Negotiating Startup Equity Splits (Valuing Sweat vs. Capital)

[@StanFranssen]

Brett, thanks so much for this video and your clarity. I find myself in a "Capital and Calories" dilemma where my original 50/50 partner, an engineer, passed away. We had no vesting or divesting setup, so I inherited his wife as my new partner. She's a good person and has been funding us so far, but has no plans on doing any of the current of future work. Hindsight is 20/20!

[@huntertailor218]

This video is a treasure. Brilliant advice!

[@Alex-ll4xm]

Thank you so much. You have saved me a huge amount of equity we were considering to give up.

[@BrettCenkus]

glad I was able to help, Alex!

[@Alex-ll4xm]

Hi Brett! I wanted to let you know here that I’ve reached out to you via your site in case you’re no longer getting responses from the site. I’d like to work together. Is there an email I can contact? All the best.

[@BrettCenkus]

@@Alex-ll4xm we received your inquiry and will reach out soon.

[@Lokihsu]

Enjoyed this very much. I have questions but I think I'll check out the rest of your videos first to see if you answer it already

[@BrettCenkus]

okay, Lokihsu. Don't hesitate to ask if you don't see anything that addresses your questions. Glad you enjoyed the video!

[@meedybaby5704]

Incredible video. Have watched this multiple times while going through this process. Extremely helpful

[@capnjs]

Gotta say this is one of clearest videos on this topic!

[@BrettCenkus]

thank you, Thompson!

[@shannonlisadirectors]

Congratulations, your channel is the very first channel I felt worthy of subscribing! I'm in the process of dealing with these very issues and hope to speak with you soon

[@BrettCenkus]

Thank you, Shannon!

[@joedegano]

great perspective and clear concise communication skills. This is worth the watch!

[@BrettCenkus]

thank you, Joe!

[@RicharMurillo]

In the middle of something big, and here I found a pearl! Thanks for share...I found also some info in Hackernews

[@BrettCenkus]

You're welcome, Ricardo.

[@SlothSniper]

Thanks Brett. This video is very helpful. Very informative and great communication style.

[@BrettCenkus]

you're welcome!

[@realdiscoverytours5928]

Hallo Brett , thanks the video.

[@kevansinanan1576]

I love this video. Great information, Brilliant advice

[@BrettCenkus]

ty, Kevan

[@onthepurplepath]

Thank you for so much value Brett - appreciate you going through various situations I can relate to. I'm always seeking advice with the multiple startups I get involved in. Yesterday I was offered 3 points of one of the owner's 33% to come in and lead Marketing --- eCommerce for a superfood product. Because I'll be getting a (needed) salary (to be negotiated this week) I wonder if I am overvaluing the salary over the equity. I know I'll be turning profit for this company because of my strong Digital Marketing Team and niche Influencer Network...I also want to set myself up to rise with the tides as my sweat will be the game-changer for this business.

[@BrettCenkus]

Jennifer, I'm glad that video was helpful! Did you negotiate salary and take the position?

[@Marco-wz8xw]

Excellent video! Thanks.

[@BrettCenkus]

You're welcome. Glad you enjoyed it!

[@michaellindo6331]

Great content Brett

[@BrettCenkus]

Thank you, Michael!

[@Hillinto]

Great video

[@gitaranuhardi9971]

super nice insights Brett. super thanks!

[@BrettCenkus]

you're welcome, Gita!

[@tenzinchoegyal543]

You must have had good reasons to stop making more videos, whatever the case may be, just want to say thank you for making/posting these videos, very informative and helpful 💯

[@BrettCenkus]

Tenzin, I am committed to making more videos and recently shot two new ones, so those are coming soon! Thank you for watching and providing feedback!

[@williebrits6272]

Awesome insight. Thanks

[@BrettCenkus]

you're welcome. Thank you for the feedback, Willie!

[@ficho21]

How would you deal with companies offering you equity to do the technical work (dev/marketing) instead of hiring you ? It is always under the shroud of “we need you at the core of the company because you really know X”. I’ve been facing that with most of my clients recently.

[@BrettCenkus]

I'm not entirely tracking with you. Is your issue/question regarding how to deal with being offered equity vs. cash compensation?

[@ficho21]

Yes exactly that!

[@BrettCenkus]

@@ficho21 I think you need to be super selective about those "opportunities." You can bet heavily that the companies that don't want to or cannot pay you will consistently fail to outpace the companies with budgets/funding and/or the willingness to pay for good work/advice. That said, there are plenty of examples of service providers taking their payment in equity and cashing out big time. It's easier for advisors and lawyers, to some degree, vs. technical/marketing providers b/c strategic advisors (i.e., members of a startup board of advisors) and startup attorneys can potentially have relatively light time commitments vs. programmers and developers, especially. That is not always the case for advisors/attorneys but can be vs. developers who often sell their souls and forego lots of other opportunities for a promise/prayer.

[@adam.cph_]

Great video. Super helpful!

[@BrettCenkus]

thank you!

[@mitravindgarg5372]

Hi Brett, This exactly the problem, I am going through currently. I need more information. Kindly help

[@shubhankarsingh4065]

Damn good video

[@BrettCenkus]

thank you!

[@glbarry4520]

Thanks for this great insight. I will like some clarity about contract with redemption right. Assuming business made X10 of buyback value within 3 months, can a founder use revenue stream from business within that 3 months to buyback ownership? Thank you.

[@BrettCenkus]

if you have a right of redemption, unless your agreement (whatever agreement spells out the right of redemption) restricts the funds that you (the company) can use for the repurchase (I wouldn't normally expect that type of restriction, although I suppose you could see a requirement to pay out a special dividend/distribution of the cash on hand to the current owners before the redemption, i.e., indirectly limiting the company's ability to use the cash on hand, although that still would not be super common, IMO), you'd be free to do that.

[@trackerlegal]

Solid video. I am in the starting phase of working my sweat equity in his start up. He's provided the initial proposal to me but I see all the numbers as guessing numbers since he has no revenue and so on... So my goal set by him to achieve ownership look ridiculous us to me. Are you able to view this 2 paragraph write up? Thanks.

[@BrettCenkus]

no, that is not something I'd likely handle

[@BrettCenkus]

Actually, I'd be willing to look at that if you scheduled a call with me on Clarity.fm - clarity.fm/brettcenkus. Doing it through there is much simpler and would make sense vs. setting up a formal engagement.

[@couturexolivia]

Option 5: Don't give up equity for capital. See Arthur Lipper.

[@BrettCenkus]

that's not always an option (lots of entrepreneurs need capital)

[@bossmovement7374]

I really need your advice

[@BrettCenkus]

what's going on?

[@bossmovement7374]

@@BrettCenkus well I have a ride share app that's similar to uber and Lyft and I'm trying to figure out how to split the equity in my company.

[@alicianboxe7156]

Good day Brett, firstly thank you for such informative session. I find myself guilty of something you mentioned. I am young and starting up a business in two months. I don't have the funds to hire a lawyer but I assure you if you say I am been taken for granted then I will need to. Do you can a business email I can contact you on. Please I need your help and my contract comes in by Thursday. I would love a response before Wednesday this week.