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!
Did the co-founder actually state that the reason he/she deserves more is that he is related to the investor, or did he/she state that the investor would not have invested without them.
If they said the former, you shouldn’t partner with then you know you have a problem. if it’s the latter, you should go back to them and ask them to get the investor to state that this is what they wish. In fact you should raise it with the investor.
It is likely that the investor would not have know that a step child is behaving in such a way, and if they are a savvy investor would take him aside to tell him to differentiate between business and family. if they insist, you know you are being taken for a ride. Take your skills and bring it to another investor and partner.