Does it make sense to accept equity plus a contract specifying payment for services when the company is profitable?

By the way, I have a very strong sense that this company will be successful. This is a health information technology firm in a niche with which I'm very familiar.


Would you hand over 100% of your paycheck to your investment advisor?

In this scenario, you're being asked to invest your time instead of money but really, it's the same question.

I've done several of these types of 'time investments.' Most have not worked out, one might.

I'm not too worried though because most of my time that was invested was 'extra time.' I basically traded some of my leisure for an opportunity to be part of something that might hit pay dirt.

These deals can be fun, but I don't think it makes sense for most people to work full time on them. It would be like putting 100% of your paycheck into your retirement account and finding money for groceries elsewhere but with a lot lower chance of paying out one day.


Answered 7 years ago

The only scenario it would not make sense for a company to hire that way would be for very standard, repeatable tasks, where the performance has very limited impact to company's results. In any other case, I'd make sure people have skin in the game, even if the overall cost at the end will be higher to me, because those incentives will result in higher commitment and potentially lead to new / better / more efficient ways to execute.
Whether or not you should accept that in the form of equity, that depends... How long is that engagement supposed to be, how is the vesting period, etc...

Answered 7 years ago

Yes, definitely! Most of the time, people miss out on great opportunities and untapped business potential just because they're not getting "quick money."

Everyone want's to be rich or even become entrepreneurs, but they're not willing to be a part of the "struggle."

If you believe in this company so much, then take a leap and help them get to that place where you see them to go.

Answered 7 years ago

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