

Ask HN: How much equity should I give my new co-founder? - zeynalov

I&#x27;m solo-founder and everything goes good for now. But I&#x27;m very stressed now and I think it would be better if I would have a co-founder. Our startup is ready and already launched 2 month ago. I found a good guy, that I think he can help me to grow our startup. Now he asks what part of my startup I&#x27;m going to give him.<p>I can&#x27;t decide how much percent equity should I give him.<p>He is startup-savvy guy, knows SEO, online marketing strategies, online business growth-hacking etc. No coding skills.<p>Our startup is SaaS but our business model isn&#x27;t on recurring revenue. Clients make one time payments.<p>Margin profit now: 80% revenue (team= me(founder)+3 employee+ 2 long-time freelance developers + tax)<p>Real revenue in first 2 months:<p>Oktober - 1st month – 1230 $<p>November - 2nd month – 9820 $<p>Revenue Prediction :<p>3rd month – 11000$<p>4th month – 20000 $<p>5th month – 25.000 $<p>6th month – 35.000$<p>7th month – 40.000$<p>8th month – 45.000$<p>9th month – 50.000$<p>10th month – 55.000$<p>11th month – 70.000$<p>12th month – 80.000$<p>13th month – 90.000$<p>December 2015 – 14th month – 100.000$<p>Total Revenue on end of 2015: 662.050 $
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hakanderyal
There isn't a formula that will work for everyone. It heavily depends on the
company, it's niche, it's potential of growth, personalities of owners, and
much more.

If you are looking for a simple formula, here is one that I see regularly on
HN:

Will you pay him a salary, or just equity?

If it's just equity, %50, with vesting.

If it's salary, than between %0 and %50, with vesting.

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alain94040
You do not give us enough data to help you. What difference will that person
make?

A real cofounder should get 10-50%. But first, you should work together for
1-3 months minimum. Once you know you are a good fit, vesting will protect
you. Remember that 40% vesting over 4 years isn't that much if you fire your
cofounder after one year for lack of performance. That's really just 10%
equity for a full year of work, not bad for you. And if it works out, everyone
is happy.

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zeynalov
in first 1-3 month, should I pay him monthly as employee?

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smt88
Don't agonize over it too much. Be generous. Are you paying him a salary as
well?

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akama
I actually disagree. Once you give equity, you are stuck for better or worse.
Make sure you have a vesting schedule in place and pay more salary and keep as
much equity as you possible can.

~~~
smt88
S/he should get the right people and pay them what they're worth. Trying to
under-pay people results in sub-par people or good people leaving. 80% of
nothing is a lot less valuable than 60% of something successful. Great people
are absolutely vital at an early stage.

I'm not making things up here, either. Every successful entrepreneur I know
agrees with that sentiment, as does the prevailing philosophy of
investors[1][2], thought leaders[3], and serial entrepreneurs[4].

I have never once seen anyone successful say to hoard your equity, especially
if you're bootstrapped and cash-flow positive. Greed is a great way to kill
morale.

1\. [http://hunterwalk.com/2014/11/26/one-founder-told-me-he-
want...](http://hunterwalk.com/2014/11/26/one-founder-told-me-he-wanted-to-
overpay-his-employees-so-we-invested/)

2\. [http://blog.samaltman.com/employee-
retention](http://blog.samaltman.com/employee-retention)

3\.
[https://news.ycombinator.com/item?id=8109](https://news.ycombinator.com/item?id=8109)

4\. [http://jamesaltucher.quora.com/The-Ultimate-Cheat-Sheet-
For-...](http://jamesaltucher.quora.com/The-Ultimate-Cheat-Sheet-For-Starting-
And-Running-A-Business)

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s0x
I wouldn't give him any equity. Since it sounds like you can afford it, why
don't you just hire him on a contract basis and pay him hourly?

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notahacker
Is the projected revenue based on what you expect to make with or without the
assistance of a marketing-focused cofounder?

