chrisw5977
New member
So a bit of context - I’m 29 and have an already established company that does a modest $40k / mo gross. It’s a single member owned online business and I’ve built it by myself, so I’m comfortable marketing/branding/designing and product development.
Here’s the thing - I want to start my next business, and it’s something I’m greatly passionate about, without question 10x more passionate than my first one. I built a business model around it and it’s very profitable. I then made a deck with everything from the brand to the financial model, go-to market, and business plan and shared it with a few of my closets (3) confidants. All three are financially more successful than me - one is an ex-investment banker with 20 years experience, the other head of acquisitions at a multi-billion dollar company, and a founder fresh off raising his Series B. I wanted feedback from them before I went out to raise capital.
2 of them gave me great feedback - the head of acquisitions and the other founder. They said this had legs and helped me strengthen the deck further. The ex-banker came back with his feedback and it was clear he hadn’t stopped thinking about it. He was very keen on hearing more.
So we sat down and it was apparent he wanted to be involved. At one point he even mentioned “I’d be happy to go 50/50 with you on this, I’d have to take a longer think about it before committing though.” He then proceeded to ask what my next steps were to which I responded, “I’m not sure, I think i’m going to raise some capital for this.” To which he said - “No private equity or venture capital will put money into this idea. It’s too early and it’s too small. You want a private investor.”
Fair, the idea is small, and I do need an MVP before getting VC or PE. And maybe that’s why I spoke to him first. He’s right again about the size - the idea is small. At least on a relative basis. It’s not the type of tech idea that will disrupt a billion dollar industry investors froth at the mouth over.
This business is built to be a low-headache and heavy cash flow business that can make 10s of millions over 10 years if executed right, not hundreds. And I’m fine with that. Truthfully, I’d rather build slow and small without the headache, but that’s just me.
Anyways, over the following weeks, he became more involved. I’m pretty sure I even said let’s do it together. And it’s been awesome.
He’s a good buddy of mine, even though he’s about 15 or 20 years older than me, and the time we’ve spent working on it together has been way more fun than the time I spent alone making my other business. He brings great ideas to the table, not all of which I agree with, but it’s nice to work alongside somebody equally as passionate.
I always said the next business I do, I want to be a co-founder. I think business just works better, and is more fun, with two.
And the model and idea became 10x stronger.
Now we’re meeting up regularly, working nonstop and touring potential places for our first MVP.
And this is where things get complicated.
We’re broaching the topic of equity. To build our first MVP, we need about $200k, maybe more. And I don’t have that type of cash available to me. The absolute max I could bring is (maybe) $40,000, and I’ve been transparent about that from the beginning so it’s no surprise. He knows he has to fund the Lion’s share. The sticky part is that he finds it’s difficult to justify an even split given the capital situation. And that’s after I’ve proposed he funds what I can’t but I don’t get paid until his initial investment is paid off.
I don’t necessarily disagree either, It’s a fair case from his POV. He’s risking more capital, and I recognize that. However I can’t help but feel slighted here. I’m the one that brought the idea to his attention, looped him in the business, and the one who has more hours to allocate to the business when it’s live and running. Even now I’m working on it more. I’m also the one who will be driving people through the door. What he’s bringing is a level of financial expertise, and the cash.
We need one another but anything less than an even 50/50 feels like a loss to me. Is that unreasonable?
It’s also noted between the two of us that I’ll be the two feet in, where as he’ll be one foot in, one foot out - And I’d prefer it that way. Let me run this because I want to, and I know what this baby needs.
So I’m just wondering what you guys thought -
1) Am I being unreasonable to expect anything less than 50/50?
2) Are there some creative ways we could structure the business?
3) Should I be willing to walk away if he’s not willing to meet me in the middle and try raising money elsewhere?
Thanks for reading.
Here’s the thing - I want to start my next business, and it’s something I’m greatly passionate about, without question 10x more passionate than my first one. I built a business model around it and it’s very profitable. I then made a deck with everything from the brand to the financial model, go-to market, and business plan and shared it with a few of my closets (3) confidants. All three are financially more successful than me - one is an ex-investment banker with 20 years experience, the other head of acquisitions at a multi-billion dollar company, and a founder fresh off raising his Series B. I wanted feedback from them before I went out to raise capital.
2 of them gave me great feedback - the head of acquisitions and the other founder. They said this had legs and helped me strengthen the deck further. The ex-banker came back with his feedback and it was clear he hadn’t stopped thinking about it. He was very keen on hearing more.
So we sat down and it was apparent he wanted to be involved. At one point he even mentioned “I’d be happy to go 50/50 with you on this, I’d have to take a longer think about it before committing though.” He then proceeded to ask what my next steps were to which I responded, “I’m not sure, I think i’m going to raise some capital for this.” To which he said - “No private equity or venture capital will put money into this idea. It’s too early and it’s too small. You want a private investor.”
Fair, the idea is small, and I do need an MVP before getting VC or PE. And maybe that’s why I spoke to him first. He’s right again about the size - the idea is small. At least on a relative basis. It’s not the type of tech idea that will disrupt a billion dollar industry investors froth at the mouth over.
This business is built to be a low-headache and heavy cash flow business that can make 10s of millions over 10 years if executed right, not hundreds. And I’m fine with that. Truthfully, I’d rather build slow and small without the headache, but that’s just me.
Anyways, over the following weeks, he became more involved. I’m pretty sure I even said let’s do it together. And it’s been awesome.
He’s a good buddy of mine, even though he’s about 15 or 20 years older than me, and the time we’ve spent working on it together has been way more fun than the time I spent alone making my other business. He brings great ideas to the table, not all of which I agree with, but it’s nice to work alongside somebody equally as passionate.
I always said the next business I do, I want to be a co-founder. I think business just works better, and is more fun, with two.
And the model and idea became 10x stronger.
Now we’re meeting up regularly, working nonstop and touring potential places for our first MVP.
And this is where things get complicated.
We’re broaching the topic of equity. To build our first MVP, we need about $200k, maybe more. And I don’t have that type of cash available to me. The absolute max I could bring is (maybe) $40,000, and I’ve been transparent about that from the beginning so it’s no surprise. He knows he has to fund the Lion’s share. The sticky part is that he finds it’s difficult to justify an even split given the capital situation. And that’s after I’ve proposed he funds what I can’t but I don’t get paid until his initial investment is paid off.
I don’t necessarily disagree either, It’s a fair case from his POV. He’s risking more capital, and I recognize that. However I can’t help but feel slighted here. I’m the one that brought the idea to his attention, looped him in the business, and the one who has more hours to allocate to the business when it’s live and running. Even now I’m working on it more. I’m also the one who will be driving people through the door. What he’s bringing is a level of financial expertise, and the cash.
We need one another but anything less than an even 50/50 feels like a loss to me. Is that unreasonable?
It’s also noted between the two of us that I’ll be the two feet in, where as he’ll be one foot in, one foot out - And I’d prefer it that way. Let me run this because I want to, and I know what this baby needs.
So I’m just wondering what you guys thought -
1) Am I being unreasonable to expect anything less than 50/50?
2) Are there some creative ways we could structure the business?
3) Should I be willing to walk away if he’s not willing to meet me in the middle and try raising money elsewhere?
Thanks for reading.