Questions

I've been working on SwitchDin for 8 months and have self-funded the product development (no salary). We've built a platform for managing solar energy and battery storage and with the help of some great contractors I already have a good prototype and have a few pilot sites up and running. We've had great feedback from pilot testers and channels partners and I'm gearing up to start selling. I anticipate our first paying customers in the next quarter. I'm not an experienced software engineer and have been looking for a co-founder to take the lead on these matters but so far the right person just hasn't emerged ... until now. Considering the investment i've made and the traction i can demonstrate I don't want to give equity away for nothing, but I still want them committed for the long term. So I feel they should buy-in but still take on a reasonable split. I would not expect them to take a salary until we raise or have the cashflow. Any tips on how to approach this arrangement or some models which are fair and equitable? How to handle the valuation? Also what about using vesting? I had in mind a cash buy-in to reflect current value but then a vested component to account for sweat?

I think you first need to answer the question how key this individual is; if they are the difference between making a success or not of the venture then you should be generous with the quantum. Your own historic investment can be protected through reflecting the amount using a class of preference shares. I don't think you can expect him to work for nothing and buy in at a full price for a business that is not currently producing revenues, but you could vest based on various milestones.


Answered 9 years ago

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