This is a long exposition.
Please bear with me, I think that I need to provide as much specifics as possible, while keeping it as short as possible. Thanks for reading, any feedback is much appreciated.
(I'm using a throwaway account for obvious reasons).
One year ago I entered this startup as a partial time hire working remotely. A total of six programmers in the project. Four months later I left over disagreements of the development process and the business model.
April this year. I'm contacted by the owner. The business model is a different one, I'll have full authority on technical matters. Two other programmers in the project. I'll work only for two months full-time, full payment. I accept.
To the current situation
- First month and a half. The new business model is incompatible with the system. I make some suggestions in how to present it to the clients, and I hack* the frontend to meet the minimum requirements asap. The payment is as promised.
(Why a hack? The system is written in a full JEE stack: Struts2, Spring, Hibernate... Very painful and slow to pivot - one of my initial disagreements)
Some problems arise with a client. The owner can't pay me. I decide to stay and help maybe one more month if this means that the project can succeed.
Next three months and a half (unsurprisingly, it wasn't one month). More clients start arriving, but their data have some unexpected requirements, and with the existent back-end system is a matter of days to capture only one client's information, and not even all of it.
I rewrite approximately 70% of the back-end system, new requirements included, capture time is reduced to a tenth, the first clients get (finally) all of their data captured, and this week we are delivering.
So... the owner and I finally come and sit to talk about what happens next in our relationship.
We have talked and we agree in the following:
The frontend is currently a hack, it delivers, can hold on for a while, but it needs to be rewritten. Soon.
There is some real potential in the new model. Particularly valuable is the network that the owner has built during the last months.
Right now he can't pay me for my work during the last three and a half months, so the back-end code belongs to me. All of this has been without any kind of contract, only good faith on both parties.
Even if he would pay me in this moment my previous work, is almost sure that he won't be able to pay me a full salary in the next months. And any kind of payment will come from sales of the system, not from his money or any investor's money.
There are no external investors.
Our first talk about a potential partnership as co-owners, has come out with some starting points:
a) 20% for me as co-owner and CTO. 80% for him.
b) He tells me that he doesn't want to be in a Craiglist-like situation (!?). So he wants to include a restriction to prevent me from selling my shares to any third party.
Rationale for a) is that he has been working in this for a year, and my contribution has been for three months and a half. He also spent all his savings when he was trying to starting it (the last months of last year), although with no success.
In b) I think that this is like getting equity without really getting it.
1.- With all these facts, do you think a 20% is appropriate? (Taking into account his initial investment and he working on this for a year now). I am under-valuating my contribution? Initially this felt right but while thinking and writing all this I am having second thoughts.
2.- There is some kind of practice that allows you to block completely a "co-owner" to sell her equity, and can you call the person being blocked a "real co-owner"?
These last days I've been getting the feeling that this is a bad deal for me* (maybe a very bad one), but I need some feedback in what would you consider fair and appropriate. I don't want to feel like I'm taking advantage either.
*We are still talking, nothing has been settled yet.