I can tell you that this proposed structure will significantly reduce NewCo's ability to raise additional capital. The idea too that the startup's valuation can jump from less than $200,000 to $10m just through the creation of an MVP in a relatively short period of time is also unrealistic. If the investors actually want their investment to succeed, the absolute maximum they should be getting for a $100,000 would be 15%. If there is a tangible asset (not just an idea but a patent, a customer list, whatever), this could also be worth some equity but generally not more than 5%. If they believe that this NewCo is worth investing $100,000, they should want to invest this $100,000 in the best possible way as to attract further outside capital, not structure it such that the deal is immediately toxic to new investors, day one.

Happy to talk through this in a call.