Ask HN: Bootstrapping with 2 founders Hi HN. My partner and I have a Delaware C Corp all formed and are getting ready to do our initial investment. We want to maintain a 50/50 equity split, but I want to put in $1k in a lump sum and he wants to put in $8k in 4 installments over the next three months. What is the best way to arrange all of this investment to lower complication and tax burden? Thanks! |
Also decide who makes final decisions, since you have equal votes. Decisions should never be made by committee, even if the committee is only 2 people.
For a startup, losing time is death. You're often choosing between option A and option B, and neither will kill the company, but you end up arguing about it forever. If one single person doesn't have the authority to say, "We've argued enough, and now we're doing A," then you'll lose valuable time and die.
y agree with smt88, C corp is prob. overkill and could introduce tax issues go LLC first.
I would just have each of you track what you invest as expenses for the LLC, then get reimbursed once you are profitable and keep your 50/50 ownership split.
The two of you should be able to make decisions together, I expect one of you are handling marketing and one technical anyway so you can probably defer decisions in those areas to each other.
Good luck.
Committee gives you a perspective from different people. Which is valuable! Have the meetings if and only if you or them have to go outside the delegated authority to find a solution.