When kicking off a new business to commercialise a new and innovative product or technology, inventors often recognise the value in bringing experienced business partners alongside them. Business partners might run an existing business in the industry or even in the same vertical, be an experienced business adviser from the same industry or simply, but not preferably, a general business mentor.
The best way to effectively remunerate and incentivise business partners in our experience is take them along with you in your journey by holding equity together in a new company – if you can find a partner who is willing to engage on these terms. The alternative is to pay them. The problem with this, however, is that the capital of almost every early stage business is entirely allocated to hard or essential costs. Bear in mind, every business starts with a full bank account of equity.
Apart from being very discerning in your choice of business partner, the best thing you can do to secure a trusted and effective partnership is to structure your relationship within a company which you control both at a shareholders level and directorship level. You will also need to protect the minority interests of your business partner in the provisions of a shareholders agreement that you should have prepared by a solicitor and put in place with your new business partner.