| My totally wild guess is they helped drum up some of that initial customer interest and opened your eyes to it. Is that right? Anyways, here's my free advice. You get a refund if it's bad: - One, define whether this is a small business or a startup. - Two, separate sweat equity from financial equity. In a classic SV-type startup, the company is illiquid for a 4 - 7 year time period. You want ownership at the end of that time period to reflect the fraction of work adjusted for risk. With respect to the work, "having the idea" and doing some validation on it is typically worth a small premium but not a large one, because 99.9% of the work at time of starting the company is in the future. The main question is whether the potential co-founder will contribute roughly equally for the next 4 - 7 years. If not, don't try to change the equity split -- find a different co-founder or hire them as an employee (and their added value should be far more than "motivation and quick learning skills" because you should have that too). With respect to risk, there's a few stages in the early days: - Pre-product v0.1 - Pre-customer interest - Pre-PMF (this is the big one to get past) It sounds like you already built v0.1 and have proven customer interest. Thus you've de-risked the startup for this potential co-founder significantly. That's worth another chunk of equity. But you have to make a judgment call as to how far away you are from PMF: ideally there's an equity split where, if the product blows up tomorrow you won't be frustrated about him/her having a ton of equity; but if it takes another 2 years to translate customer interest into real PMF, (s)he won't be frustrated about working for a dramatically smaller share (or, if we're being realistic, both of you will be a little bit frustrated but not super frustrated). Lastly, with respect to financial equity, I would ask if you really, really need that 150K to get to the next stage. I'm assuming 150K is meaningful to you because you are a Masters student. Can you get to the next stage with 10K? 20K? 30K (and then raise outside capital)? Can your potential co-founder afford to put in 5K? 10K? 15K? My general advice is when the sums are in the 5 - 10K range, each person just puts in what their financial situation allows for and it's small potatoes at the end of the day. But 150K is a lot and you should structure it as a separate investment [1]. The tough part here is to come up with what you think the business is worth today. Without knowing anything about your idea, it sounds like it's at best something where investors in the U.S. would put in ~$500K for roughly 10 - 20% of the company. [1] Note though that a truly independent investor will typically get Preferred shares for their money -- but they will probably disagree with one of the founders having Preferred shares, so the shares you negotiate as part of this investment will likely be converted to Common shares upon raising real capital. |