Questions

I'm considering a partner who would bring technical expertise to my SaaS product. He began work after we discussed 30%, now that he is months in, we both want to firm up the partnership, yet he suggested now he wants 40%. I had the initial idea, designed the product in full, have existing customers for an early version of the software, I do all the marketing, have developed strategic relationships, have won two grants, done considerable work on funding, have substantial recognition, and have incurred ALL expenses to date. I feel that 40% is too much for a CTO to build the software, am I off the mark? One tool I've used to calculate fair equity was this: http://foundrs.com, and it suggested 23%.

If all the CTO is doing is coding software that you came up with, designed, and made previous versions of, then yes 40% is too high, and 30% even may be a bit high, as the website you cited suggests. It depends largely on how indispensable he/she is. Do they have unique skills that are uniquely contributing to the project (other than the fact that they've been there for a while and know the product well by now). If not, then you could very well have freelance programmers do the work instead, using ODesk, elance, etc. To use freelancers effectively you can use the 'Code as Cards' system developed by Amol Sarva (link to free book: http://a.sarva.co/wp-content/uploads/2014/12/2014-Dec-9-Ship-While-You-Sleep.pdf). I've worked with Mr. Sarva in the past (co-founded Halo Neuroscience with him), and the system works well once you get past the first 1-2 weeks and have stable, dependable programmers working for you. If you'd like to talk more about any of this I'd be happy to do a call.


Answered 4 years ago

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