Hi everyone! My co-founder and I are planning to start an LLC. We came up with this idea because our biggest investor, who happens to be my co-founder’s step-parent, wants us both to start a company together since we’ve successfully completed numerous projects together.
Regarding equity, our investor is seeking 45% since they will bring clients to the company. My co-founder argues that I deserve 20%, while they deserve 35%, primarily because they are related to the investor. I believe that without my contributions, our investor wouldn’t have suggested starting the company for us, as the previous projects wouldn’t have been completed. I also believe that I possess more essential skills for the business than my co-founder.
I find myself torn between two choices:
- Accept the deal to gain more experience, even though it may not feel entirely fair.
- Inform my co-founder that they may not be the ideal business partner I’m looking for and decline the deal, which also feels like missing out on an opportunity.
I would greatly appreciate any insights you have to offer. Thank you all in advance!
Giving away 45% of the company for a first investment isn’t a strength, it’s a weakness. If anything he should get less.
But it’s really worse than that, having less stake than your investors is already a foolish mistake and you haven’t even started.
You will either be smart and run or regret it once you realize you’re blinded by greed and/or wishful thinking.