
Ask HN: What are the risks of creating a company with a complete stranger? - nirmal8
Hi, I&#x27;ve been working with my co-founder on a startup for a while without achieving any interesting results.<p>Few days ago we&#x27;ve been approached by a person that we don&#x27;t know and is not in our network.
He said that he has a similar idea and proposed to help us with his contacts, network, marketing and business effort.<p>The main condition is that we&#x27;d have to create a new US company (we are not Americans, he is) where we would split the equity 51% (him) and 24.5% (us&#x2F;each), without putting any money nor covering expenses like servers and others, but instead splitting them equally. We&#x27;ve done our checks and we cannot find much about this person on the web a part a couple of interviews and videos.<p>Since the other option is to shutdown the startup soon, we&#x27;re considering this offer, and I&#x27;m interested in knowing what risks (legal and not) there could be by creating a company with a complete stranger.<p>I understand that it&#x27;d be better to talk with a lawyer and none of your help could be seen as a law advice, but before doing that we&#x27;re trying to figure out if there is a way to protect ourselves and which kind of company would be better (a standard Inc, a LLC or something else), since we&#x27;d lose the control of our project we&#x27;ve been worked hard.<p>Anyone of you had a similar experience? What do you suggest to do?
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smt88
Don't do it. His terms are insane. His value is unproven. It's too risky to do
this with someone you don't know at all.

If the alternative is to shut down, offer him equity in exchange for closing
deals, or just offer to sell him the UP of the company and move on.

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gus_massa
I agree.

>> _He [...] proposed to help us with his contacts, network, marketing and
business effort._

Is there any reliable proof that he has contacts, a network or know something
about marketing?

[In a more reasonable deal, I'd propose also fixing a sane vesting schedule.
So if he decides to abandon the company next month, he can't walk out with the
51%. But this raises too many red flag for me. 51%!!!!!!!]

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sharemywin
why not setup a contract where his company gets a residual 50% commission for
each deal he sells. or some fixed price per mo per customer you charge him
etc. so that you can remain different entities but still "partner" and put a
non-compete which says he can't just get rid of you and build out the service
later on.

