Looking for a little guidance on an equity offer for a project I'm involved in.
I was approached six months ago by a founder-developer who has written software to accomplish an idea originated by a founder-fundraiser. Software has been successfully beta tested and there is a confirmed market for it.
The offer six months ago was for me to be website lead/social/digital marketing head for the bootstrap project in return for equity.
Because of the scope of the project, I decided to assemble a team to make it happen (two developers, 1 social marketer, 1 graphic designer) with the idea that they would divide a portion of the equity I received. My team and I have been working part-time on the project for 6 months and we're now ready to launch.
Now, the founder-fundraiser has secured a small portion of our original funding estimate from a founder-investor to set up an LLC and pay office admin-level salaries to myself and founder-developer. I have been offered a fully-vested 5% equity stake now, and a full-time salary and title of CMO as the company grows.
Founders are retaining 60% equity (minus my 5%) and reserving 40% for investors.
My concern is at only 5% equity, I have no equity to offer the team I assembled and not enough funding to offer salaries. I was expecting at least a 10% equity offer, part of which I would use for equity for the team I assembled.
My question: Am I correct to expect at least 10% equity? Or, perhaps, what should I expect?