Comments on: Partnership vs. Pay

By: Chris

Chris — Wed, 13 Dec 2006 14:43:05 +0000

Great post and thanks for the response. It seems that "venture Web development" is no different then venture investing. It also looks lke you are willing to do it under some very tight conditions, which is really the only way to do it. If I were going to do it, my conditions would be: - No idea guys. Here's my post on that: http://www.chrisknudsen.biz/?p=196 - Only do deals with people that you have done business with before or who have a proven track record - Require a real business plan - Make the "partner" invests the majority of the money in the company and take a minority stake for services rendered. Make the partner prove he has the cash. - Require a revenue share on each sale on top of the "investment" - Establish up front and in writing how much your firm is willing to spend out of pocket on the project thus setting the expectation with the partner before you ever do anything Bottom line is that when you are a small business and cash it tight it's smart to play this game safe, which might mean not doing it at all.

By: Blake Snow

Blake Snow — Wed, 13 Dec 2006 06:16:21 +0000

I’m still trying to “partner” with a BMW. Still can’t talk the dealer into yet, though.

By: Matthew Reinbold

Matthew Reinbold — Wed, 13 Dec 2006 05:08:44 +0000

I’ve pinged quite a few web developer friends over the years about this exact issue and the response is almost always the same: just say no. There are just too many quality paying clients (who themselves represent long term opportunities if the relationship is kept strong) to endure the upfront costs for questionable rewards.

It’s not just web developers. During my MBA time at the U of U I had the opportunity to learn from a number of VC’s. Each one expressed that a leading factor for investing in an opportunity was the commitment of the business owner to making things work. And a large part of that was demonstrated by the amount of personal investment that was involved. In a logical twist of irony, existing investment engenders more investment.

Don’t get me wrong – there are excellent opportunities for partnership but both sides need to bring quantifiable assets to the table. An ‘awesome idea’ is not a tangible asset – that’s something that dawned on you while shampooing your hair.