The following situation has happened to me twice now, both times when the startup became funded by an angel or two (not a VC firm):<p>I am the scrappy developer and I invest my time to build a product. The other founder invests their money to pay a sales guy, create marketing material, legal, and do all the other necessities of a real business.<p>We demonstrate value, we get investment. I have shares that are valued at some amount and the co-founder has shares valued at some amount, but IN ADDITION, reimburses themselves for their upfront expenses. This essentially puts them at even for their investment, while I still have lost time to make up for.<p>The impetus for my post is that one startup, while generating revenue, is not profitable(sales expenses & admin expenses). The other founder wants to call it quits in the next couple months if we don't exit. They have been reimbursed for their expenses, while I have over 1000 hours of sweat in the company. Sure, I have theoretical value in my shares. However I don't think the angel would by them off me, so really I've got nothing if we stop.<p>So my question, is it normal procedure to be reimbursed upon investment? Am I not getting paid back for my sweat investment simply because I didn't think to put it in the contract? Do developers ever enter an agreement with a "Upon funding, previous time investment will be reimbursed at $X per hour" clause? Is my lack of sleep making me sound irrational and maybe I should take a few days off?
The solution is either to negotiate better, or appreciate the nontechnical work.<p>If the cash-only founder is really just an angel, and your agreement with him should be that his cash gets rolled into the seed. Perhaps at better terms.<p>This probably means that you need to hire the sales guy, create the marketing material, legal, etc. When you do that, you might discover that the other guy was actually doing hard work all along even if he wasn't coding.
Sadly, your situation is fairly normal. That's the downside to investing your time (that you have to prove the product).<p>Next time get your own funding!!