Determining Ownership %: Inventor/Engineer vs Business Guy

[disque71]

Lets hear your opinions. I'm interested in seeing how much the should the inventor be willing to scarifice to possbily get a business off the ground at the expensive of % ownership loss.

[akula]

the answer has been covered here:

Allocating shares in a new start up

it's got to do with arriving at a premoney valuation

i'm open to answering more questions

[The Stealthy One]

How much is the engineer able to contribute besides his or her idea?

[akula]

I expect 2-5 year employment/consulting commitments from lead engineers

if the technology is novel, and the engineer is irreplaceable (because it's her code), I want to make sure they're not gonna fly to mexico, just 'caus they feel like it

also...obviously...the engineer will assign all ip to the company, and agree to extensive non disclosure/competes

plus, i'd want a cash commitment from the engineer as I would from any cofounder

if these terms aren't fulfilled, the engineer has less ammunition to buy more securities from the firm

the point: with startups, equity isn't "shared". it's sold, by the company, to the people (including cofounders) who are willing to pay the most for it (payment need not be cash). if someone is only bringing an "idea", then, what they're paying for their equity is less than what everyone else is paying (therefore, they will get less equity).

everyone's got "ideas". whether it's ideas about product design, or ideas on how to sell the product; "ideas" are just one of a large number of bargaining chips that founders can use to acquire equity in startups