Should I sell my side project for 5k to my co-founder?


Currently, our app has an MRR of 1.5k. I've been working on it for the past 2.5 years (AVG of 6 hours a week). I really enjoyed working on it, but my passion has waned in recent months.

Some stats:

- 3292 users;
- 15616 on the mailing list;
- 372 companies;
- 5k impressions per day - 300 clicks (in search console);
- 1.5k MRR;

It's a very cool product but the code base is not that good, because we shipped fast and did not know what direction we wanted to go. If I proceed with the project it should be rebuilt from scratch (backend/frontend code). 

It's a very big project and complex project, and in relation to the code base and the number of users, it still generates too little money. 

What would you do? Should I sell it to my co-founder who definitely wants to go through with it, for 5k? 

Or should I give it 1 more year? If I sell the project I will invest my time in other Saas projects. 

Please let me know your opinion :)

if that don't attract you anymore i would sell it, but you can sell more than this

I completely understand your feeling, this is what I think:

  • Your numbers and traffic looks good. Have you thought expanding vertically and use the current code base to host other niche sites, not only influencer dogs? Maybe you could scale the income with a bit of extra effort.
  • If you go for the sale, I would ask more than $5k

Thanks for your reply! Yes expanding would be possible but not with the current code base. It needs a rewrite but that will take a lot of time. I agree 5k is not that much for these numbers and my work already.

Does 5k sound like a motivating amount of money to you? If not, you shouldn't bother with the headache of selling.

Afaik prices for selling a SaaS are usually 3x to 5x ARR – 50k+ in your case. You can probably find guides online on how to price a SaaS for sale.

If you don't want to be involved and the partner won't buy you out for a good price, there's always the shareholder approach where you simply own part of this asset and get some sort of dividend and/or part of proceeds of any future sale.

Thanks Swizec, I suggested this to my co-founder.

Assuming you currently own 50% of the business, then a $5k buyout imputes a $10k valuation on the business. That's less than 1x your annual revenue which seems extremely low.

If you no longer want to work on the business, I agree it's fair to your co-founder to sell your share (or at least the majority of it) but it should be for a more reasonable valuation IMO.

A 3x annual revenue multiple for 100% of the business is a typical valuation, if you have decent profit margins and the site doesn't require on-going work to keep running as-is.

So that would be a valuation of $54k or $27k for your half. Let's call it $25k to simplify.

Rather than your co-founder having to pay it all upfront (which would be quite risky as perhaps the revenue implodes, etc), you can structure it such that you continue to get X percent of the revenue (maybe even 100%) until you've received the $25k.

Whether it's $25k or something isn't just an accounting matter, but also subjectively what seems fair.

If you're basically "walking out" of the business and leaving your co-founder hanging, then maybe it's fair for you to walk away with less than 50%. Many companies have a vesting clause built-in for this.

On the other hand, you derisking the buy-out by having it done through revenue-based payouts might already make up for the fact that you're moving on.

One final thing to consider is that you'll need to make it worth it to your co-founder to continue. If your demands are too high, it's likely they won't want to continue either and you're both left with a dying business and no payout.

Thanks Marc. Appreciate your response! I have to think about it maybe 5k is indeed not that much. I have to take into account that the code base is bad and he has to find someone to continue with. It has a lot of potential but it takes a lot of development time.

That’s a risk the cofounder takes on, not you. You’re in a negotiation, you should negotiate your side, let the cofounder negotiate theirs.