Iterate 3 deal start up parameters 
I have been part of start up teams for 14 years now. First as a VC and later as a seed investor / co founder. In the beginning I was involved with product and technology introductions but the last couple of years I am involved with internet start ups. Four reasons I have chosen for internet are 1. the time to market 2. the way you can iterate with your users, customers and partners. 3. Scalability 4. (international) collaboration

Let me focus on the last point. How can you collaborate when founders live for example in the United States, the Netherlands and India. There is an increase in international collaborations and the development and cooperation tools are available. But do you want to start a legal entity when you are still in the concepting stage? In which jurisdiction will you start it? Who will own what during the collaboration and before you start the company? Steve Blank has describe in 'four steps to epiphany' the way you can develop your idea to web-concept. In my opinion you can best go through these steps before you start a legal entity. He also describes the importance of iteration while stepping to epiphany.

What I have learned through the years is that you also must iterate the deal parameters during the start up stage. The start up team is mainly focused on the concept and forget to iterate the parameters that are the basis of the collaboration. Many good initiatives stop because the start up team ran into a deal breaker situation. For example 2 persons start a collaboration based on 50/50 stake. During the development one partner finds himself working 80 hours a week and the other founder works 5 hours. This goes on for months until they launch and want to incorporate a company. The 80 hour guys claims that based on the number of hours he has worked on the project he wants a 80% stake. The other partner believes he has added less hours but his time is of greater value and therefor he claims his 50% stake. Both decide that they do not have any trust in the collaboration and will terminate the partnership. I hear these stories almost on a weekly basis of start ups that approach us for investments. Probably you have also heard them. Mark Z. could have done a better job while creating www.facebook.com;-)

The three deal parameters that you should discuss with all partners on a regular basis are:
1. The number of hours that every partner invests
2. The amount of money every partner invests
3. The assets that are invested (concept idea, domain name, hardware, software etc)

These three elements will result in a certain stake in the collaboration. During the process from idea to incorporation these deal parameters and stake must be iterated on a regular basis. Keep the discussion open and stay reasonable, you all have a responsibility to bring it to the next level. If you need seed investment or growth investment potential investor will always ask if all things are arranged properly especially ownership. We are successfully working with this methodology for years now. Not all collaborations will become successful but by using this method we now see much earlier in the collaboration if we must terminate the agreement and move to the next project or that we are on the right track with the right team. We have developed a website www.isthenext.com where you can use the methodology for free. It is in open beta now and we hope it will help you.

Good luck and keep collaborating.

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