How much equity should I give to my new co-founder?

[gloria_]

@radiantjedichica In my previous YC application; we were on the top 10% startup as per the email I received.
I infact received 2 emails before being rejected at last.
However back then I only had 5000 users, 0 revenue and a semi functional MVP.
So it’s definitely a VC fundable business as proven my many startups in similar space.

 

[futantagenda]

@gloria_ Will having a technical cofounder peak vc interest and help closing investment?

I think it's this is the only reason to get one now. Or if they're willing to come in at 10-15%

Otherwise a great tech lead with the business having lesser net margins for a year might still justify the cost in return for the growth unlock and automation, post tech infra has improved.

 

[gloria_]

@futantagenda

1. My startup isn’t a hard core tech like some other startups, it’s an intersection of Tech, Manufacturing and Supply Chain built in to solve a supposedly complex problem or maybe it’s just a unique business mode that seems to be making sense for me atm.
2. I was playing with the idea of getting in a co founder as been suggested by some well meaning friends.
3. But given the traction and milestone I’ve achieved with an unbelievably low investment and being mildly profitable to grow the business. I don’t have any idea on how to value the Technical Co-founders future input, since by the time someone join in after 2-3 months, we will have a fully fledged product by then built by our in-house team and will be hitting atleast $60k MRR which btw we already hit once few months before..
4. I was thinking of maybe 10% - 20% equity split for an experienced talented Tech Cofounder; but again I wasn’t confident enough to throw such proposals owing to the fact that I don’t have a reference point to evaluate.

 

[futantagenda]

@gloria_ Don't do it for the investors, VCs. There is no hard commitment that they will fund you.

Do it only if you really find insane value and tech cofounder handling 3 devs is also not something very clear to me either.

Does your tech team increase significantly as you grow?

Do you have cash to hire a tech lead, engineering manager? Ambitious and young engineer who wants a management role maybe 3-5yrs exp

 

[gloria_]

@futantagenda One of the dev is younger to me and we share a brotherly bond since we’ve known for a long time. But he isn’t interested in becoming a co-founder for the fact that he’s seen me grow the business from early on even before writing the 1st line of code. He is well aware of the stress and hassle associated with being a cofounder and also English not being his native language, I see some challenge of articulating his thoughts when questioned by any native English speakers.. Also he isn’t very keen on being a cofounder, but a possible CTO role and future employee stock options is the only thing pushing him to work for very low salary.. Hence the question of maybe an outside Technical Co-founder might be useful?

Again the industry I am in will eventually require huge investments in the long run and there’s only so many 2nd hand scrap equipments, makeshift units we can build..
Often times we are in a position where we need to buy 2-3 desktops, furnitures and equipments in a given month. And the profit of that month is only enough to address 1 departmental needs, and we end up rationing our growth for that month, while the other depart ends up waiting for 2 months to get their hands on the needed devices..
Our Fulfillment Centre is comically semi manual and faulty coz we can only afford to buy 1 component at one given month and it takes us a year to establish even a remotely efficient system, which we compensate by hiring more people coz they are cheaper on the short run..
And that applies to all the depart and aspect of the business, coz some things are more expensive than others and some infrastructure value is extracted over a period of 5 years while requiring its installation just few months from the start..

We have just enough cash not to die and survive the other day. We hit what we kill.
And for that reason we only hire people when the system breaks and not before, just before the event we only pray that things don’t break soon.

 

[futantagenda]

@gloria_ What are the mysterious little things are you building in your dark shady warehouses? to know, links please?

 

[gloria_]

@futantagenda Sure will share soon..
I can share few stuffs in private message if u like

 

[futantagenda]

@gloria_ Yea dm

 

[gloria_]

@futantagenda My startup is an intersection of Manufacturing, Supply Chain and Technology currently centered around the fashion industry..

We run our own fashion brand (25% - 35% net margin) while also allowing our users to submit their custom designs for a fee. (50% -60% net margin)

We produce and ship those designs to the original customer while also listing it in our app. The original customer earns 15% commission on sales. (20% - 30% net margin)

Plus our users can also upload their thrifts in our app, where we charge 10% on sales. (Potentially cover 15-20% of our operation cost)

We are building a complete ecosystem for fashion. We are like YouTube for fashion creators but we are a vertically run company. We handle everything from 0 to 10 all in-house..

 

[futantagenda]

@gloria_ All in all, kudos to YOU for what you have built. Super impressive and hats off.

 

[elijah2017]

@gloria_ Your original post is very long!!?!

From what I understood, you're a solo founder (probably non technical?), you have a team of devs and revenues.

Are you aware that a lot of VCs or angels would take a meeting with you to learn more? Maybe try to contact some investors (VCs, angels etc).

Are you aware that even if you find a cofounder, you might be rejected by YC?

You don't mention the country where you are. If you're located in a country that is blacklisted by the US, it's going to be hard to raise money from US investors.

 

[gloria_]

@elijah2017 Hi there my startup is registered in the UK, but 90% of the operations are run from south east Asian country due to the fact that it’s cheaper here and the ecosystem supports my industry. I am also an immigrant with UK passport hence it’s easier and feasible for me to work from my operational base rather than registered address..
I am sure we aren’t banned by the US or any nation.

 

[gloria_]

@elijah2017 There’s this strong notion that VCs mostly fund startups with co-founders and in rare case where they fund solo founders; these are usually founders who posses exceptional talent ,credibility or some kind of proven track records…
Even though I’ve built a fully bootstrapped startup and grown this far organically within 6 months technically; I am still pondering if traction, revenue and growth is a metric enough to push aside the bias towards solo founder without any past track record or credibility??
What we can achieve in 2 years with VC funds. We will achieve the same in 6-8 years bootstrapping. Slowly but Surely..