Questions

I am a developer and own a web/mobile development agency. I had some success with startup as the technical co-founder. I get pitched few times a week by people saying they have a great startup idea, and if they develop it they will give me some equity. How do I tell them if you cannot manage few thousand dollars for developing a product they shouldn't be entrepreneuring and go get a real job - without sounding like a jerk. I am okay if people ask me if I can develop it for a lower fee and some equity. I really get agitated when people ask for free work. How do I convice them they should pay. Most people who ask for free work can afford to pay.

Actually, the reason I think one should not work for no cash is a different one. Working for equity only is the equivalent of investment in the startup, and there is nothing wrong with it in principle, if you can afford it. For years I worked for equity only, and accumulated a nice investment portfolio (as a business consultant rather than a developer - but the principle still holds). The main issue I have encountered was that many startups do not feel the pain when giving an equity, and often will not prioritize their work with you. That means that in addition for not getting paid cash, you also waste a lot of time.

My model at the moment is to charge 30-50% cash and the rest in equity. That help me build my startup portfolio, normally not to expensive, cash-wise, for the startup,and still they feel it enough to want to help me with my work as quickly as possible.

What I said here is exactly what I tell the startups. And if all they are willing to give is equity, I tell them I see nothing wrong with that, but that I am not the right person for them.


Answered 2 years ago

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