We're two co founders, I'm the tech, he is the business end.
We want to bring on a graphic designer (since the stuff we've gotten 2/3 times on Guru.com was awful). We currently have begun raising capital yet, since we're bootstrapping and we're considering paying them in a small amount of equity. How much equity for a graphic designer? We also want to bring in another business guy (count would = 2) to help support marketing/PR/etc. We would see this guy (if all works out) as possibly a COO eventually. How much is a good amount upfront? My business partner and I are currently doing 50/50, bootstrapping. We're NOT profitable yet, since I'm developing the product.
This is a tough question. The approach that I've seen used most often is calculation of "sweat equity." I'll go through an example in the steps below.
The biggest variables in this approach are:
This approach is not perfect but it's a general framework that I've seen used before. You can obviously tweak it as necessary. Also, it's good to have the valuation discussion early so you can set the vision of how big you are trying to grow.
When you aren't paying the employee it becomes difficult to go with industry standard equity arrangements.