Need advice

corkmanjames

Hi All

Im new to this site and to the business world i have always been an employee and now I'm about to be apart of a startup company my only concern is the people I'm starting up with have been at this game a long time they have both a number of companies between them and i feel like a small fish in a big pond.

Im just looking for advice on what i should look out for and what i should be doing to protect myself.

Thanks
james:)

SeanSouth

James I think you need to tell us a bit more

Are you investing money ? Is it a company ? Do you have a shareholders agreement ? Whats your role ?

corkmanjames

Hi Sean

Yes we are setting up a company.we are all directors but the shareholders agreement is whats putting me off.
there is only one putting money up for this but I'm the person that has the idea and the product built it has not yet been patent
and i hold all the info for the patent.my main issue is the other two are only offering me 10% shares.

when we started this off there was two of us the third person came on board when the product was almost complete now the person that put the money in has given him 20%

Peterdalkey

Sounds like a crap deal to me, moneyman has 70%, new guy has 20% and you have only 10% and the business is based around your concept/product.

Walk away and find new backers/partners. Get some proper advice from your county enterprise board and or Enterprise Ireland. You urgently need a proper Mentor and they will help you find the right one.

jimmii

How far along is the product, How long have you been developing it and how close is to being able to go to market? 70% for the investor seems massive they would want to be bringing a lot more to the table than just some money to get that piece of the pie and if you have put a fair bit of money and time in already then you should certainly be getting more than just 10%. As Peter says I think I would consider going it alone and looking for finance from your local enterprise board or finding another backer.

vinnie13

the least i would take is 50% and let the others fight over the other 50% if that fails walk away try getting finance for the idea yourself,enterprise ireland and small business grants are out there its just finding them.

have you already signed up to any contracts?

dbran

Hi

You do need to speak to someone before you sign as it does appear that you are being exploited. There is a type of business person who is not satisfied unless they are making the most money and you are making just enough that you are not loosing interest. They find this "sweet spot" and then rush the signature and such businesses rarely flourish but usually are dogged by conflict and a lack of direction.

If you are not happy with the deal you need to walk away or at least fight for a better share of the rewards.

Hope this helps.

dbran

terryhobdell

corkmanjames wrote: »

Hi All

Im new to this site and to the business world i have always been an employee and now I'm about to be apart of a startup company my only concern is the people I'm starting up with have been at this game a long time they have both a number of companies between them and i feel like a small fish in a big pond.

Im just looking for advice on what i should look out for and what i should be doing to protect myself.

Thanks
james:)

Don't commit money without advice,get a fair share of the enterprise and if you have ANY doubts about anything you are being asked to do don't do it. Otherwise remember you are taking a huge gamble no one is giving a gaurentee and if you don't like it get out. If it don't look right it probably isn't. Best of luck.

terryhobdell

Sorry didn't see earlier part of thread. It is your invention? It isn't patented yet? How much will it cost to patent? Can you patent yourself ? 10% of something is better than 100%of nothing . If you need them pay them if you don't do it yourself.

dbran

terryhobdell wrote: »

Sorry didn't see earlier part of thread. It is your invention? It isn't patented yet? How much will it cost to patent? Can you patent yourself ? 10% of something is better than 100%of nothing . If you need them pay them if you don't do it yourself.

No. That's just selling yourself short and totally giving in to the lowest possible result. 10% IS nothing. He will have no control over the company but may find they are doing all of the work.

OP had the original idea has all the information about the product and the patent. It may not be possible to go ahead without him.

If so he has a fairly good hand. The guy with the money wants him to think he just has a pair of "2s" when he may really have a pair of kings.

Regards

dbran

doubtfir3

I think that your shareholding should reflect your ongoing involvement in the company.. Its fine to insist on getting a larger shareholding but if you aren't going to any actual work in the business, or going to invest any money in the business/project then 10% isn't actually that bad..

Take, for example a few initial costs:

Company setup: Eur300
Short-term patent registration (Ireland): Eur500 approx.

Those are the easy ones...

Then, (I'm not sure what your idea is so can't be accurate on this) you have costs of a premises, utilities, transport, patent extension (can be Eur15,000 plus), trademark registration (approx. Eur1,100 for Europe and can be several thousand for additional territories), hiring a sales person, tooling costs (depending on the idea you could be looking at Eur60,000 plus here), purchase of raw materials, web and graphic design, financing credit requirements from your eventual customers etc..

Without additional information on responsibilities in the company etc it is a little difficult to see what is fair in this OP, but still, I do get the impression from your post that you are being sidelined a little with the "big fish", effectively splitting things up amongst themselves..

Having said all that, if the idea is a good one and you sell a lot of this product and have no involvement in the day to day running of the company etc its not an altogether bad idea. If your partners aren't good ones the product could languish and you'll come out of the experience with little or nothing.

If you like, you can send me a PM with more info or share it here and I'll be happy to give you my 2 cents!