A few months ago, I started a student entrepreneurship (essentially a sole trader business) at 22 years old, offering a variety of IT services (think VoIP, small scale ERP & CRM software, basic cloud solutions) alongside your run-of-the-mill SMMA activities (mainly helping small business get set up).
The main goal was quite simple: substitute two student jobs I was working with a business activity profitable enough to bring in a similar amount of money.
I've managed to hit that goal already.
I have now been approached by my brother-in-law, who already is a successful business owner with an offer: him and his business partner want to pay for the startup of a C-corp, along with a few costs to allow for me to scale my business up (partnerships & initial partner fees for e.g. amazon aws) totaling close to 20000 euros.
Beside the money, they would help me out by representing me to potential clients, and leveraging their networks to acquire new leads for me and get more clients on board. They believe in the idea, and want to see where I can take it.
In exchange, they would like a stake in the company – and are asking me to come up with an offer.
Some factors I am considering:
- Finding new customers is challenging for me, as I mainly want to do B2B services and I don't really have a corporate 'network' yet.
- I can do the work I do in evenings and weekends (outside conventional business hours). However, I have found that meeting potential customers is difficult because I am busy with uni during the day. This would help that problem as they can make time during the day.
- I find the idea of taking this step up alone quite daunting – their support would be welcome
Now for the tough question: What is a fair equity split?
All I bring in is technical knowledge and skills (ability to do the actual work) and they bring in sales experience and money. I was considering offering them a 75/25 split where they get the lesser share to split between themselves.
To me this amount seems fair, given the fact the operational part of the company would fall entirely onto my shoulders initially until cashflow is sufficient to hire staff. Also, I am well aware of the fact that without this offer, it would take me years to work up the money and courage to take the plunge.
Thanks in advance for your thoughts!