Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 3 down vote favorite

Hi I have worked in start ups all my life and love the life, but now I am a first time founder and have lots of questions. this is the most burning matter now.

We are a groupd of 3 founders. This is fine and works great at the first stage of the company, as we all invest equally, time and money, and agree on complete and equal sharing of ownership.

We are now going to start looking for outside funding, VCs or angels. And now comes the hard part. How do you decide on roles in the next step of the company, and slaries. Of course one of us fits better in the CEO position and others in more technical positions. And that is natural. But since we are all equal partners, can we, and is this common practise, have the same or almost same salaries even though we will probably have different official roles? do we even have to decide on those roles now, is this something VCs expect when presenting the startup[ to them?

share|improve this question

5 Answers

up vote 2 down vote

The roles should decided based upon the skills each of you posses. The company needs to make sure that the best people are in the best positions.

VCs would rather invest in an A team with a B idea then a B team with an A idea. The team must have the correct roles, or the company will never be able to survive.

The 3 founders can share equal stake in the company, but you need one person to perform each role. A company can only have one CEO, because decisions need to be made, and deadlocks must be avoided.

share|improve this answer
up vote 1 down vote

You should have roles well established BEFORE landing your funding. In fact, no VC worth his salt will fund you if you don't already have that kind of thing worked out.

Ideally, it comes even before that -- you should not be partners/co-founders with anybody without already having a pretty good idea of what your respective roles are.

share|improve this answer
up vote 0 down vote

I think it's important to figure out the roles as quickly as possible. That's not only for attracting capital but just for running the business successfully. And it's to get any bad outcomes out now when the impact is a lot less than securing funding then finding out one of your co-founders really thinks THEY are the CEO.

Best of luck.

share|improve this answer
up vote 0 down vote

I agree with RonGa with respect to what VC's will want.

When the funding round comes in, the share of the company that the three of you share will be diluted, however, you can still each have an equal share of the remaining ownership.

Regarding salaries, if all of your partners agree, you could keep your current status of equality. Given that titles can be largely subjective to the business model, you could each have a C-level title and have equal compensation. For example, you could have a mix of (CEO, CFO, CTO) or (CEO, COO, CIO) or etc. with each paid the same compensation.

share|improve this answer
up vote 0 down vote

I don't think this should be a problem with the VCs. Like the others I agree that you should get everyone to do the jobs that they're best at. In ways, it's easy to decide who's the CEO since you say you have one person who fits this role better.

The other two, and it sounds like you're all technical, might have a harder time deciding who's the CTO and who's the lead developer, or whatever. Other than the CEO, the titles don't need to matter too much. You can certainly agree, at least initially that you'll all have the same salary.

As the company gets funded and grow, this will change, but if you make it that far, it'll be a good problem to have to figure out.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.