I founded a company with my business partner around a product that I invented. I came up with the idea, designed the product, did the patent search and wrote the non-provisional patent application. I also wrote a business plan. I had some help building the prototype from a machinist, an industrial designer will help with the product development, and a patent lawyer edited and modified my provisional patent application and he will help write the non-provisional patent application. My business partner has paid and will pay for all of these things. I have done most to all of the work and coordinating that has propelled us forward thus far. I've made most of the connections (except for a couple) that have allowed us to propel forward. However, he is financing everything. He is expected to spend almost $100K on this business which will carry us through the first production run. He will also be responsible for building our company website. We both plan to stay with the company for the long term - provided the product is successful. Should we divide the equity equally between us? Is that the best way to go?
This is an equation that math cannot solve. I would tell you to go back to the that moment when you told your partner you wanted him on your team. You went to him just because he could finance the first stage of the start-up? What did you and what did he/she agree on when you signed up for this project? Are you thinking about changing what has been discussed and agreed before? Sorry to add more questions than answers to your question but this things are important to understand where you stand right now.
Let's say you are right now on a 50-50 basis and you think that is unfair...to you as it sounds (but I'm not entirely sure) from your question. If you want to change that you must value all your capacities and contributions (in the past and potentially in the future) to the project in a way they can have more impact in the future than the 100 k . That is a hard exercise though. Another way to think about this is: could I get someone else to invest 100k in this project right now as it is for less than 50% of future profits? Could I get any other source of funding that would diminish the amount an investor should invest in this project? Since you are describing is a partner that only offers you money, then thinking your project without money could answer your question.
Feel free for a chat on more details over these issues and good luck!
Answered 9 years ago
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