

Ask HN: How much % for the Idea/Concepts behind a Startup - dryicerx

I have started a start-up in January and since have gathered several co-founders who will be joining full force in the Summer. I want to have a equity sharing vesting-over-time structure finalized and agreed upon. Since money is not involved yet, equity sharing seems to be the only fair option towards everyone. (http://news.ycombinator.com/item?id=580930)<p>I want to make it fair for everyone including my self, and wanted to know <i>what % of the ownership is usually held by the original founder</i>, as the person responsible for the key ideas/concepts and as someone who risked it all and went all in working on it a few months before the rest of the team was formed.<p><i>In other words: How much is the key ideas/concepts behind a start-up worth?</i><p>Thanks HN<p>edit: when I mean how much it's worth, I am also meaning idea/concept/research work/proof-of-concept as a whole. I think it was a bit misleading the way I worded it earlier.
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cperciva
_the person responsible for the key ideas/concepts_

That's worth approximately 0% of the shares.

 _as someone who risked it all_

That's also worth approximately 0% of the shares.

 _working on it a few months before the rest of the team was formed_

I'd look at this from a perspective of how many months you'll have spent
working on this vs. how many months everybody else will have spent working on
this at the point where you could reasonably expect the company to start
paying you market rates in cash instead of equity.

Based on a complete lack of knowledge of your company, I'd pick a two-year
horizon and say that you should get 25% more than new people, in light of your
6 extra months of work. So if this company is you plus 3 other people, I'd
split the stock 29.5 / 23.5 / 23.5 / 23.5.

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dryicerx
But without the original idea, the start-up wouldn't come to formation to
begin with, right?

Also the even split between the co-founders isn't quite possible either (one
is working summer only, another is part time over summer).

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tybris
Funny, how people seem to value their ideas.

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dryicerx
It's not really something I want to spend any time on, but I would much rather
do it now than leaving it for later.

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numair
There aren't any rules about this, and anyone who tells you that there are
hasn't been doing this for very long. Unfortunately, however, equity is one of
those places where you have to assert yourself and potentially be a temporary
asshole to get what you want. You should have asserted yourself and your claim
from the beginning (I.e., "this is my company, here's what you could get if
you joined"), but it seems you've missed that opportunity. I'm actually
surprised you have allowed this to drag on for such a long period of time --
take care of it immediately. The only "rule" is to do whatever you can get
away with that leaves you with the greatest share while keeping others happy.
Oh and, whoever tells you to ask your INVESTORS how to split it up is truly
... Well ... Nevermind. :)

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Travis
For my startup, we had 5 people in on it from the beginning. The workload is
split evenly, except the President is def. putting more time in than the other
guys. We spoke with some funding groups, who said they like to see the
President have a greater interest (seems to help by giving someone a bigger
vote in the direction). So VCs might like to see an uneven split; we each
decided to give the President 1.25% of our overall share.

BTW, we're currently a friends/family funded, bootstrapped company that's
post-revenue, but not yet ramen profitable.

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dryicerx
A equal workload would have made things a lot easier for us, but some of our
co-founders have other obligations so not everyone is working full time on
this.

I didn't know about the VC's requirements as that, but seems to make sense.
Good to know.

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bravura
On Noam Wasserman's blog, <http://founderresearch.blogspot.com/>, he finds
that the idea guy typically gets about 5-10% for the idea. IIRC. I cannot find
the URL right now.

You should really negotiate with the rest of the team members based upon a)
how replaceable they are and b) how much effort they are putting in.

Milestone-based vesting may also be appropriate in certain circumstances.

~~~
bravura
You should also try asking your question on thefund.com. Their forums are more
geared towards term sheets and negotiation nitty gritty details.

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jgamman
one would think (100 - equity needed to incentivise other workers)... sarcasm
aside, that's the only thing that counts - you have to make a deal and the
only thing you have to buy their time is equity in your idea. 1% of a
x-million dollar company or 100% of a not-million dollar company.

