Equity for cofounder
I hired a few friends (as contractors) to help during the course of the program and by demo day, the company has become quite attractive to investors.
I am thinking of bringing on one of my contractors (he is also a friend for about a decade) as a co-founder. I've been advised to give up to 10% with below market salary (vested with cliff), or 5% with market salary. I can't afford paying market so my questions are
1) Is 10% good for a cofounder? If not, what would experienced entrepreneurs suggest?
2) Would a ramp vest over 4 years be recommended ( Year 1 - 1% (with cliff), Year 2 - 3%, Year 3 - 6%, Year 4 - 10%)?
3) Would it be beneficial to change the vesting schedule to 7-10 years (instead of 4) and vest ~1% a year (with a 1 year cliff) ?
4) Is 10% too generous over the lifetime of a startup? (Financing rounds (3 rounds at 20% each), 7% for accelerator, 20% for employee pool) This leaves a total of 13% (in an average case) between founders - so really should be 6.5% each between the two of us.
Thank you for answering