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How much can I ask for equity partnership in a new subsidiary?


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#1 gamelife   Members   -  Reputation: 192

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Posted 21 February 2014 - 09:12 PM

My ex-boss currently owns a non-IT/game related business. He recently contacted me, knowing I had worked in the games industry for ten years, had track record of good technical skill, and also had idea of a new project that might earn high money.

 

He is now preparing a proposal to outside investors to found a subsidiary under his current company. The subsidiary will focus on IT/games. He verbally agreed to include me as an equity partner, and wanted to include my portfolio in the proposal for first round of funding. The proposal has to be finished in a short time, and since I don't have enough time to draft my new project's idea, my ex-boss will use his own simple idea about classical mobile game in the proposal.

 

Now I am thinking how much can I ask for the equity. It seems to me that my ex-boss is just providing his business knowledge and relationship with investors to the new company, and he invests no money from himself. Once the outside funding is captured, I will be the person who works full time and manage the core production. Now should I regard myself as a co-founder and ask for more equity, and if I could not get more, I would rather be a normal employee and ask for high salary?

 



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#2 frob   Moderators   -  Reputation: 19006

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Posted 21 February 2014 - 10:08 PM

You can ask for the moon, but you probably won't get it.  It is a very good question, but one I don't think we can answer. Look at what he is offering. Look at what you are offering. How well do they relate to each other? Who is taking the risks? How much is each person's relative risks?  If one person is offering much more than the other, or one person is risking much more than the other, the ownership should reflect that.

 

Also, be VERY careful about people listing you in various positions. I've seen multiple people who at startup time were declared things like "co-founders" and "partners", but unless your name is on the incorporation documents detailing not just your position but also your stake in the company, those claims are verbal only.  Get it in writing in a contract or the bylaws or it didn't happen.


Check out my personal indie blog at bryanwagstaff.com.




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