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# How much of a share to buy

Several people have asked about how much of a share of the company they would be expected to buy and how much it would cost. It's hard to put numbers on this until we see who's interested and at what level of effort, but I can give you some rough background on how this will eventually be crunched out.

The first question any partner must ask, as detailed in the Working Paper, is ``How much time can I commit to the venture''. Once you know that (and I'm assuming everybody will be able to say at the organization meeting), we can begin to guess at a share. Ideally, everybody should buy in at a share proportional to their time commitment. Let's say that of the technical partners, a total of 100 hours per week is available. Let's assume than MSL is buying 60% of the company by its cash contribution and the technical partners are buying a total of 40%, and that MSL is contributing \$50,000 to found the company.

Now if you have 15 hours per week to work for Marin Software Partners, your ideal share would be 15/100 or 15% of the 40% owned by the technical partners over all. Thus, your share of the total company would be 6%. To purchase this share for cash, your contribution would be (50000/0.60)*0.06, or \$5,000. If all the technical partners purchased their shares of the company for cash, the company would start with an initial capitalization of \$83,333. If the company made \$80,000 profits in the second year (this is the level MSL was running at its peak), then the partner's share would be paid off at this point. If the company reaches \$1,000,000 in profits then the partner's original \$5,000 investment will be yielding \$60,000 per year in income.

If you don't have the \$5,000, but want to buy in at that level, we'll find the money for you to borrow. If that number just looks too doggone big, you might choose to buy a lesser share and reduce your time share accordingly. This is a gamble, of course, since if the business begins to grow rapidly and you wish to increase your share, it will cost you far more to do so (as a percent of a company earning \$100,000 per year is worth a lot more than one of a company earning zero). Conversely, if the business starts off poorly, you might be able to pick up a piece for less.

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Editor: John Walker