's the story. Im now to the stage of having a product or idea, > > and about to get it further developed and bought into the light, I > > have found someone to help fund it, but what I can't decide on is the > > split of the company... > > > That is I want to give them a percentage of shares of the company in > > exchange for their funding it. Talking to someone else who is in a > > similar position they are in for 85/15 split, but his situation is > > slightly different to mine, in that it involves close family. > > > My financier wants it (understandably) closer to 50/50, but I want to > > keep control of the company and it's direction. > > > The other point I want to consider is, if in the case that the website > > does take off and I need to go back and ask other parties for funding, > > how do I build that into our thinking. I want it 'future proofed'. > > > Any ideas/experiences etc. > > > Look forward to hearing from you all!! > > > Cheers, Isaak > > Perth (although will be in Melbourne with time to kill on Friday > > afternoon if anyone is around :) --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Silicon Beach Australia mailing list. Guidelines on discussion: http://tr.im/ujKF No lurkers! It is expected that you introduce yourself: http://tr.im/ujMm To post to this group, send email to silicon-beach-australia@googlegroups.com To unsubscribe from this group, send email to silicon-beach-australia+unsubscr...@googlegroups.com For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en -~----------~----~----~----~------~----~------~--~---
