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

by zeynalov on 11/27/14, 6:08 PM with 8 comments

I'm solo-founder and everything goes good for now. But I'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'm going to give him.

I can't decide how much percent equity should I give him.

He is startup-savvy guy, knows SEO, online marketing strategies, online business growth-hacking etc. No coding skills.

Our startup is SaaS but our business model isn't on recurring revenue. Clients make one time payments.

Margin profit now: 80% revenue (team= me(founder)+3 employee+ 2 long-time freelance developers + tax)

Real revenue in first 2 months:

Oktober - 1st month – 1230 $

November - 2nd month – 9820 $

Revenue Prediction :

3rd month – 11000$

4th month – 20000 $

5th month – 25.000 $

6th month – 35.000$

7th month – 40.000$

8th month – 45.000$

9th month – 50.000$

10th month – 55.000$

11th month – 70.000$

12th month – 80.000$

13th month – 90.000$

December 2015 – 14th month – 100.000$

Total Revenue on end of 2015: 662.050 $

  • by hakanderyal on 11/27/14, 9:16 PM

    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.

  • by alain94040 on 11/28/14, 6:50 AM

    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.

  • by smt88 on 11/27/14, 7:40 PM

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

  • by s0x on 11/30/14, 4:09 AM

    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?

  • by notahacker on 11/27/14, 9:54 PM

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