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I'm in a same situtation, maybe worse as this guy: Developer, offered share in small startup company in return for large rate reduction - advice needed

Two friends had an idea, they were kinda working on it for few months then invited me for 5% of the share and I joined them. At that point when I joined we had nothing really - just an idea and a business plan in development. I've already spend 6 months now developing the product for free because in the start I believed in it and we almost had investors (one investor was really interested). But from then on we had a lot of "interested" investors but no one actually did invest. I was promised 5% share in the start but now I'm thinking about if all that free work for almost half a year is worth it.

We did launch the product actually, and we're getting traction slowly. But I had a job which payed well (but was kinda dull). And now I'm spending my own savings for 5% that some day may be worth something.

Should I request bigger share, wait a bit longer or leave maybe? I can't decide. I really think this could turn into something great but I don't think I'll still be motivated by that 5% in few upcoming months.

Any thought on my situation?

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"And now I'm spending my own savings for 5% that some day may be worth something." Can you elaborate: What are you paying for? – jimg Jan 16 at 14:42
Nothing project related, just my basic expenses (housing, car, insurance, ...). – user78635 Jan 16 at 14:43

1 Answer

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I'll gladly pay you Tuesday for a hamburger today

J. Wellington Wimpy (and countless non-tech startup CEOs)

You have skills. They have ideas. No one has money.

I think that the referenced post really does a good job of spelling out the economic gains / risks inherent in these sort of arrangement.

If you bored at your current job and want to expand your skills with minimal risk with (however small) potential upside, moonlighting in a startup provides an outlet to scratch that itch.

The problem with such arrangements comes when the "proof of concept" gains traction and becomes a business: You've already priced yourself at a low level (free) and the perceived value you provided to make the POC a success is assumed as part of the original deal. Most concepts never survive first contact with customers.

Renegotiating is an option, but the burger is already eaten: Now the focus moves to whether you are the right person to grow the product. The next hamburger.

One way to break this cycle is to upfront negotiate agreements where revenue share is taken in consideration. Or reimbursement of IOUs upon funding. Or bonus based on achieving specific milestones. Or buyout / separation clauses.

In short, negotiating an agreement where your effort has an actual value associated with it. Depending on the partner / opportunity / challenge the parameters will change. It's up to you and your negotiation skills to define such value and protect your interests.

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