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!
first of all, no round should dilute you more than 20% at most. so 45% is out the picture. Give him a commission for bringing clients. Secondly, being a stepchild is not a fucking qualification or a skill. It’s probably your investor feeding him that shit going by him wanting 45%.
This is my feeling as well. The 35% claim is a distraction for the 45% requested by the investor
Is this a small business or a startup? If it’s a small business it may be fine if they never plan to get more investment. Additionally he mentioned it’s an LLC which makes me think small business. If it’s a startup trying to raise multiple rounds it should be a delaware c corp