How do you find a technical co-founder
As a technical co-founder, how much equity should I ask for? Is 20% inappropriate with a salary of 144,000? [closed]
20% of what? If the company is worth $ 100, have a few drinks this weekend. If this company is expected to be valued at $ 100 billion in the next 5 years, you would be one very well remunerated CTO.
The equity issue is how much you bring to the table compared to what the rest of the company is "worth" (in the case of a start-up, this is future value rather than current cash flow).
Investors get equity because they fill the business with cash. You get equity because it a) incentivizes good business decisions and b) closes a compensation gap that you might otherwise be able to fill in a more established company. The founders receive equity because this business was their idea.
They might call you a "co-founder," but it sounds like they have it indeed started and brought the business to this point without your help. So I think 20% is a big question. They will likely refuse to give you so much before they have to give away more to investors. I could see 10-12% as a more reasonable goal. While this depends heavily on your location and the type and position of the company, I could be a long way from it.
You can also ask to be on an equal footing with the other co-founders. That means you each get an equal share of the equity (so if you're the fifth co-founder you get 20%). But this also means your equity equally gets watered down when investors and others get into the business. So you could end up at 8-12% again.
Update to address comments below
First, let me say that I am neither a lawyer nor an expert.
If you accept a 10% deal, I would expect you to either at all Not or in subsequent financing rounds little and only in proportion to the equity you hold (i.e. if he holds 50% you hold 10% and another holds 40%. A dilution strategy is to give equity to a fourth party who wanted 10%) that you give 1% (you stay 9%), the founder 5% and the third 4%, but it all depends on the contract you signed and others signed, so read it carefully.
I think a 4 year vesting period is pretty common, but you could try pushing for 2 or 3 years instead or removing cliffs that are currently on the vesting schedule. The founder will continue to want some sort of vesting schedule so that you can stay invested in the company for several years (to make sure you don't just take the equity and then put your feet up and let him do all the work to make money) . Or, you could save your negotiation to get more equity instead of getting less equity faster.
In general, I think you should sit down and ask how committed you want to be to this business. From your description, you could have a huge impact on the potential success of this company. Also evaluate your risk tolerance. In a start-up you can do your job and Your investments will be tied in one place. and this place has a very real chance of total failure.
If you want to go out of your way to make this a success and you can handle the risk, I would ask you to be an equal co-founder with them (with an equal dilution of your holdings as investors join).
If this is more of a side project or you don't want the full risk. Stick to 10% and do what you can and hope for the best.
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