
edited to remove - dudenotrightnow
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TuringNYC
The answer is...it depends.

Ownership of 0.5% equity sounds like "Advisory" shares or "Scientific Advisory
Board" which is common for non-full-time participants. However, your stake
should be fair in the context of the entire company.

Firstly - You said the company is based on your research, do you mean market
research or actual scientific research? Is the scientific research published
or secret? If secret research, would the company end up owning your research
or would you own it and license it to the company? If the company is based on
actual scientific research that you did and you own (e.g., cure for disease,
new way to make transistors, etc), you should be getting a lot more, probably
in the form of a license fee based on the startup selling their embodiment of
your research. If you are literally handing over non-published original
research or trade secrets you should be getting a lot more.

Next, 0.5% might be fair, but only if everyone else is getting a fair deal.
Your other co-founders -- are they working full-time on the startup? If not,
they should not get a lion's share of the equity. If they are, then they
should get a large share of the equity. Regardless, everyone should be on a
vesting schedule (perhaps 4yrs?) so they dont just outright own a large chunk
of equity but rather earn it by working full-time on the startup. As soon as
others go non-full-time, they should fall back to just whatever equity vested.
This ensures that your co-founders who have large ownership dont walk away
(like you) 3mo later, except with an un-earned conveniently large ownership.

Some of this is also dependent on money put into the business. Did you and/or
your co-founders invest money into the startup or is it just sweat
equity/research? If you invested cash into the business, you deserve more than
0.5%.

Finally, the whole bit of many students working on this for 40+hrs a week
seems questionable -- are they being compensated for the work? Who actually
owns the work, them, the University, or the startup? Is there an agreement
that lays out the ownership and consideration for work? As an investor, i'd
stay far away from this company because if it gets popular/large/valuable
enough to warrant legal action, I can see either the [slave] students or the
University claiming partial ownership over the company's assets. If all this
is verbal only, my gut tells me the "startup" is doomed for
failure...or...someone is going to get a raw deal. With these things, a
shrewed co-founder often claims the business is shutting down and then
secretly forms another business with the work/assets/research and get a fresh
start and cleans house of any legacy. I'd go with a real startup that lays out
ownership, compensation, rights, licenses, etc.

