I am a coder and have very little in-depth business knowledge. I was recently approached about joining a very promising startup with a great idea. Only problem is that they were unfunded and would need me to work for equity which i have never done before. So in a nutshell my question is this, as i am the technical person and really the only one that is investing a billable commodity, is there anything i can ask for in a contract that assures me some sort of return if the business never takes off or just dies? None of this is being done in bad faith and i have already asked them and they have agreed to me asking around for a situation that makes sense. Any ideas or suggestions would be appreciated.
In this situation it is very unlikely you are going to get anything if the business doesn't work out, you just need to make sure you are compensated enough for the gamble you are taking (ie. if the business succeeds and you end up getting paid what you would have in a normal company, that's not enough). Work out how much equity/reward makes the risk worthwhile to you and there you have your deal. If what you want is higher than they will give, then move on.
One thing you mentioned that is worth pointing out, technical skills aren't the only billable commodity, don't undervalue other peoples contributions because it's not coding, that will likely lead to conflict.
Amin, you need to understand a few things. Try to follow even though much of this won't make much sense at present.
First of all, a business (like a corporation, or an LLC, or a Limited company) is created specifically to shield the owners of the business from debt in case the business fails. This works directly to YOUR disadvantage in this case.
If a business fails typically it goes into bankruptcy proceedings. When a company is bankrupted, it must follow a precedence in paying debts that is imposed by the court system. First comes the taxes owing to the government. Next comes salaries. So if back taxes against the company wipe out the company's cash assets, employees may not get paid. Now, assuming that all employees get paid, NEXT comes any debtors - like those holding promissory notes. And there will likely be a lot of people in line ahead of you.
So if the business fails, you will not see anything at all in exchange for your time. Even the work you performed may be appropriated by the court as an asset of the business.
Second major point: you are foregoing your salary - working for free - in the hope that you receive a payoff much greater than the salary in terms of equity appreciation. Even if the startup succeeds, unless you are one of the founders of the business, the likelihood of your profiting in terms of multiples of the salary that you sacrificed by working for free is extremely low.
Essentially you can figure that at very best you are working for free for a period of time in order to buy yourself a possible job in the future.
I consider this opportunity that you are looking at quite dubious. In other words it's an extremely poor bet and almost everything is against you.