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Understanding Relationship as an Entrepreneurs

There are three things you should consider when working with other entrepreneurs.

First, start by understanding the context of the relationship and what you both hope to gain. Are you both putting some actual cash in to start? If you are and they aren’t, then they are a vendor, not a partner — you are investing and taking all the risk.
Second, don’t buy into the line that they are leveraging company resources to move the project forward. This might be true but it is not the same because they already have that resource earmarked as a salary expense and would occur regardless of your joint project. In this scenario, you should ensure that the split you receive reflects the risk that you are taking.

Finally, there is a big difference between partnering and partnership. How formal do you actually need the relationship to be is important, and I would suggest only go as far as you need to protect your financial return and any legal risks. This does not have to include formalizing any kind of bond between your businesses; it can easily be set in a contract clause on a predetermined date that allows either side to execute stock option on a pre-agreed rate.