My startup went through a very prestigious accelerator, during which, my co-founder left. This resulted in a solo founder company throughout the program.<p>I hired a few friends (as contractors) to help during the course of the program and by demo day, the company has become quite attractive to investors.<p>I am thinking of bringing on one of my contractors (he is also a friend for about a decade) as a co-founder.
I've been advised to give up to 10% with below market salary (vested with cliff), or 5% with market salary. I can't afford paying market so my questions are<p>1) Is 10% good for a cofounder? If not, what would experienced entrepreneurs suggest?<p>2) Would a ramp vest over 4 years be recommended ( Year 1 - 1% (with cliff), Year 2 - 3%, Year 3 - 6%, Year 4 - 10%)?<p>3) Would it be beneficial to change the vesting schedule to 7-10 years (instead of 4) and vest ~1% a year (with a 1 year cliff) ?<p>4) Is 10% too generous over the lifetime of a startup? (Financing rounds (3 rounds at 20% each), 7% for accelerator, 20% for employee pool) This leaves a total of 13% (in an average case) between founders - so really should be 6.5% each between the two of us.<p>Thank you for answering
I would NEVER join a company, esp. as a co-founder if my vesting was over 10 years for 10%. Nope.<p>and as @sharemywin states, at 4) he is fully diluted - and would happen way faster than his vest schedule. Especially. given its just the two of you and you still need to build a company, hire people, raise money....<p>I think the whole proposal is bad. What I would do is give him more - and then when you bring on other entities (investment/employees) the future equity come from your both positions.
1,2) Probably yes, depending on your situation.<p>3) Probably not.<p>4) Ownership doesn't work that way. When you do 3 funding rounds at 20% each, you're left with 51.2% (1 - .8<i>.8</i>.8) not 40%. The co-founders 10% would be diluted to 5.12%.<p>The accelerator you went through would be the best source of advice for 1 and 2, since they know your situation.