

Ask HN: Need advice on raising money with a part-time founder. - throwaway12464

Myself and my co-founder originally started our company on the dream of being apart of the solution to healthcare.  Being a front-end/back-end combo, we had little "healthcare" experience, but we thought that we could make it work.  We realized we would eventually need to bring on someone with healthcare experience.  We did this about a year into the company when we brought on a very well known figure in the Health IT world as a part-time "co-founder".  Among other roles, he is a practicing physician.  At the time, although he was not working full-time, we decided to give him founder equity in the company.  Everything would be split three ways - 33%.  We viewed his part-time efforts as being acceptable because he was in the field, figuring out the problems in healthcare...<p>Since then everything has been going well.  Myself and my original co-founder are working full-time on the company, we pushed out a successful beta, have a paying enterprise customer, etc.  The doctor co-founder has been proving his worth - he is actively involved in the product, helped us sell to our first enterprise customer (gave the presentation), has been tracking down new leads, and has been talking with potential investors.<p>That said, some of the investors we have been talking with are seriously hung up on the fact that we have three founders and only two of them are working full-time, going as far as saying that this would turn many off from investing.  The way we see it, he has been crucial to our success thus far even though he is only working part-time.  He provides a role that we could never do (be a doctor).<p>Will our cap table, as it currently stands, cause us to be unable to get investment?  If so, what is an acceptable level of equity compensation for someone in this role?
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jkaljundi
Search and read on founder vesting and founder cap tables in places like
Quora, Venturehacks and Ask The VC.

Yes, having a part-time or passive shareholder with 33% ownership can be a
major no-no for raising external financing. Both 50/50% and 33/33/33% are
often considered bad even with full-time co-founders.

One thing you definitely should do is to honestly discuss this with your
passive co-founder. Ask him, how low would he be willing to go if the 2
choices are not raising any financing and having his 33% or going down to
15/10/5/3/1% and having a smaller piece of a larger pie.

Even if you do not have founder vesting in place (which you should discuss
anyway) you can come to a gentlemen´s agreement. Over the coming 3-4 years if
things go well for you 2 full-time guys, you will be putting much more effort
into the company anyway, so you should get more. Either rethink the original
agreement or award you 2 significant additional options.

Related: [http://www.bothsidesofthetable.com/2011/05/09/the-co-
founder...](http://www.bothsidesofthetable.com/2011/05/09/the-co-founder-
mythology/)

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throwaway12464
I guess I'm not sure I understand the problem. Why would investors be turned
off? It's one thing if the partner is not pulling their weight, but its
another if they are. From the investor perspective, assuming that some
founders are more valuable than others, wouldn't the passive founder be
disproportionately diluted out on future rounds through vesting or options?

