I'm the co-founder of a bootstrapping startup, and I have incentive to prefer short-term compensation, like deferred salary, instead of equity. Would it be reasonable to apply a multiplier to the deferred salary to account for the risk & opportunity cost?
I think it could work using this equation:
- Market-rate for my position, $10k per month, minus $3k actual paid salary per month = $7k deferred per month.
- I work for 4 months at the startup, creating $7k * 4 months = $28k deferred.
- We apply a multiplier of 3 or 4 for the risk & opportunity cost ($28k * 3.5 multiplier = $98k).
- We set aside 15% of profits each month to pay the deferred salary until it's fully paid out.
My co-founder wants to maintain as much equity as possible, so finding a way to make this work could be better for him also.