Here’s the question: “If you’re a software engineer or developer and your asked to do a project for a lean startup to incubate and you’re asked to reduce your price in exchange for equity, what ratio of discount to equity is reasonable. An example might be a 50% discount for 30% in the company.”
If you’re going to be a co-founder and receive equity on par with the other co-founders, it seems appropriate that you should receive income on par with them as well.
In other words, it depends on how much cash is available. ‘Co-founders’ that get significant ownership should receive similar ‘salaries’ initially.
So rather than think of things in terms of how much of a discount against salary you should ask for, I think it would be more appropriate to think in terms of what you bring to the table — and what the others are bringing. Then, see what cash is available for you all to share.
If you want more cash than others, then you should be prepared to get less equity. Some technical co-founders take no salary at all in return for more equity.
Co-founders that bring money to the table in addition to time would be right to ask for a greater equity stake. - Full Post
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