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Hey guys, I recently started a business with a friend of mine.
He has already started two businesses and has done well for himself. He's a couple years older than me as well. This is my first business.
He's mostly busy with his other business but he will help me out with this business as well. He is more so in the "advisor role". He's also someone I trust and someone I've been friends with for a while.
As of right now, I have 80 percent equity in the business, and he has 20 percent.
He's going to put in 20 percent of the work into the business while I'll be putting in 80 percent.
We're in a bit of dilemma right now.
Our long-term vision for our business is to make it some sort of a social media platform, an app.
However, right now we're simply trying to build the website.
Neither me, nor my friend and cofounder have the coding skills to do any of this.
We are looking for a third cofounder - a CTO.
We've been interviewing people in the last few days and we have some options.
So far we've done things such as create a business plan and conduct market research. People seem to really like our idea.
We're also probably going to get a few thousand dollars in funding.
One potential CTO is asking to receive around 25-35 percent equity.
One way the equity will probably be divided will be something along the lines of:
Me: 50 percent.
My friend: 20 percent.
CTO: 30 percent.
I have a few questions:
- Is giving 30 percent equity to somebody we don't know well a bad idea?
- How should we decide on "control"? My friend is suggesting that, despite the fact that I'll be the person with the most equity in the business, the three of us should have equal control, or at least me and him.
- Any other piece of advice on this situation would be greatly appreciated.
He has already started two businesses and has done well for himself. He's a couple years older than me as well. This is my first business.
He's mostly busy with his other business but he will help me out with this business as well. He is more so in the "advisor role". He's also someone I trust and someone I've been friends with for a while.
As of right now, I have 80 percent equity in the business, and he has 20 percent.
He's going to put in 20 percent of the work into the business while I'll be putting in 80 percent.
We're in a bit of dilemma right now.
Our long-term vision for our business is to make it some sort of a social media platform, an app.
However, right now we're simply trying to build the website.
Neither me, nor my friend and cofounder have the coding skills to do any of this.
We are looking for a third cofounder - a CTO.
We've been interviewing people in the last few days and we have some options.
So far we've done things such as create a business plan and conduct market research. People seem to really like our idea.
We're also probably going to get a few thousand dollars in funding.
One potential CTO is asking to receive around 25-35 percent equity.
One way the equity will probably be divided will be something along the lines of:
Me: 50 percent.
My friend: 20 percent.
CTO: 30 percent.
I have a few questions:
- Is giving 30 percent equity to somebody we don't know well a bad idea?
- How should we decide on "control"? My friend is suggesting that, despite the fact that I'll be the person with the most equity in the business, the three of us should have equal control, or at least me and him.
- Any other piece of advice on this situation would be greatly appreciated.
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