I've been working on SwitchDin for 8 months and have self-funded the product development (no salary). We've built a platform for managing solar energy and battery storage and with the help of some great contractors I already have a good prototype and have a few pilot sites up and running. We've had great feedback from pilot testers and channels partners and I'm gearing up to start selling. I anticipate our first paying customers in the next quarter. I'm not an experienced software engineer and have been looking for a co-founder to take the lead on these matters but so far the right person just hasn't emerged ... until now. Considering the investment i've made and the traction i can demonstrate I don't want to give equity away for nothing, but I still want them committed for the long term. So I feel they should buy-in but still take on a reasonable split. I would not expect them to take a salary until we raise or have the cashflow. Any tips on how to approach this arrangement or some models which are fair and equitable? How to handle the valuation? Also what about using vesting? I had in mind a cash buy-in to reflect current value but then a vested component to account for sweat?
One thing that I'm looking at for a current project I'm working on is sweat equity. While we won't have cash to pay people in the near term, we can allow them to earn equity at a rate commensurate with their skills and the value they bring to the table. This way they can "buy-in" doing what they do best and have the opportunity to build equity over time.
As for valuation, while not all that practically helpful, the old adage something is only worth what someone else will pay for it holds true. If you were to sell the company right now what do you think you could get for it?