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Strategic Partnerships: I need partners to help my company launch. How many shares and/or how much profit do I offer to get them?
DD
DD
Declan Dunn, Growing audience and revenue based on results. answered:

In your question a few key terms stand out:

1. Partners - be careful with this one. You will only have a few close partners, and not knowing the nature of the business, usually you need strong technology, management, and marketing partners. The more you divide the company between numerous partners, the less each one gets. In the early stages this sounds great, just remember the awareness that business, and life, is never equal. In this first year, some people will become more important than others in terms of the business.

I've seen companies with 3 partners getting 25% each, and the remaining 25% used for angel investors, employees, rewarding key freelancers and outside help, etc. Given that at each phase of investment - if you are raising capital - there will be dilution, and this gets each partners share much smaller. Bottom line, in the long run this equality failed to motivate the company to growth, with 1 partner sharing less than the other 2.

Contributions are rarely equal, and should be measured and reviewed.

2. While everyone says they will handle what you throw at them, the way you throw it and manage this will make a huge difference. Even with a contract, they are not getting paid, and you refer to getting on top of their priorities.

The only way to do this is keep them busy and get this generating revenue, and/or investment. Stumbles will affect your team, as well your management style - for good or bad. These team dynamics need to be truly dynamic, not static, so be sure to not only clearly outline who gets what early, with expectations in terms of time, and if possible set some performance standards to gaining this ownership of the company.

For example, if someone is developing a mobile app and knows they can get one going in 6 months, then based on that they get XX%. If they don't, and I mean it's a disaster and it's not working, you have a review to make sure that the deal works for both of you.

That said, you want to keep as much of the company between a few founders at most in my opinion. This gives you decision making strength, and also reflects the ones who aren't there for a contract, they are there for the 2-5 year run to build this into a real business.

Often 25% is set aside for angel investors, early help and employees; use this amount to first measure who is giving what to the company, and anything outside of that should be reserved only for long term partners in the business. This should be earned with some simple benchmarks so everyone has a sense of progression, because startups can move through months of vagueness, and keeping people on top of things, and also communicating well, is huge for your success.

This can be done in a fun way. Remember giving anyone more than 10% gives them serious input in the direction of the business, it doesn't sound like much but it is. You need to get along with them, and be able to work with them, that's the key part.

Obviously not knowing the product or business, exact estimates are tricky, ping me if I can help with specifics, glad to share some insights.

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