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Comment by stefanobernardi | Hacker News Reader

I've seen this situation quite a few times. Let me give you some advice.

1) Don't let him incorporate the company for you. You need to incorporate the company yourself and then let him enter as an investor. Not sure about indian regulations though. 2) Have the investment agreements drafted by a lawyer who you choose, do not let him bring his own lawyer. 3) If you want to give him a board seat, pay close attention to his veto rights and negotiate them wisely. 4) DO NOT LET HIM MANAGE the company day to day operations, including bank account etc. Do not give him a signature right.

In my opinion after you negotiate the amount and valuation, you should incorporate the company, have an investment agreement drafted and then have him sign it. If you need help with the amount/valuation negotiation, fell free to hit me up via email.

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> do not let him bring his own lawyer.

Sure he can bring his own lawyer, but only to represent him, not you. So you pay your lawyer, your lawyer drafts the agreement, if his lawyer wants to take a look then that's fine but don't let him dictate terms.

Agreed with the rest though, that's all sensible stuff.

And while we're doing sensible stuff anyway, remember to first get the situation between yourself and your co-founders ironed out. Typically that's something that people tend to forget in the heat of the moment and it can lead to huge trouble later on.

Make sure all your respective roles, responsibilities and commitments are clear, then bring on board your investor and have a plan for when he decides not to partake after all (because you'll be out a good bit expense wise by then).

Yes of course, sorry if it was not laid out in this way. What I wanted to say is not to just blindly trust him and his lawyer.

Great point about the cofounders.

More importantly, make sure you do not only choose the lawyer, but pay them as well.

Typical incubators in India gives $10000 for ~10%. Seed funding/Angel investing is very new in Indian context, so couldn't find much resources as reference. How to go ahead with amount/valuation.

Ok, $100.000 post is not that cheap :)

If you go with the simplest method, I'd say you first need to understand how much you would need and how much he is willing to put in the company and then set somewhere between 10 and 30% for him depending on his day-to-day involvement in the company (which needs to be written down in a contract, of course).

But there is way more information needed to give you sound advice here, and still with all the info I wouldn't be the best one to ask. Probably someone from India would be better.

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