Questions

How much equity should you give a technical co-founder if you already have the idea, but you need them to help build the product?

I know I'm going tp need a coder on the team, but I don't have the capital to pay for one, so I'm trying to find out how much equity I should give the coder

3answers

Hi
This is a good and common question.
The answer depends on numerous factors. Just to name a few: how complicated the project is, how talented the person is, do you want them solely as a service provider (who then leaves at the end of the project) or as a co-founder long term?
Additionally, it depends on what the Coder wants (and not only what you want).
1. I suggest that you start by trying to "sell the dream" of your idea to potential coders and then once they show interest, ask them how many shares they want. Then, based on the above factors decide how many shares you're willing to give.
2. Whatever the amount is, be sure to:
a. Allocate the shares/right to shares gradually (through vesting) and not all at once.
b. Get a waiver regarding the IP rights and an NDA for confidentiality.
c. Get copies of the progress as the coder advances.

p.s.: if the project is interesting enough *you can send me a pitch/investors deck), I know a programming company that will do the programming (and provide support) for you - for free - in exchange for shares. Your only costs will be the legal costs for drafting the agreements via their lawyer.

I've successfully helped over 300 entrepreneurs, startups and businesses, and I would be happy to help you. After scheduling a call, please send me some background information so that I can prepare in advance - thus giving you maximum value for your money. Take a look at the great reviews I’ve received: https://clarity.fm/assafben-david

Good luck


Answered 2 months ago

Here is the bad news. If your contribution is the idea alone, you are unlikely to find a developer to do it for equity alone. If you have some kind of unfair advantage, it would be different. If you are going to do non tech roles like sales, fund raising etc.. It would be different. Also if you need them just to create the initial product or be a tech founder, it would be different.

If you pay a minimal amount for the development, the amount of equity needed would be reduced.


Answered a month ago

This may be an unpopular opinion, but I would take a second look at what your limitations on capital actually are. Software development has this reputation of being extremely expensive, but my (limited) experience has shown that you can hire developers at very low costs if you are willing to do a few things.

1. You have to be willing to learn enough about coding to not be taken advantage of and to be able to communicate effectively with a developer. You want to do this anyways so that you can really know your product.

2. You have to be willing to look into the global market for developers. You might be surprised at the low cost you can find by exploring options in other countries.

3. You have to be flexible. The first developer I worked with was great....at least for the first 80% of the software. After that, I had to renegotiate how much he would be paid (ended up paying only 50%) and move on to a different developer to finish the software. This approach only worked because I understood the software and existing code well enough to forecast how much the completion would cost.

Feel free to give me a call. We can go over the financials and your background. You probably have more options than simply giving equity away.


Answered a month ago

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