I recently participated on a team with a developer at a hackathon. The person has their own freelance business, so unlikely to join fulltime later. They expressed interest in helping with my project on contract (which I can't afford) or equity basis. The help would be in terms of basic MVP to get going. The startup is very consumer/sales focused and not tech/software based.
As this is not about equity between fulltime cofounders, I'm not sure how to approach this. And this is not regular parttime either, it's more of a finite amount to be done upfront. Are there any good rules of thumb, proxies or templates to use in calculating equity-work exchange rate?
I am concerned about getting this right in order to prevent equity issues with potential employees or fulltime cofounders (I have none yet) and VC in future.
Development Equity Compensation
I was recently involved in a situation similar to yours where I was in the role of the developer. The company was just beginning to create their product, and didn't have a lot of cash.
Once we agreed on an hourly rate and the project scope, we then identified the payment terms:
Overall it was a shared risk. They were dependent upon me to deliver the code, and I was (and still am) dependent upon them to turn a profit.
While I don't have any equity in the company, I will still enjoy a decent return for my effort since the rate was much higher than my normal rate.
All in all, I was happy to work out the deal.