Tell me more ×
Answers OnStartups is a question and answer site for entrepreneurs looking to start or run a new business. It's 100% free, no registration required.
up vote 3 down vote favorite

We are in need of a designer for our start up, but we are pretty much cash poor. I have been talking to a designer for a few days, and he really wants to help as he loves our idea. He is very flexible and willing to work creatively to solve the compensation problem. I am looking for suggestions to creatively compensate him that will benefit us both, yet not put our chances of getting funded in peril. We have talked about possibly giving him some kind of small equity, and possible back pay when we are funded, in return for his part time work now. He also understands that funding may never come, and seems willing to take that risk. He is unsure if he will be able to come on board full time when funding comes through, as he has a few irons in the fire already. Basically, he wants to keep his options open.

Thank you for reading, and for your input!

share|improve this question

2 Answers

up vote 2 down vote

Seems like you have a pretty good relationship with this person. I would have them quote the work and how much he would expect it to take to do whatever design work you need. Or, if you need him for X hours a week or whatever put some type of value on it.

Since you are so close I would probably just handshake on it, maybe agree on 20% over his quote when you are funded or in a position to pay him back. Or once you get investors evaluate the amount of work he has put in versus you to determine some equity arrangement.

Since he sounds pretty flexible I would just do a casual/verbal commitment.

share|improve this answer
up vote 1 down vote

In principal I agree with @ryandoom but wanted to add some detail. Your relationship is good now so it's a perfect time to get it sorted out. Shares is good for an ongoing quite regular involvement, sweat multiplier (their normal fee multipled by a risk factor) is good for short term or more adhoc work.

  • risk multiplier gives incentive to focus on you when needed. Paying out these is the critical bit to agree on, is it in 6 months or after you have made you first $50,000. This is important for both sides as it can sour the relationship long term.
  • shares brings them into the long term game and goals. Are they actually onboard and committed as you? It can be a great inclusion, just ask the graffiti artist for Facebook but more often it becomes a noose around the neck of one or other party.

It can be worked out, now is the time to have the hard conversation.

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.