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Cofounder wants 80%. Is that fair?

I’m a non-technical founder with experience working in different tech startups (as an employee). I’m in the process of working with a partner who is designing and developing our site. He’s more a design guy and is learning how to code for the web/mobile. He’s a young guy that has limited experience working at organizations (does a lot of freelance gigs).

Although he’s not a developer he’s learning how to code and implement various tech platforms together (coding a front end/back end).  He’s informed me that he’s been putting in 12 hours days and wants to focus on the startup 100%. He also wants to do the marketing and create the site so that portion of it is automated. As well, when the site goes live there’s a portion where customers need their designs to be approved by a designer (since he’s a designer it will increase his workload).

To start, I’ve advised him that we should have a simple site up and running to further validate the model.  Once we have sales and the company is running we can hire an experienced developer. He’s extremely keen on creating the site from scratch hence why he’s putting in the time.

It’s great that he’s creating the site but I’m afraid once we go live we might need to make changes/updates.

In our initial discussion, we verbally decided that the equity would be 50/50. I’ve created the overall business plan and financial forecasting. I also plan to be responsible for digital marketing, operations, and product delivery. I’ve advised him that we can outsource content marketing (writing) as it’s not my strength.

He’s coming back to me and wants 80% of the equity (from 50/50). He’s suggesting that the money will be invested into the company. As well, with 80% he will be responsible for the direction of the company. Please keep in mind that I’ve suggested that I pay him for the work but didn’t agree it. When we decided to work on the project he knew that I wasn’t a developer/designer.

I understand that he’s developing and designing out the site/platform but should I give away equity? I’d love to help with the design/development but it’s not my strength.  I understand right now equity means nothing but I just want to protect myself so that I don’t screwed.

I want to be fair. Any suggestions on how I can work with this co-founder? What should the equity split be so that it’s fair.

 

  • This will end in tears. Find an amicable way to part ways now.

    If you don’t have a formal contract in place (and it doesn’t look like you have) he legally owns all the stuff he’s worked on so far, and it doesn’t look like you’re bringing enough to the table for him to agree to a 50/50 split.

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    • I agree with the writer above. If you actually believe in this startup to make significant money then you need to consider what each of you bring to the table (money, time, skill, contact etc.) If you believe that he is just a design guy learning to code why not jump into the cold water and hire some real coders from Upwork to do the job. If it works you can keep all the money and you save yourself trouble later on.

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  • How much time are you putting into it? Are you doing it part time while he does it full time? At the end of the day do you really need him? Since you mentioned you would be able to pay him I don’t see why he can demand such a high equity percentage since it’s not like you’re expecting him to eat ramen for months building up the site.

    So yeah push back for 50/50 or else say you’ll just outsource the work or find a new cofounder.

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  • Non tech founder here –>. What do you do??? Sounds like he’s stepping up to do it all while you expect 50? You need to earn your 50. You’re lucky he’s giving you that.

    If he’s doing the design, marketing, and building the site. You have no value. If you get 20% from being there to bounce ideas off of, you would be a glorified investor.

    It sounds like you just want part of the reward, but not willing to do anything. You should walk away and tell him you have no value.

    If this is not the case and you are an amazing marketer, then pull your weight. You must be dropping the ball if he wants to do it all suddenly.

    This relationship/business is doomed anyway. If he does want to build the site, sounds like a pet project moreso than a business. Your team’s time is more valuable than waiting on him/her to get something right when building.

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  • If your just an idea guy then keeping 5% seems fair, if your the enbler maybe 10%. Of course since he turned down money to invest in company. You could look at yourself as the angel investor. Value is work at whatever is going hour my rate is,that’s the amount you need for fifty fifty.

    Finally control and majority shareowner ship. Don’t need to be correlated they often are but not always. Decide on how you want it to work then both go to a lawyer together and discuss if veto shares or super voting shares or preference shares or conv notes or shareholders agreement or something else suits your needs,

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