Should I quit or stay?

I am working in an idea with a group of friends. One of us is the owner of the idea and the one building the team. We also have his uncle involved with us as a mentor. Now that we are about to launch the prototype, the uncle is interested to invest in our idea but for a return of 51%. The founder friend says that since it’s his idea, he should be getting 24%, leaving 25% to be shared between the three of us left.

Obviously this was unexpected and we three who are the co-founders have decided to quit. However, since we have already contributed to this venture, we think that we should continue for some more time and then get the experience and learning and then go on to our venture. I think that it’s a waste of time because there are chances we might be backstabbed again. Any suggestions?

Quit.

How much equity is the investor getting? 51% in a seed round is a big piece of the cake…

Don’t agree with the 51%. Those are not the kind of investors you’d want for a healthy company. Or leave immediately.

Well 51% is depending on how much the uncle is contributing. If the uncle contributes a million dollars and the idea is worth 2M, then its fair regardless of what “silly con valley’s” best practices are.

If you said the reason you’re continuing is for the experience then why are you worried about being backstabbed since you already know you’ll be quitting eventually anyways. However you should see if all three of you will tank the co if you quit because like unions, if you group together and quit and the company can’t go on without you then you have more leverage to ask for a different equity split.

You don’t really say about your contributions to the company.

And you don’t really say the amount of the investment.

It would be to easy to say to continue and learn from your experience but it would also be easier to say quit an forget all the work you put in.

from my point of view I would say it’s fair and that he’s actually doing you a favour.

Yes, please post more info (as requested in other posts).

In general, if all of you have equal experience, and are all working full time without salary, then the split should be more fair than that.

Giving away 51% of the company this early on will guarantee that no future investors will want to invest.

kick the mentor to the curb — Next problem ?

If you will be working, negotiate some pay for your hours out of that funding for 51% that the uncle is putting in. Take your 25% (split 3 ways) equity and sit on it while you get the experience you are looking for. If things get too “weird” then bail with a little pay for your time and your equity interest and go start something else.