[msandford]

Cashflow is cashflow is cashflow, it doesn't matter if it's more cash in or less cash out. They're mathematically equivalent.

When pursuing a startup cashflow is the biggest problem of all, you're bleeding out and trying to staunch the flow. Someone plugging a hole is just as valuable as someone providing a pint.

[tptacek]

All sorts of things cofounders do for each other have value. The best measure of a cofounder relationship is the tacit assumption that they have each others' back.

Again, the issues here are simple: dragging valuation into day-to-day operational discussions turns those discussions into negotiations, which I think isn't good for cohesion.

Reasonable people can disagree.

[msandford]

I completely agree that dragging valuation into day-to-day operations is a very bad idea. You're quite right about that.

Let's say that you and I go in together for some startup. Neither of us has the $50k in the bank to pitch in immediately so that we're equal investors in the company as well as equal cofounders. But let's say that due to a book you published some time ago you're bringing in $4k/mo in royalties which is enough to pay the bills. And because I don't have the option to go without a salary, we get some seed funding to the tune of $100k so we can pay me a small salary and afford whatever mundane things we need to get going.

I would argue that as long as we agree to both pay ourselves $4k/mo until things really get going, and you just happen to be able to pay yourself that $4k/mo for the next year out of your royalties that is a $48k (or perhaps a bit more due to interest) investment. Sure it's not all delivered at the time of the seed round but it's all pledged by that time. So long as you don't start demanding a salary before the year is up (i.e. you make good on your investment) I think it makes sense for you to get some additional equity as a result.

If you disagree I'd really like to hear the particulars. You've written before that one shouldn't mix up the day-to-day with valuation, but if it's a one-time thing at the beginning it seems more like an investment and less of an ongoing negotiation.