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Sonu Goyal   19 July 2017

Spliting equity in starting a business

Hello all,

I am an engineering student trying to start a startup with my prof.

In the beginning, my professor introduced me to a new product. This product is new for india but, readily available in foreign countries. It is imported in india but in very small quantity because chinese sell it expensive. We want to make it in india. So I presented the idea to our institute's incubator where we got selected and got some grant to explore the idea further. Now we are doing that, exploring about the idea. Now my prof wants to make the founders agreement. So I am in total dillema how to split the shares. Following are the points on basis of which decision needs to be taken:

1. Idea is from my professor and he has the technical expertise. But these technical aspects and manufacturing processes are largely known. Raw materials are going to be imported and machines are going to be purchased domestically. We contacted the supplier just few days back.

2. We do not currently have plan to make investments ourselves for near future. We have financial support from the institute for now.

3. In future, we might go to the investors for investments. That will be done by both of us.

4. We are going to do all the managerial, marketing, production work together. And as he is in governament job, initially I will be the one running here and there.

5. My professor is skeptical about me staying in the company. He thinks I might leave the company. So in the intial offer, he has considered this also.

In the initial offer, he told to give me 5 % annual equity increment for 3 years and 25000 per month salary for 3 years.

I do not think this is fare. So I need your help in deciding this equity split. I want to have important managerial role in the company.

Kindly help.

Thank you.



 4 Replies

Rama chary Rachakonda (Secunderabad/Highcourt practice watsapp no.9989324294 )     19 July 2017

You have more flexibility in the initial ownership decision, however, than some concrete designation of ownership from day one.  Vesting simply involves the right of the firm to buyback shares contingent upon certain described conditions.

Conditions that might determine the grant/buyback of shares could include such factors as: the passage of time, the accomplishment of certain tasks, or the occurrence of certain events. In fact, many vesting agreements condition these right upon the passage of time.

1 Like

Hemant Agarwal (ha21@rediffmail.com Mumbai : 9820174108)     21 October 2019

Originally posted by : Sonu Goyal
Hello all,

I am an engineering student trying to start a startup with my prof.

In the beginning, my professor introduced me to a new product. This product is new for india but, readily available in foreign countries. It is imported in india but in very small quantity because chinese sell it expensive. We want to make it in india. So I presented the idea to our institute's incubator where we got selected and got some grant to explore the idea further. Now we are doing that, exploring about the idea. Now my prof wants to make the founders agreement. So I am in total dillema how to split the shares. Following are the points on basis of which decision needs to be taken:

1. Idea is from my professor and he has the technical expertise. But these technical aspects and manufacturing processes are largely known. Raw materials are going to be imported and machines are going to be purchased domestically. We contacted the supplier just few days back.

2. We do not currently have plan to make investments ourselves for near future. We have financial support from the institute for now.

3. In future, we might go to the investors for investments. That will be done by both of us.

4. We are going to do all the managerial, marketing, production work together. And as he is in governament job, initially I will be the one running here and there.

5. My professor is skeptical about me staying in the company. He thinks I might leave the company. So in the intial offer, he has considered this also.

In the initial offer, he told to give me 5 % annual equity increment for 3 years and 25000 per month salary for 3 years.

I do not think this is fare. So I need your help in deciding this equity split. I want to have important managerial role in the company.

Kindly help.

Thank you.

 

1. IF the Professor is a Govt. employee, THEN he CANNOT conduct any Business or any other office of profit and any agreement or partnership shall be null & void, for futuristic purposes. 

2. ANY Terms & Conditions have to be decided mutually and reduced into a registered agreement, to be legally enforceable, for all statutory purposes (Income Tax, GST, Bank, Subsidies, Exports .... )

Keep Smiling .... Hemant Agarwal 
VISIT:  www.chshelpforum.com

Jagdish   31 January 2020

If you have debit or credit card follow the instruction for activation of card.

avadhesh Paliwal   13 March 2021

Your professor is right on his place because this is startup and if startup is successfull then your salary and equity will be huge amount.....it depend on your success

initially in any startup you can not except any salary reward ......but after success you will be the part of  success and you will get everything wat you wat in salary or remuneration


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