equity for part-time project?


3

I have a side project that I work on part-time. Recently someone who is not technical had similar idea approached me and would like to work on the marketing side and help out on product design.

This will still be a part-time project for me, and for him too. But he would like to setup equity sharing agreement.

what I have in mind is definitely equity but vest over time. but I am not sure if he is going to bring value to the project and no idea how much equity for him.

If we do go down the vesting-over-time road.. should I setup performance metric just in case he don't contribute much but still end up with the vested value after one year?

thanks!

Equity Part Time

asked Sep 26 '12 at 16:45
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Perlwle
23 points

1 Answer


2

My basic answer would be Yes to most of your idea.

  • Vest over a good period, say 24 months
  • Setup milestones for both of you to be fair.
  • Each period (say 3 months) provides a "milestone payment" of 3/24 of your vesting provided you hit your targets for the period.
Sales and Marketing milestones could be

  • First X users from sources setup by them. (Google analytics or similar can track the source).
  • Sales pipeline. This can be a useful tool to judge progress. How many are entering the pipeline, how many is the marketer pushing through per month?
  • Volume targets.
  • Revenue targets.
  • Other metrics like Tradeshows attended.
  • Feedback received from talking to prospects. This is actually a good "soft" measure, if they are genuinely out and about, they will always be receiving feedback at each meeting.
Development milestones.

These are far more clear cut. Layout the project/feature plan over 24 months, it will change, that doesn't matter.

You just need to nail what is agreed to every X weeks.
Then agree to the next block.

You hit your 2 weeks your get your vesting % for 2 weeks.

Other stuff the more important consideration.

There is more to running the business besides the coding and the selling. Everything from accounts, taking out the rubbish, seeking funding and leading key meeting, hiring people, firing people, handling clients, handing complaints, running the support and Q&A with customers, fixing servers and project management ... plus others I can't remember right now.

Part of your vesting rules needs to be an agreement about who does which bits of the "other" pile.

If you are successful and grow it will most likely be these forgotten things that hinder you and that cause conflict between you ... the risk is both of you will be driving for their vesting, neither will be doing what is required to make the business a complete success.

answered Sep 28 '12 at 17:42
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Robin Vessey
8,394 points

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Equity Part Time