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I and my friend are about to get a deal to fund our B plan. This plan aligns with the expansion plans of the funding company. The deal offered is that of partnership in which we two would be having a stake + salary + a performance bonus, while the funding company would be giving the back-end support (procurement, help and assistance) + all the financial investment (we would be given a fixed amount at different points of time). So in a way, we are getting a stake for the idea and its implementation. The brand would be theirs and likewise, some terms are there; while the control will be ours. What minimum stake we should bargain to? In the salaried as well as non-salaried scenario? (Currently we are been told that we'll have 20-25% + a fixed amount per month. Also, we are been told that the expansion would be quicker than if we start on our own + they would be expanding their backend alongwith the rate at which we grow.

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Do you have a plan C? Sounds like a bit of a soft exit to me – tinny May 18 '11 at 11:03

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I just had a terrible experience with this, which I am now trying to get of. Of course, every situation is unique, but I wish I had retained faith in myself and merely pursued the start-up on my own. The project is now several months behind schedule as I sit and wait for for their bureaucratic processes to trickle down and approve my designs.... Yes, I am now getting paid, rather than working for free on my dream, but it is NOT worth it! If you can afford it, do it on your own!

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Sounds stupid, but seriously - if you accept that, it is not "your startup" anymore, at least the way you describe it. Actually I would say you turn into an mjority owned subsidiary of your investor. And you dont have any ssaying - with only 20%+25%.

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But isn't the poster saying this is plan B? Maybe the alternative is the death of the company? 20% of something is better than 100% of nothing. Maybe a last resort? – tinny May 18 '11 at 11:02
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It depends on what you want to achieve. If you need cash, go for it. But as Lindsay said, say bye to personality. Also you won't be able to sell shares at good stakes, so if you fail you are in the same boat as if you would do it all by yourself. Doing it by yourself is just without the starting money from investors, but also without losing your idea to major shareholder and other cons like being told of what to do, rather than choosing what to do by yourself.

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