We make SaaS for two month now the marketing cofounder wants more shares

3 months back, me and one of my acquaintance started working on a SaaS idea. It was mostly an already existing idea (a knowledge-base system) but my cofounder convinced me that it's still worth building because he knows there are potential customers and it might be a good way to get started with SaaS in general. So I took care of all-things-tech and put up an MVP in roughly two months. We ran campaigns (my cofounder knows multiple potential customers and is well resourced in that sense) but haven't had a paying customer yet (might be due to COVID, but of course the product might be the cause as well).

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I don't agree with what your cofounder is trying to do in giving you a lesser share. Yes the marketing is intence but the technical stuff is not a trivial matter either, I am not sure of the hours that have been put in by everyone to make him think this.

But the way that reads is you got your part of the job done (the tech) and his part the (marketing) hasn't brought in anything. But he wants you to take a lesser share?

Unfortunately, this will probably leave a sour taste in someone's mouth by the end of this and I may be a bit bias as I am a techie at heart.

I have 2 videos here that may help you, 1 is about shares and dilution https://youtu.be/FVN3rhgeOwg and another is an interview with a startup solicitor https://youtu.be/5yhXecq3aCQ they may be able to help in some way and shed some light onto your situation.

Other points

The question in full:
I have a question about founder equity-split.

3 months back, me and one of my acquaintance started working on a SaaS idea. It was mostly an already existing idea (a knowledge-base system) but my cofounder convinced me that it's still worth building because he knows there are potential customers and it might be a good way to get started with SaaS in general.

So I took care of all-things-tech and put up an MVP in roughly two months. We ran campaigns (my cofounder knows multiple potential customers and is well resourced in that sense) but haven't had a paying customer yet (might be due to COVID, but of course the product might be the cause as well).

Now fast forward one month, we are trying to adapt our solution for the Shopify ecosystem, and my cofounder introduced me to another guy who's working with Shopify app companies for the last 3-4 years. His proposal is to onboard him as a cofounder, which I'm also happy to, but now the big question for me is,

"How should the equity be divided among three or us?"

I proposed it to be split half between me and my first co-founder, and slightly less to the newly onboarded guy. But my co-founder doesn't seem to agree with equal split, he thinks I should have a lesser equity share and said that that's usually the case with other SaaS companies too because SaaS is marketing intensive.

I was wondering if someone is aware of what the right split could be (or what's the usual trend) and can share that knowledge here.

PS: I know, I should've talked all this out in the very beginning, that's a mistake on my part.

Sounds like you should stick with your previous suggestion. The concept that the marketing co-founder should get more equity than the technical co-founder is laughable. Especially with a SOFTWARE as a service startup. I could see it in a marketing firm but not a software startup. Co-Founders are equal partners that's why theres a 'co' in the title. The only time you should change from equal split is the following scenarios:

One partner has done a TON of previous work on the startup

One founder invested money in the startup

One founder is currently working a lot more on the startup

As a side note I find it pretty ironic that your 'marketing intensive' co-founder suggests he should get more equity when he has yet to get a single customer and you singly-highhandedly created the mvp. What happens when you realize this co-founder can't actually do marketing at all and he's got more equity than you?

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June 30, 2020, 4:31:25 PM

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