To the thread,
This is completely off the subject, but since I've learnt so much on this thread about issues related to my question, that I felt brave enough to inconvenience you with an offtopic question, knowing the knowledge is there.
I'm really interested in how entrepreneurs (in similar situations that the Spragues found themselves before) of fledgling companies with no capital, negotiate for a cut of the cake with the guy bringing in the money.
I think I more or less understand the concept of Class A and B shares, with the class B shares having voting rights, but no intrinsic financial value, and that they should be understood as a type of option that could be exercised at a agreed future date for an agreed price. I think I've got that straight..yeah?
But now my question is: how does the entrepreneur and the investor agree how many class B shares should be allocated to the entrepreneur and/or his co-developers? Are there any written or unwritten rules in this business. How do you negotiate essentially from a position of weakness?
My question is motivated by having a friend in such a position and I would hate to see him get nailed.
I would be grateful if anybody could shed some light, even if it is homespun wisdom, or could point me to a fount of info.
Eternally grateful
Paul
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