I suspect both you and he are living in LaLa-land - raising money is very hard and so is creating a serious track record. 3 months is nothing, frankly. But it sounds like a 50-50 split is fair. And do NOT do just a partnership. Form an LLC in the state you live in, and have VERY clear contract. You can bum a sample agreement from the internet, draw it up per your own situation, maybe even post the critical parts here for others to comment on. But DON'T chintz out on having a lawyer who specializes in businesses at least REVIEW it. You can use something like http://www.findlaw.com/
LaLa Land maybe... I agree 3-months of track record is nothing especially for institutional money. However, potential partner has already existing clients and relationships. He got me started with a decent amount of equity to start building track record. I think for him to raise 1-2M will be relatively easy. Then if the program still performs as calculated for about a year, we might start getting institutional money. That's what I'm thinking.... I am also thinking on the LLC side. Thanks for your suggestions.
If you have someone willing and able to raise seven figure $$$ on a three month track record shake his hand today on the following deal: If, in the first six months post formation, he raises: 1) $500,000 to $999,999 he gets 10% of the equity; 2) If it is $1,000,000 to $1,499,999 he gets 30%; 3) If it is $1,500,000 to $1,799,999 he gets 40%; 4) if it is $1,800,000 and up you guys are 50/50. You can play with the numbers a bit but raising capital that is not from friends and family on a three month track records is nearly impossible. KEEP IT SIMPLE AND GET THE HANDSHAKE BEHIND YOU AND PAPERS DRAWN AND SIGNED. If he has that magic touch you are lucky to be his partner. Only time will tell if he is lucky to be yours. The real key is the "lockup" on the investor funds. If you can get a year (or more) before they are entitled to withdraw it increases your chances dramatically. A 20% draw down is not big deal if a guy has produced solid low/medium risk returns for three years but if it comes right out of the gate and people have the right to withdraw be sure not to stand between them and the exit -- you will be trampled.
TZ ... You have an incredible talent for setting up straw men that lead right back to your zealot's belief that no one but you can ever succeed. No one, not the OP, not me ... nor anyone else suggested he raise money from friends or family. It was never an issue. But the only route back to paranoidville was for you to pretend as if that was on the table. You might be the biggest asshole ever to come down the pike. And if you are not the biggest you are certainly top three. And to postulate that money that adults have invested is in any way even close to abusing that person's son is looney tunes. Seek professional help.
If you're really trading a robust system with a Sharpe of 2.5 the money will eventually find you. I'm assuming you're already trading it with everything you've got?
Raising seven figure $$$ on a three month track record would be a mini or more like mega miracle It's more likely that he might be able to get 500k to start and then another 500k after 6-8 months of decent track record. After the first 1M, if the performance is still decent then we can have the face to knock on bigger doors. Unfortunately, most of my friends and family who have $$$ are bank/government bonds interest only investor types. They see investing in the markets as insanity!
I feel the same way about family's and friends' money. Anyway, I won't be able to raise money that way ...