My software startup will be launching in the next month or so. Thus far, I've been self funding and have 100% of the equity. However, I'm thinking about giving my main developer/project some skin in the game - in some way/shape/form. A big part of this is to alleviate dev costs for now and after the launch. Also to give him a more vested interest in the companies success for the upcoming year. He's been a valuable asset and is interested in talking through a potential agreement. Any advice for a possible type of agreement for the next year or so we could create?
For a technical co-founder, the minimum should be 33%. If you've been paying him, there is no way he should be 50/50 but how to determine the exact number is a calculation of a lot of variables that are impossible to answer without knowing more about your situation.
Most investors want to see a team in place (especially a strong technical team) so incentivizing the right person now might make a lot of sense.
What is standard is for all employees (yourself included) to be vesting over 4 years, with a one-year cliff. Given that you have invested cash, that should be treated differently (not subjected to any vesting) but your "earned" equity should be vesting just the same as this developer.
BUT, keep in mind that if you are only a month away from launching, you might be best to continue investing cash. After a product is validated (assuming this takes place), the amount of equity a developer should expect to earn could be significantly less than 33% and even single-digit percentages.
Happy to talk through the specifics of your situation in a call.
Answered 10 years ago
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