Web application · Programming

Can programming be considered as sweat equity?

Manoj Sahoo Lean Six Sigma Black Belt Project Manager at Freelancing (Self Employed)

October 9th, 2016

I am a good programmer. My friend, who is also a programmer, has asked me to work on aggregator type of web application. Can I request to have sweat equity in what we are developing?

Charles Koehl CTO at Sustainable Ideation, LLC

October 9th, 2016

I have worked for sweat equity in two different arrangements with two different companies. In the first, I had an agreement with the company that if there were a "capital event" (meaning a sale of the company, for example) I would get a percentage of the proceeds. (Furthermore, my CPA was able to get the Fed and State to treat the proceeds as capital gains, thus taxed at a much lower rate.) In the second instance, I arranged with the company to pay me royalties for my work. (Look up "royalty financing").

Garet Claborn CEO, Original Author at Approach Corporation

October 9th, 2016

You certainly can get sweat equity as you'll be the source of significant work. Royalties can be good as Charles mentions -- less responsibilities after the project is over. 

One thing I would mention is don't undersale your experience or, especially, your expertise. These are also worthy of equity especially from startups that cant give you a sign-on bonus.