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How to structure without knowing founders' potential value?

Discussion in 'Asset Protection/Taxes/Legal' started by _davis_smith, Jun 19, 2018.

  1. _davis_smith

    _davis_smith New Contributor

    Likes Received:
    May 4, 2018
    Rep Bank:
    Hey everyone,

    So I thought I'd reach out to anyone in here that knows more about structuring businesses more than I do.

    We're a group of 4 young guys (20-25 years old), and we're all working to create an interactive educational platform for blockchain development.

    Since we're going to be starting out primarily as a content/educational site, we don't really have any assets to protect, so we won't really be liable for much.

    Right now, the CEO and I are unsure how much each member will end up contributing in the long run. One member is a developer that can be replaced easily, in my opinion. The other has a great network in our field, and some valuable knowledge regarding the industry - but not many skills of great value once we begin pushing towards higher quality work.

    How do we go about structuring the business in a way that doesn't leave anyone feeling like they aren't valued, yet protect ourselves from wasting equity and resources on a member that is eventually not worth their weight?

    We're thinking we're going to structure as an LLC with each person receiving percentage in equity, and then restructure to a C corp if we get funding from any investors.

    Should we succeed in getting that far, are there any vesting schedules or options that can help us prepare down the road?

    We just want to protect everyone's best interests, including the other members if either the CEO or I ever decided to leave the project early.

    Any advice or direction would be greatly appreciated. Thanks!
  2. LynetteP

    LynetteP Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER

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    Apr 13, 2018
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    This was suggested to me as a starting point:
    Perfect Equity Splits for Bootstrapped Startups
    I haven't gone through it all- HTH at least a bit!
  3. LittleWolfie

    LittleWolfie Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

    Likes Received:
    Jun 28, 2018
    Rep Bank:
    You might find the slicing pie book useful.
    LynetteP likes this.

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