I am currently building a startup company with two other guys. I am doing about 90% of the work because the foundation for the project is web-based and I am the only programmer/web designer. The three of us have agreed to split the company three ways equally, however, profits from any project we do within the company will be split based on time contribution, value of contribution, etc. We are doing this because there are multiple projects we would like to do in time and each of us have our specialties within those projects and those projects will require X amount of each of our time. Questions: Is this a bad way to go about this?? Is this common practice for startups who have who have ties to multiple industries?? Are there formal and legal ways to split the profits of our projects??
I think the big issue is focus – rather, lack thereof – the legal mechanisms are way less important at this stage.
First, if you’re building a startup and only the web guy is busy, something is desperately wrong. Your two colleagues should have their hands full with interviewing potential users/customers, giving you input on product, copywriting website contents, looking for test customers, looking for money (subsidies, to start with), working on communications strategy, etc. etc. – plenty of things need to be done, more than enough to keep two guys busy full time.
Second, if you’re serious about the startup you shouldn’t be putting time in side businesses and side projects – one thing at a time. For many reasons – and I have my own and other people’s stories to tell to back this up.
Further, if the startup works, it’ll create enough money to go around so you don’t have to work on the side gigs… and if it doesn’t generate enough money – maybe it’s a wrong startup.
So, stop worrying about equity and start worrying about building a startup that works and that gets up and running fast.
If you are doing all the work you should be compensated for that. More shares or invoicing the company for your work.
Conceptually, I like the slicing pie model. I heard from someone trying to implement this for his startup that it doesn’t always match Belgian legislation, so contact your lawyer for more info.
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