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I am a Rails developer with a job who does projects on the side. I've been asked by a couple of friends to build a product for their startup, nothing too special/creative technology wise. They don't really have funding yet, but they are serious about it with a business plan and detailed plans for the site and all. I really like the idea and business model.

Would it be appropriate to ask for equity, on top of the cost of the project? And how much? They would be excited to have me around as head of tech, but they don't have funding and I'm not going to quit my day job unless they can pay me a salary. (If they eventually do get funding and I'm interested in joining them, that's a whole different story, right? What equity could I expect then?) Or how about I ask for a % of revenues?

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Why not send them this same content in an email or have a discussion? – TimJ♦ Apr 23 '12 at 0:30

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If you're not taking a salary, I think you could reasonably ask for equity as (equivalent to or close to) a co-founder, say up to 33%.

If you're taking payment, your equity negotiation position is much harder. Founder equity is a reward for the high risk taken. If you're taking payment, you're not taking on any significant amount of the risk - you get paid either way.

You might ask for first-employee equity, which might be a single figures percentage, and vesting after several years work.

Every start-up is different, so you should find out what is being offered in this specific case, and if you think it's reasonable remuneration considering that you're interested in the job, your assessment of the chance of success, and the personal risk you're taking (opportunity cost of time/money that you're giving up elsewhere).

This article is quite insightful and explains the different equity positions between founders and employees.

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Just to add to Ronalds comment, if they are paying you market rates for your work then you have very little entitlement to equity. If you are working at a cheaper rate then you could get equity in lieu of full payment. – Joel Friedlaender Apr 22 '12 at 14:46

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