About 4 months ago I was approached by an angel investor to found a software startup based on some work I had done for his friend. I've been helping said friend on his projects for over a year for little to no pay because I liked his ideas and wanted to support him in some way, as well as potentially find some opportunities.
Well it seemed that an opportunity had arisen, and I've been trying to start my own business for a little while with rapidly dwindling finances. So, I agreed to an arrangement of a three-way split (including the friend as idea guy) if they could give me some "breathing room" to work on a pitch demo/MVP for a few months. They said that they wouldn't have too much time to dedicate to the project but that they trusted me and they'd try to support me however they could. We agreed and all was good.
Over the few months that I'd been building the project, I'd been sending frequent updates and deployments for them to check out and give feedback on. Most of the time they'd quickly look at it, say "this is good", maybe have an idea or two, then disappear. I had a lot of questions that went unanswered, and the feedback I did get was mostly me trying to judge whether they actually liked it by gauging their enthusiasm. I decided it wasn't good enough and went back to the drawing board a few times, but each time I came back with an update it'd be the same reaction. It felt like they never got serious about the project, and I still think maybe it's because it's not that good.
The stress of not knowing if they're really on board, knowing I'm running out of money, and yet having a project that I think would be useful for people (and make us all money) if given enough love, really started getting to me.
So, I got frustrated and tried to manage the team. I asked everyone if they were willing to adopt certain roles on the project that could help me, maintain a Google doc for async discussion, and be available for a meeting once a week. I was a bit flustered so I didn't do it quite so succinctly and was very wordy with everything, and I managed to get the ideas guy to flip out at me - where he told me he thought he was contributing just fine, that he wouldn't be willing to do anything else, and that he told me that he wouldn't have much time to dedicate to the project at the start.
We hashed it out a bit, and he said that I should just call him if I have anything to talk about for the project. I agreed to, because I kind of wanted to end on a good note - but I honestly can't think of a reason to call him for anything at this point, considering he doesn't know much about the project and he's never given an indication of what he could even help me with.
Since then, I've delivered a version of the app that I think could work as a pitch demo. They both looked at it, said it's great and that they agreed it would work. I asked for a meeting to properly go over the features and talk about next steps, they both agreed then disappeared.
Now I'm sitting here waiting for them to get back to me, so that I can find out whether this project is going to continue at all, and whether they'll support me with a cash injection for the next couple of months as we start doing the business side, polishing the app, and pitching it to investors.
The way it feels, I depend on them to survive right now. We have a good project that could make me stop needing to depend on them, and would even let me pay them back. But, I don't know if it'll ever get there, I'm already dreading having to ask for more money, and if they decide not to give me any cash I might end up having to beg my parents for help because I can only survive like this for another month, max.
Does anyone have some ideas of what I can do here? I'm not sure how much of this situation is my fault.
Your entire story sounds like a red flag but the biggest red flag is that I don't hear a single mention of your users. Why are you asking "idea guys" for validation, you should be talking directly to users no matter what stage of development you are in.
From what you wrote, I really don't think you should take a cash infusion when the money runs out, just move on and find better partners in the future.
Note to other software engineers being approached by random angel investors: If you are being approached by an angel investor, please please vet them to make sure they are willing to do work. Ideas are valued at ZERO. If they are not technical, ask them to make a no code demo -- literally anyone can do this.
Sorry, but this was a bad setup from the beginning. I'd walk away, lessons learned.
EDIT: Just saw your other comment that you were paid a lump sum for the demo. This makes it an even better time to walk away. They paid for a demo, you delivered it. Any more work means negotiate a new deal.
Drop the project. Then go find an actual cofounder. Go out there and find an actual investor. When an investor gives you money for an enterprise, you will find that you will incorporate, the investor will send you a term sheet that gives them some portion of the company, you will have options that will vest over time for you and your cofounders. You can skip many of these if you are solo bootstrap founding, but otherwise, these are just so standard that the absence is a problem.
Listen, you're a software engineer. Go get a job. You'll make enough to keep you alive for 4 years in 1 year of work. So do the 1 year, then come back and do this the right way: talk to users, talk to VCs, get your pitch deck game strong, incorporate, get funding, then work. When you are funded, draw a salary.
Also, let me emphasize: this is not a "personal hell". This is , apparently, a few months wasted on a project. Walk away. Get a job. Make some money and come back. It'll give you some perspective.
Just give them the code as is, "good luck, no hard feelings, I need to go earn money to live", as the drama isn't worth bothering to go though "give me this and then I'll give you that" routine. If you ever care about this idea just re-write it.
Parters worth having will be highly engaged and they will bring money to pay you.
Don't take the dev role with co-founders who cannot bring money to support you from day 1. You should not be dreading asking for money. You shouldn't even be thinking about it. They should have guaranteed and reliably paid you a reasonable wage.
It doesn’t really sound like this business is full time for anyone (other than perhaps you?).
In an early stage company you should be talking to your cofounders all the time. They’re your only coworkers after all. If that isn’t happening, this is just a little side project for them.
You're living right now in the best fundraising environment tech has literally ever seen. If you have an actual good idea and can execute, you can raise real money on far better terms from more legit people. The fact those guys even let you take that deal tells me they will screw you over.
The thing that strikes me is that it sounds like the other guys involved in the project weren't involved.
Think of them as your long-term business partners. You're supposed to be starting a start-up with a team, not with a bunch of coaches, an owner and one player.
At the same time, having been an SE, a PM, and a CEO, I do know that sometimes different roles don't understand what everyone is doing. It sounds like you have a very good handle on SE & PM roles, and I suspect you are correct in your thinking when you say that the other guys haven't been pulling there weight. I think this is what you want to dig into.
I'd have a chat to the investor about how he see's the company and team progressing, without complaining about the partners. Perhaps he can give some insight into why he believes in the team, maybe something you are missing. Be cautious of how you bring up "concerns" with the investor, as you don't want to damage the relationship.
A few good things could happen. Maybe you get a better feeling for how the investor sees things panning out, and are convinced that whatever you are working on has legs. If not, perhaps the investor has other investments where you may be a good fit as an engineer.
Perhaps you take the demo yourself and talk to some would be users and get feedback (I'd do this anyway). Doesn't mean you're stealing the code and going rogue, but you want to know what a potential user thinks of what you made. From there, you can also decide if this is a good thing to continue working on (I agree with all the comments that have said you should be able to sell without a demo).
Best of luck
There are all sorts of reasons why this isn't going to work and I think you know that. This has been another great learning experience, but it might just be time to move on.
I understand your point about 1/3 being better than nothing. However, 2/3 of the stock being tied up by do-nothing founders will prevent future funding. It would be better for you to use your experience here to make an even better product with new founders.
- Start looking for other income sources right now
- Stop performing any work for them
- Withhold the project from them, don't let them take it from you. Tell them that this is the right time to set our expectations and agreements in writing - implying that if they don't commit to writing down terms with you, you're not letting them use the project
I have the impression that they were treating this like a low-risk low-effort way of getting some work down that they could raise money against in the future. There is little downside for them, so they don't care.
Not really sure what the financial situation is but it kinda sounds like they hired you as a contractor or they are just hanger-ons and not really business partners among equals. Lots of people will happily take a big cut of your business without contributing anything.
And I don't know building consumer... but you should get users/customers & get feedback back from them. Thinking you need to pitch to VC's with the perfect deck or app is a trap, what you need to do is build a product and business.
“I depend on them to survive right now”
What does that mean? Are they funding (paying you)? Are you working for free based on a vague promise?
I'll concur with others that it's time to walk away.