Is there anything we can do to spice up a "for equity" offer to potential co-founders?


3

New member. Thanks in advance for your suggestions!

I'm a first time Founder to a start up. We pushed the online application off the shelf as a prototype and have some traction with 150 users. 1.0 is pre-revenue

This adventure has been bootstrapped all the way.

To get to the next level (v2.0), we need a Technical Co Founder who can not only contribute creative ideas, but execute them in code and make iterations as we go. For tech geeks, we are coded in Ruby Rails (RoR).

It seems for an un-proven biz, it's likely only the hungry and newly graduated types would be interested, but that's not a bad thing. It would rock to attract someone who is passionate about our mission and has a greater depth of experience.

Is there anything we can do to spice up an "equity only" offer? Showing value at this stage is a big challenge. The vesting schedule timeline + percentage of ownership is negotiable. Beyond that, are there any other perks to consider?

Thanks again. :)

Co-Founder

asked Sep 21 '11 at 05:31
Blank
Richard H.
175 points
  • Thanks for the very helpful answers and perspective! – Richard H. 8 years ago

5 Answers


2

  • Connect with a co-founder who believes in the product and vision. As the founder, you can inspire someone towards your product.
  • Not drawing a salary is part of the riskiness of the early-stage startup and why the co-founder receives a relatively large amount of equity.
  • Think about what living essentials this person would desire, particularly given the lack of salary.

Some cheap ideas may include:

Offer meals, leisure activities, social opportunities and open up your network. If this person is relocating, offer to subsidize their housing.

answered Sep 21 '11 at 06:27
Blank
Seth Rogers
713 points

2

The main thing they are getting is equity. You need to sell them on the fact that this business will be a success and that their equity will be worth a lot. Getting buy in to your vision is how you can attract them, I doubt you have funds or means to do something more tangible. Work with your strength, a great idea and passion.

answered Sep 21 '11 at 09:49
Blank
Joel Friedlaender
5,007 points

1

Being a technical person, and being 'pitched' ideas quite regularly it would be very tough to bring in a college graduate on just equity.

This person is most likely in debt, and needs money to live and start paying of their student loans. Plus if they are already a competent Ruby on Rails developer they can get a paying job quite easily right now.

A good option for you might be instead of giving this person say 30% equity to work for free. You give them 10% equity, and pay them 40k a year. You then convince someone that has money to invest in your idea for 20% for 40k ... percentages and salaries just examples but you get the idea. You may need to get an injection of cash (ideally more than a year of salary) to get your project rolling and get some people on staff.

Or, get a loan :]

answered Sep 22 '11 at 12:12
Blank
Ryan Doom
5,472 points

0

I like your website and your idea. If I was a programmer, you showed me this and offered a good stake in your business, It would be enough for me to join, because I would see the potential in it.

If you plan to abandon your bootstrapped model and get an investor, you can add some sort of promise of decent compensation if you get funded.

answered Sep 23 '11 at 19:05
Blank
Peter K.
194 points

0

You might consider someone not just out of college. Don't get my wrong, those just out of college can be very motivated and work extremely hard but I know lots of guys who retired in the .dom days with enough money (and cheap lifestyle) that they have the talent and the opportunity to work hard for an equity stake.

One more benefit of talking to these kinds of people is that they can help you flesh out your ideas - they've likely seen similar ideas to yours due to their time in the industry.

answered Sep 21 '11 at 08:51
Blank
John
1,194 points

Your Answer

  • Bold
  • Italic
  • • Bullets
  • 1. Numbers
  • Quote
Not the answer you're looking for? Ask your own question or browse other questions in these topics:

Co-Founder