I’m currently heading up sales, marketing and business development at a small software company in Canada. I report to the CEO and been with this company for just over 4 months. We make enterprise grade on-premise software for a niche market. It’s powerful, expensive, takes 8-12 months to implement and only really applicable to a small number of large prospects.
Due to the challenges of our existing market, I’ve approached my boss (who is also 100% owner of the company) with an idea to create a SaaS/app based application for the broader, more accesible SMB market of the vertical we are currently in. There are other competitors in this space, but they’re growing fast and there’s no reason to think we couldn’t grab a slice of the pie.
He thought it was an amazing idea and said it was something he was interested in doing for a long time, but he didn’t think the culture was right at our current company to build it. So he proposed another idea: “you figure out how much it’s going to cost to get it built by an outsourced development company, put together a solid business plan, and me and you will do this outside of the main business. You can be the CEO and if we get traction we’ll bring on other investors to help it grow.”
So basically he’s agreed to provide seed money (6 figures worth) to get this off the ground. So it’s basically 100% his financal equity, and 100% my sweat equity to guide the development, then do what I do best, sell and market the app to gain traction.
I’m obviously very keen to do this, but I’m wondering what percentage of equity, if any, do I deserve/should ask for? I mean, I’m taking no risk. I’m going to continue to do my current job until this takes off and he’s going to continue to pay me a salary at my current company. I can’t afford to work for free, so if/when this requires a true full time effort I’ll still need my salary to make it work, even if not yet supported by revenues.
Am I out of line to ask for anything? My thinking was maybe 10-20% considering he’s taking all the financial risk.
What does SA think?