'... take more of a back seat in return for less equity but also less initial investment ...'
Bummer, but all is not lost. This is actually a good thing to happen now, rather than later. How much investment? A lot? Can you do without it? Can you repay them back? Is it worth keeping someone on who doesn't really want to contribute but still wants some control?
'... we have been working on the project for a few months ...'
This is good. The longer you work on the project the more investment is required (time, money and effort). It's also good to weed out early someone who is not willing to go the full journey. So in this respect you are lucky. You haven't created a lot of value that has to be split up or given a dollar value.
'... What to do when your co-founder takes a backseat? ...'
Use the ejector button?
'... What do you reckon I should do? get another co-founder? ...'
Find another co-founder. Work out if you need your ex-founders investment, skills at a later date. If not re-pay the investment. Try to determine why the co-founder has left? Is it because of lack of interest, skill, commitment? Is it they found a better offer?
I admit it s good thing to happen now, I am not bitter in any way. i am almost glad.
1) The investment is not a lot in monetary value but I couldn't get started without it, in that respect it is "worth it" I could probably pay the person back if the company made even a little money. The person is still involved in the sense that I could ask for help and ideas etc but i would not expect proactive participation.
2) You are right, almost no value has been created as of yet, so if we were to shut up shop tomorrow, he would have lost out.
3) I think the ejector button would be too strong, the advice etc this person has given and i am sure will give will be invaluable. however, i would not expect a LOT of work in terms of execution. But then execution is what matters. If the company did well I believe this person would join. But i would not expect him to leave his job in uncertainty.
4) He left because he is just not THAT interested in Web Apps. No interest = no determination and no determination = no startup in all honesty. Maybe I should have seen this coming. I was visibly more enthusiastic than him.
I think I will push forward until launch (mid-summer) on my own but will look out for another co-founder. If anything this situation has made me more determined to succeed. I am reminded of Evan Williams at Blogger!
Bummer, but all is not lost. This is actually a good thing to happen now, rather than later. How much investment? A lot? Can you do without it? Can you repay them back? Is it worth keeping someone on who doesn't really want to contribute but still wants some control?
'... we have been working on the project for a few months ...'
This is good. The longer you work on the project the more investment is required (time, money and effort). It's also good to weed out early someone who is not willing to go the full journey. So in this respect you are lucky. You haven't created a lot of value that has to be split up or given a dollar value.
'... What to do when your co-founder takes a backseat? ...'
Use the ejector button?
'... What do you reckon I should do? get another co-founder? ...'
Find another co-founder. Work out if you need your ex-founders investment, skills at a later date. If not re-pay the investment. Try to determine why the co-founder has left? Is it because of lack of interest, skill, commitment? Is it they found a better offer?