Everyone wants to go to heaven, but nobody wants to die. A lot of people want angel financing, but it always comes with strings attached. Here's the story of how we came to an understanding with our investor using basic, high-level ground rules as a starting point for negotiations. Read more...
When we received an offer from an angel investor for them to finance the development of a product that we would own together, we were skeptical. About a year before the offer, we were hired as sub-contractors building a project for the same investor. Since we were junior members of the team, we weren't empowered to make any decisions. Unfortunately for everyone involved, the old project turned out to be a mess.
Inevitably, we burned out, and the team of contractors disbanded one by one. By the time we concluded it was time to take off, all parties were consumed by mistrust. Building software isn't worth being miserable, and we were ready to give up 80% of our income and eat the red pill. But our investor wasn't ready to give up. He asked us what we would need to stay on board and start again from scratch, in fact he challenged us to give him a reason to walk away.
The least we could do was take a shot at it. Here's the email we sent him a few days later.
Thank you for your time today. Here's the list of our needs:
- We don't want to engage the clients that you maintain (no side projects, marketing sites, or sales meetings).
- We need to have secure financing, every month, without fail.
- We need to establish expectations for this product together, and stick to them.
- We need two stakeholders in this project (Us, and you). Only expert opinions should be considered when evaluating new features.
- We need to make our own product, and own a fair portion of it.
- We need to know our operating budget.
- We need to resource this project as we see fit.
- We need to trust that these commitments will be honoured.
If we can address these eight needs that we have, there's no reason we shouldn't be able to do work together.
Turns out he thought our list was pretty reasonable. If anyone's wondering why they haven't seen much of us lately at some of the great conferences and meet-ups, it's because we've been busy working. We're looking forward to getting back out into the community and talking about our new project, just as soon as we release this beta.