
Selling 80% equity - finalight
So we met this middle man from china, who say there&#x27;s investor interested in investing in us for 80% of our shares. In return he will give us 400k. We have another option, which is 150k for 30% of our company shares. We now own 100% of the shares completely, so we are deciding on which one to take. Our country is not based in US, but rather a small country, which has a small customer base.
Due to NDA, I can&#x27;t disclose on what the app is doing. My partners are leaning towards giving the 80% equity, which left us 20% I don&#x27;t wish to give up that much because I&#x27;m afraid it will get burn out too quickly and therefore we can&#x27;t raise another round of fund due to our small equity percentage left. Moreover, I didn&#x27;t get enough background check of that investor (in fact, we havne&#x27;t met him yet but he&#x27;s quite interested in our app). My partner is ambitious, he wants to expand quickly into other regions (especially mainland china which has very large users base). However, I suggest to him that we should start small and make sure our product succeeds here first before expanding in other regions. Of course, the downside is that China is able to replicate our product very quickly. In fact, they can replicate a lot of apps now very quickly (and probably efficiently). So I can&#x27;t really argue against this.
So what&#x27;s your take on this guys?
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anovikov
Selling 80% equity is effectively an exit. Just think if you are willing to
sell a company for that much, and if so, go for it. Having no control over
what remains will make you effectively hired managers working for 10% of
profit each, so after that, what kind of salary they are willing to pay you
will be your biggest concern. Making something which is easy to replicate
doesn't put you in a good negotiation position for sure, so maybe just take
this cash, then walk away, and use the money to fund yourselves for a couple
more years to build something that isn't that easy to copy.

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finalight
We will be locked in if we were to take the 80%. So even if there's full exit,
we are still required to work inside or can't proceed a startup straight after
that.

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anovikov
Are they going to pay you for staying in, i.e. salary?

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finalight
Most likely yes. It would seems unfair for us not to get paid for working

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anovikov
If i was you it would be the main point of discussion. Now it looks more like
a job offer with a hefty sign-up bonus. If the salary is good, why not?

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finalight
To be honest, it's not attractive enough. I gain more by working in corporate
world

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urs2102
I don't think 80% at an early stage is ever justified as it not only hurts
future investors from considering you in future rounds, but it hurts founders.

I like PG's equity equation to calculate the value of investors. I don't think
any investment can increase your odds of success by 400%.

[0]:[http://paulgraham.com/equity.html](http://paulgraham.com/equity.html)

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finalight
I want to add on that my partner is right in the sense that having 20% but
able to expand to overseas might be much more than having 70% locally. However
I still feel that we should start our steps small then proceed forward.

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dragonbonheur
If you want to give up control of your company and product this early and this
cheap, you way as well sell 100% of it now. Also, are your prices in Euros, US
Dollars or Yuan?

Anyway, keep saying NO while there's any uncertainty.

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finalight
It's sgd btw for the currency.

