My wife wants to found a SaaS startup. She would work on product, and would need a technical co-founder to build it. I would support on the market and commercial side on a PT basis. Should I take a (small) equity position to give us a combined majority stake so that we can keep the dream alive if the third founder pulls out? Or would this be discouraging to the third founder and/or potential investors? I’m thinking 45:10:45… could I go higher?

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I would say keep it between family and instead of third cofounder just hire a person/company to build it for you.

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This is terrible advice. If you’re building a tech business, do not hire a company. At a min, you need a full time, legit CTO. Ideally a tech cofounder.

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This is why you do vesting with a cliff. If your third founder drops out they get nothing. This is very typical in SV. Dm if you want more info

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Important to have vesting for everyone
What if you do part time for six months, and then the company takes off and you move in full time for five years? Suddenly 10% doesn't make sense anymore

Any chance it would be possible to divide the equity with a vesting schedule at such an early stage? I thought even founders had to earn their equity to avoid that very risk of them just leaving with a piece of the pie. Great e question though, I’m following…

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Most early VCs will force vesting on founder stock.

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As an technical Co founder in VC funded startups (who can still code at after 20 years of working), who has led 80 person teams in corporate ventures and super strong b2b sales experience and contacts, I'd be very wary of joining a venture like this.

If I sign on as a cofounder, I am doing a cofounder role, which is more than just build a product. Therefore, I expect 50 to 50 split. I don't like family members in the early team (and in top of that skewed equity as a result of that), feedback and taking potentially adverse actions are super hard.

If I join on as an employee, or decent pay CTO with 2 to 5% equity, then I don't care. I also will be doing my job and then focusing on my other projects outside of work because someone like me has lots of ideas, can self build and self validate with my networks.

Hope that gives you a perspective.

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Agee. UI/UX and business roles are easy to find. Why would a good technical resource go into this venture knowing that husband and wife have more equity than them?

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Honestly I’d do a little reading in the book “The Founder’s Dilemma”. Has some great benchmarks around equity splits. Also warns about making the decision carefully before working with close family members as cofounders 😬

Also I challenge that you need to have equity to have a majority stake. Many investors will expect the person with the idea acting as the CEO to take a higher portion of the equity. 50/50 splits tend to make decision making and leadership unclear, so investors actually like uneven splits (even if slightly uneven) in many cases.

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Do you have the third cofounder already lined up?

Do you guys have a product established yet? 

No and no. I’m working on the business plan and my wife is sketching the wireframes for what the UX will be like. We are very early in the process.

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Happy to help with the technical stuff if needed.

You can dilute yourselves later. There's a magic number investors want to see though, but it escapes me.

Oh wait, proof of concept, 3x levered, and no revenue with a monster burn rate. All kidding aside, your big money people are going to restructure the shares anyways, as mentioned. I'd be more worried about a viable product and proper technical expertise.

I have an ad hoc budget with minimal oversight, and finding proper talent probably is harder than learning to do it ourselves. We're in e-commerce and struggling with cross platform inventory verification. If that helps

Hire someone. Keep 100% control

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