I'm roughly following lean startup methodology, having started with an idea, making mockups, showing to several potential customers, and even running a couple of crude pilots. Positive signals so far.
Now I want to build a real "Minimum Viable Product" prototype that can function in the real world. I've identified a veteran developer of successful websites in the past (i.e. they make money), and have gotten to know him over several months. I'm trying to figure out the cash-equity offering to have him develop the prototype, over say 4 months of part time work. I want to offer both, since he deserves some cash upfront, and I want his equity to keep him engaged.
If my max cash payment to him would be say $10k, what equity should I expect to give him? Would it be 1-5%?
From the other angle, if I want to give him max 2% equity, how much cash should I expect to pay?
(If things go well with this prototype, he would consider joining full time should he be available, at which point we could revisit the equity question)
Your guidance is appreciated.