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Question

I founded a company with my business partner around a product that I invented. I came up with the idea, designed the product, did the patent search and wrote the non-provisional patent application. I also wrote a business plan. I had some help building the prototype from a machinist, an industrial designer will help with the product development, and a patent lawyer edited and modified my provisional patent application and he will help write the non-provisional patent application. My business partner has paid and will pay for all of these things. I have done most to all of the work and coordinating that has propelled us forward thus far. I've made most of the connections (except for a couple) that have allowed us to propel forward. However, he is financing everything. He is expected to spend almost $100K on this business which will carry us through the first production run. He will also be responsible for building our company website. We both plan to stay with the company for the long term - provided the product is successful. Should we divide the equity equally between us? Is that the best way to go?

Answer

Hernan Jaramillo answered

50/50 usually gets you in a gridlock in case there is a need to make a strategic decision. Allowing a 3rd member to have a small 5 to 10% could help break any indecision.

It is only natural that you feel compelled to equally divide your shares as you are starting there is "enough" romance to have a rosy outlook of everything to come. I did this with my current partner and we have been working at ease for the past 15 years.

Happy to give you more advice