Engineering · Startups

Startup offered 8% equity to work on there Website, Apps and marketing. Should I take the offer?

heysagar CoFounder

Last updated on August 23rd, 2017

A startup offered 8% equity and also said that after 10 months if I don't like to work with them then they will pay for the full project and maintenance charges.


Should I take the offer?

Najat Assia Corporate development professional, with a passion for consumer tech startups

August 23rd, 2017

It could a great opportunity, but don't forget that a large majority of startups fail, so it could very well be that this 8% will never be worth more than $0 and you'll never get paid a dime. It's a risk, but if you believe in their product/idea and think there is a real opportunity in the market, then you should definitely take it!

Marko Tiosavljevic CEO at Cloud Industry

August 24th, 2017

no

Shahar Yar Sukhara Self employer

August 23rd, 2017

Yes you should take the offer. Sometime its not about money, you need something to grow with, you need experiences.

rich minchuk Technical Entrepreneur and Product Developer

August 23rd, 2017

I'm currently negotiating a deal for hourly pay (at a fair price) and 10% equity. It is possible to get both, but you need to prove yourself indispensable. Start with hourly pay first. If the owners don't have enough money to pay you for your work, they are not worth the effort, are bad at getting financial investments, or the product itself isn't worth the investment.

Parvez Husein Co-founder and CTO @ Portable Office Company. Exited.

August 23rd, 2017

There just isn’t enough information to answer that question properly.


Are they giving you equity now because they have no other currency ?

What is the current valuation of the company ? What is 8% worth in real terms ? Will the value of the work you do be equal to or greater than that in 10 months time ?

If in 10 months time you want to leave, can you keep the 8% equity ?

If they are giving you 8% now, why don’t they buy that 8% back in 10 months, at an agreed value now ?

From a startups perspective the jobs you have listed are at the core of what needs doing, so what will the other founders be doing ? Why is 8% and not 10% ?

Are you passionate about the project? Do you think you can add real value ? If in 10 months you come away with nothing will you learnt a lot ?

Have you done your research, and is your "customer" solving a real problem or just have an idea ?


After all that, in my experience, these sorts of deals rarely work for either party and is probably a recipe for disaster. You’ll be pricing your work and include the value that you have created, which will be largely intangible in the beginning. They will be pricing your work on a hourly/weekly salary plus costs basis. Those two things are very difficult to reconcile, especially for a startup. You’ll just end up arguing… a lot !!! If anything you should price your work now. Say it will be 100. Your deal should be, you should get 100 in return for their 8% back. Regardless what happens, if even if the business shuts down, the other founders should be personally liable.


Hope that helps…


Kalu Obasi Founder/CEO

August 23rd, 2017

it is a nice offer that you should consider taking but before you do think of the amount of experience you should have gotten after the 10 months either there or outside the money should not just be your taught but your popularity (connections) and personal growth


Men Works

August 23rd, 2017

I have a very bad experience with start up and the shortfall primarily was in the focus on an external(outsourced) team to handle marketing. As a marketer, this felt threatening since there was always a growing conflict between strategies adopted by the internal marketing team and that of the external marketing company. This continued until we lost 85% of the internal marketing team. The disparity in strategies made working unbearable and we always had to follow the rules set by the external team even if they didn't understand the product, culture and our client base. In the end, i immediately started looking elsewhere for places where my skills would be needed most. On the other hand, the internal team was vibrant, young and we spent times integrating internally more. The internal culture was very great and healthy.

Anonymous

Last updated on August 23rd, 2017

It sounds like a good idea, if you think that you might be doing this because you like or passionate about the things you do and that it brings value to the startup and yourself. I'd say you can take the leap of faith and learn something from the process. Equity percentage, i would suggest you go for based on what you think you are worth based on the values you can provide. If you see tremendous potential, you should request for more equity but if you can't. 8% is still pretty great if you can see the upside. Failing is part of start-ups and i believe that if everyone in the team works together co-operative efficiently and effectively. You may get it right for this one to take up the offer. Always take a chance for the opportunities given to you. But remember to cut loss when it becomes a falling knife.


Cheers,

Allen

Anonymous

August 23rd, 2017

It sounds like a good deal.....

Give it a try 8% of equity is better than paying 30% - 50% of royalties on a 5 yr contract, at least you'll be working on your own baby....

Daniel MacCrohon Entrepreneur, Board member and and self employed, self starter, Millennium,

August 23rd, 2017

This about this. 8% of equity in what. The companies stock, correct. What is that 8% represent, and what are the warrants of the 8%. When will you be able to monetize that 8%? What is the valuation of the Company today when you are receiving the equity. Can that 8% be diluted?

DMC