Replacing previous tech co-founder

Since I don’t have any startup experience yet, the terms I am using may not be correct…

So here goes the situation. I have a friend that has a startup. The previous co-founder who is responsible for coding has left and he invited me to replace his role. Now I am in the process of rebuilding the digital platform. His company is making a little profit but it is not enough to pay me in market price. And I believe that it can be a success. So I told my friend that I will take company share instead of payment. We had a verbal agreement that once the platform is rebuilt and I join the company fulltime, I will have 20% of the company. (with some vesting, probably 10% once the goal is achieved and remaining 10% vesting in 2 years or so). Now I think that we need to sign some agreement. I am a bit confused about my role. Am I co-founder or just employee? What should the agreement look like? Co-founder agreement or some contract? Thanks for the advice!

More info about the startup

1. it is incorporated and it is making some profit. it is more or less enough to cover the expense.

2. the product we are selling is purely digital. The profit is from membership subscription.

  • If you do believe the product can be a success and you are sure that you can work with your friend full time for a long time without a falling out, you should joint the company. I would advise to put everything in writing, even as you are friends. I lost me oldest and closest friend simply because we did not specify our roles in the startup specificly and in writing and I know a couple of people that had the same problem.

    If you will outright own 20% of the company and not only virtual shares, you should alter the partnership aggreement he had in place with the old co-founder.

    You will be a partner in the company and not only a “simple” employee. As to what the contract should look like, spend the money on a lawyer to set up that contract. It’s worth it. Don’t jeopardize your friendship and your peace of mind because you were too shy to push for a written agreement.

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