First I must say, this site is quite impressive. I found it while researching partnership agreements. That being said, I am nearing a fairly important conversation with my current partner to discuss structuring our business. Below are the specifics:
He and I own another successful business together. Currently, we are in early/launch phase with a fully developed/tested concept and product. He works full time and I currently work part time. Given the stage of business, it is quite difficult for us to stay informed as it is moving at an exponential rate and I am still in my very demanding job. Discussed far prior to starting the business, it was understood that I would maintain my job until our new company could afford to pay me - however nominal the amount may be. Also, I am willing to sacrifice in order to further the business.
We are currently coming in to conflict as he is concerned with the amount of work and not being able to cover it all. His proposal includes hiring on an employee we have previous worked with in our first business who, although young (24), is quite responsible and successful (worth the $$). The problem lies in that he feels I should give up an equity state in order to incentivize the employee to join forces.
Here in lies the concern:
- Giving up an equity stake puts me at a disadvantage from a voting perspective (or does it?) Can you structure it as a non-voting equity stake? How much equity, if any, is fair? Should there be a vesting schedule? Buy-back option?
- As a new employee in a start-up, how often is equity offered? Said employee has had a successful past with us, but no true prior work experience/credentials. Starting salary roughly $12+/hr and, as I am confident in the business, should afford her a salary of $30K+ by end of year one.
Any ideas/options would be greatly appreciated!