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Orion Parrott

Founder and CEO, Lendsnap YC S16. We're hiring!

I have read many discussions here and elsewhere on pre-investment founder equity but still want to hear your thoughts about my particular situation.

I am currently a solo-founder building a web fintech product. I have a MSEE but am not a webstack developer so I need a technical parter or founder to join me and be a strong team together. This is my first startup and I have been working full time for a year already. I am negotiating B2B sales contracts right now and think I'm close to having the first pre-sales closed. I am self funded and expect to put in more of my own capital. I have a prototype that contractors developed, which I have been demo'ing to potential customers with good feedback. Delaware C-corp.

I have found a developer (current title: Director of R&D) with 16+ years experience in the relevant industry. And he still programs so he can architect and build the initial product that we want to release in about 4-6 months. I am willing to consider him a founder at this late stage but prefer to avoid titles. I want him to be more than a developer, more like VP or Director of Engineering. He will build the first product, and then build out an engineering team. I can function just fine as a product manager and have been working closely with customers to learn product market fit. I consider him very capable of architecting and building a great product.

But here are the cons: He wants to keep his day job and is confident he can work 40 hours a week for me on the side to build this product. He wants to call that "full time" but I tell him VCs will not see it that way, not the same level of commitment. He wants "to keep his job as long as possible" and join only when I can offer him a full or near-full salary. He has never done a start-up before. Supporting the product after launch will certainly require someone technical to be full time. The salary will be possible only once we get significant funding.

Yes, I need him (or someone like him) to build a product. Alternatively, I have had quotes from contractors for around $100k to do the whole thing for me based on detailed specs, but I want to build internal technical capability.

To get to the point, he wants 35% equity plus the salary starting when we get funding. Common stock isn't good enough for him and he thinks it needs to be preferred. I told him preferred won't happen and it's not how things work. I have already offered him 10%, with 4-year vesting and I have already had advisors tell me "no way" to that level. I feel like "full time" is the lynch pin here. I want to work with him, I believe he can get it done, but it's hard to not think of him at employee level if I need to offer a salary to bring him on FT.

Please let me know your thoughts
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