Equity % when only 2 people are

So why the attitude of placing yourself beneath your business partner? Why would he "allow" you to have a part of the company? You're earning that share by your efforts, no?

I'd have another question as to whether or not this is a good deal for you... The part about you doing all the work and then being named CEO sounds fishy. If the other guy has all the experience and the business background, I'd expect you to be the COO (since day to day stuff is operations) and him to be the CEO (since he is experienced and the visionary). By you being the CEO what will he do? Take a vacation? If that is the case, fair enough, make sure that's ok with you and take that into consideration when you propose a share of the company you want.

So, your call. Personally, I would stop placing myself beneath the other guy, and open negotiation (and it is a negotiation) with 50%. When asked why 50, I would say "because I am expected long term to do most of the work, or did I misunderstand that aspect of it?". But that's just me, with the little info you gave about all of this. Check with your gut before talking.

One other point...in negotiation often if you put the first offer on the table you lose.

It seems very, very strange that with his seasoning and VC background he's asking a college kid what percentage of the company you want. Tell him you respect his background and expertise and would like to get his perspective on what split he thinks is fair. Then work from there. And in your negotiations get in writing what he's talking about giving you in other areas, e.g. CEO role at some point.

I expect that he wants you to take over the management so he can concentrate on the development side, but getting more than 1/3 may be a stretch, as he is taking on most of the risks at the moment. The other part is that without him can the company survive? If you turned it down, could you be replaced?

You may be able to have it written that you get some stock options, or your equity increases, when certain goals are met. For example, once there are more than 7 full-time employees, then you get 40%, and have other goals to work toward 49% or so, as you become more indispensable.

Thanks for the timely responses.

Gmagana- I didn't mean for anything to sound fishy, it's just that the other half who is responsible for funding all the start-up, who has all the professional connections, who is the mastermind of this IT project is looking for me to take over all day to day operations once the start-up is lifted so he can continue to look onto further improvements within and outside of this start-up. Like I said I'm new to the out of college workforce and realize that I am not worth the value of somebody who has 20+ years of experience in this field.

Mr. Black- You are correct but I would say he is basically taking all of the risks not just most. If the start-up groundsout I'm out my effort, and he is financially out all his investment time and effort which is much more of a lifestyle swing. I love your idea of an equity increase as goals are met, I thought this to myself but didn't know if this was a plausible idea.

I think I'm going to go with a starting 25% with an increase as levels are met to hopefully achieve a 35+ total percent. I have until Dec 15th to decide... so more ideas the merrier.

My recommendation would be to split the businesses 50/50, have him put his money into the company as convertible debt to be priced at a 25% discount to the first round of funding your company does of at least $1 million in a single round. Any good corporate lawyer can help you draft this. And make sure to think about the pre-nuptials.

I cover the topic of how to deal with partnership issues in the first few posts here: Startup Advice

Also, I talk about convertible debt and angel funding in some of the early posts here: VC and Angel Funding

Good luck!

Your question depends on your salary. Are you a partner or employee? Unless you're guaranteed a good salary from the start, you are a parter and the suggestion of 12-18% equity means you've misunderstood your central and important role in this venture.

You need to agree in writing up front if you're a partner or an employee. Sure, you can work for the guy for a competitive salary and small equity stake. But don't 'partner' with someone at a reduced salary for anything less than significant equity stake (40-50%). And don't rely on his vague statements of good will. If you'll be the CEO he either has to pay you like one or make you a significant stake holder at the outset.