equity, payment, web-appsI’m a computer science student and I recently got hired by a new startup. The company is fully owned by one person so far. The company wants to develop a web-app kinda similar to https://codefights.com/ with the Meteor platform.
Now I have been hired to create this app by myself, so there is no assistance in development. The deadline is in 8-12 months and I will be working a long side the company owner, designing the app but the programming is on me. I will be working approximately 20-25 hours a week since I study meanwhile.
We talked contracts and reached the conclusion that I will receive 2 possible contracts I can sign. One option is that I will be paid hourly and the other option is that I get to be a co-owner of the company.
Now my question is, if I choose to become a co-owner, how much of the company should I expect to receive? Has anyone had any similar experiences that could perhaps help me out? I will answer any questions if you need more info.
Thanks in advance.
If nothing has been developed, ask for 50% over a 4 year period.
You’ll be doing just as much work as the other partner will, or more. Regardless of who’s idea it is.
Take a percentage. Money comes and goes.
However, 1% of something is better than 99% of nothing.
Try to go 50 50 with your partner. Take risks, big risks. You’re young (even if you’re old) and you have nothing to lose either way!
Seeds that you plant today will grow into trees in 10 years.
Equity is usually preferred. However, startups in the app-industry are very difficult to sustain and turn a profit on due to heavy competition. You should ask yourself what you prefer, less but guaranteed cash now or the opportunity to have share in something that could potentially be MUCH more in terms of value (or bust and work for nothing).
Have you considered royalties as opposed to equity or wage? Royalties ensure you get a percentage of each transaction, but this can negatively impact firms due to taking away from the cash pool. Sometimes this is preferred however because it does not require any up-front cash or releasing of owner equity.
How will this app be monetized? Ads? In-App Purchases? Is there a clear business plan in place?
Negotiate and do not be taken for a ride. You could possibly negotiate to have the best of both worlds (ie. wage and partial ownership/equity or royalties). You cannot get what you do not ask for…BEST OF LUCK
One question you should ask yourself
Do you believe in the product? Do you believe it will make money? Do you want to be a part of it?
If yes take the equity, and as much as you can get. Perhaps as another user suggested you can have an agreement that you get more equity each year you work on it. You are young, take the risk
If no then take the money for now and start looking for another job anyway!
To counter the other answers so far, I suggest taking the paid hourly option.
I don’t have data to back this up, but I think it is reasonable to say that more than 90% of startups in this position are never worth anything. There is thus a 90% chance that you will not receive any compensation at all for your work.
| Try to go 50% | 50% with your partner. You will do the most important part of the job so i think this is fair for life. Also try to talk to a lawyer to guarantee and preserve your rights. |
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