A serial entrepreneur wants to co-found my company – he has other companies under his wings. How can I maximize my terms? –@OdelyaB
First off, congratulations. You have an idea/company that is good enough that someone serious wants an equity stake.
Now your challenge is: don’t let him overrun you with his credentials. Now you need to get into negotiation mode.
I wrote an article on this about how to negotiate.
But let’s summarize what you should do:
First, list the items that are potentially at stake that are all worth equity of some sort:
– Will he put in personal money?
– Will he get his fellow entrepreneurs to put in money?
– Can he find immediate paying customers?
– Can he provide office space, programmers, etc.
– Will he put in sweat equity? If so, make sure he vests into his shares over time so that if he dispappears he suddenly doesn’t own half your company for nothing.
– Will he provide product development?
Each of the above is worth some equity but not a lot by themselves.
If he is not putting in his own cash, then the vesting is the most important thing. He must vest into equity over time. And you are the judge if he is providing value (the only real value is if he provides customers or revenues of some sort).
You can give away the nickels (he won’t provide immediate customers) if he puts in the dimes (e.g. if he puts in significant personal money).