How to Hire Developers for Equity

Are you struggling to launch your startup for lack of sufficient funds? Let’s assume you have your product requirements and business strategy in place. The only problem remaining is; you lack a robust product developer yet you neither have sufficient finances nor have you received funding yet. This means that you are unable to hire someone to develop the product.

Where can you find developers who are ready to code for equity?

Acquiring a professional developer to work for equity can be an option. However, there are various other options that can be more convenient. For instance, you can collaborate with a technical expert with whom you share similar objectives and co-found the business. Experts opine that startups may need to hire more qualified staffs to drive their brand.

Whether you choose to work with a technical co-founder or even work with developers for equity, it’s worth remembering that quality is vital. If you can’t afford to pay a qualified staff, then you can as well prepare to propose a significant amount of equity to your preferred developer.

 

Hire Dedicated Offshore Developers

Many companies are fast embracing offshoring to facilitate the proper running of their projects. The best thing about offshoring is that you get a wide range of technical skills conveniently and at a reasonable cost. Offshore developers are also assigned duties depending on their level of skill which means you are guaranteed a quality end product.

When it comes to offshoring developers, you can hire them at reduced salaries and still offer them some percentage of equity. This benefits both parties in the long term. The idea of replacing part of the developer salaries with part of the company equity may work well with the offshoring technique.

Today, many companies are collaborating with service providers to get their tasks completed accordingly. If you are looking for the ideal developers willing to work for equity, you may want to contact angel.co and they will provide tangible solutions to help you propel your product to the next level.

While there is no laid down a formula to compare equity ownership and hourly work more so for startups, you need to hold discuss the matter at length with your potential candidate. Assuming you are not prepared to partner with a technical co-founder, the ideal place to begin your search the college within your locality that has a robust computer science department. You will benefit more if the school already supports an entrepreneurship culture.

Understanding Equity

Equity is ownership in a company and it comes with value. When a company hires you for equity, you are tasked with growing that value. What you should know about equity is; you can’t transfer it, tap into it, or even dispose it of unless; either the company is sold out and the proprietors tap in the value right away.

Equity can be valuable in a varying way especially if you own the most shares. Majority proprietorship offers control which allows you access to the firm’s hiring and firing deliberations, cash flow, and earns you absolute freedom. To become the majority shareholder, you will need to start the company and inject your money in it. While this can be risky initially, it can be rewarding potentially.

How Much Equity Should Developers Anticipate For?

If you are joining the company at the initial stages, you are likely to get higher equity and sometimes control. However, you shouldn’t expect payment immediately. If you join the company at a later date, you will receive less equity and a decent wage which can range between a little percentage to a fragment of a percent. Generally, the equity will vest over a specific number of years. This means that you will only earn it if you stick in the company until then.

Working for the Minority Share

 

If you get hired as a minority shareholder, you will only have control over less than 50% of the company shares. If you are working for the majority holder who also happens to be funding the project, you will remain the minority proprietor.

Working Free of Charge

If you are hired to develop a product free of charge, you may want to ask for not less than 51% equity, or 50% and 100% of the common stock and voting stock respectively. Remember, equity changes over time and if you have no control, you may be weakened especially when new shares are issued minimizing the value of your own shares.

Another thing you should beware of is unreliable people. The market harbors both good and bad entrepreneurs and you need to be cautious of the bad lot. For you as a chief technology officer co-founder or a software developer to gain from your startup equity, everything should be operating well. Often, there is little you can do and you may never know whether or not the majority owner is being genuine. Sometimes even when the company is flourishing, chances are you will get peanuts and an unsuitable legal position.

How to Choose the Ideal Co-Founder or Startup Employer

If a startup entrepreneur approaches you, the first thing you should do is establish their budget, figure out their strategies for countering competition, and find out their time obligation. You will want to watch them closely to learn how they treat other people knowing well that you could be a candidate for the same treatment in the future.

Still, you will need to figure out whether or not they are running an additional business, follow them on social media and check their presence, search them on Google, and even check their residence and establish whether the location and date of purchase resonate with their story. You want to do due diligence to find any red flags.

Why Established Developers Don’t Work for Free

Established developers and even agencies hardly work for equity. Freelancers too won’t agree to develop your product for equity. Here are the reasons why.

Apps Hardly Make Money on their Own

Apps are unable to make money on their own contrary to popular belief. This means; to generate sufficient income to a point of making a profit in order to stabilize the business, you will have to create an entire business throughout your app. In this case, no freelancer or even app development agency has the resources or time to pump in your product.

Both entrepreneurs and developers should avoid the misconception that immediately your app is live on App store you start making colossal amounts of money from downloads. In the real sense, you need to make preparations early in advance before you finally embark on the development process.

Some of the vital things you need to organize before the process include; your marketing strategy, finances, business plan, and your personal life. Remember, development is a life-transforming decision that requires an adequate business mindset and skills to augment it.

There are Lots of Risks Involved

Working for equity comes with numerous risks. If you are an entrepreneur, try to fit in the developer’s shoes. A fresh graduate approaches you in your office and pitches you their concept. Later, they give you a proposal requesting you to develop their new app for equity.

Studies suggest that a huge percentage of startups will fail which means that you may end up executing the development work free of charge. Considering this, would you proceed to accept the proposal? Here are some of the questions you will need to ask the appreneur before accepting the proposal.

  • Will you be entirely committed to your app startup business?
  • Do you possess sufficient skills to operate and grow your business for approximately 5 years?
  • Can you manage to build your startup from the ground up?
  • What’s your assurance that the app will generate money?
  • Will you manage to monetize your app successfully?
  • Is your idea a full-time venture or a side hustle?

It’s important to note that agencies or even freelancers will spend so much time your project for equity, so much so that they will miss exciting opportunities to work for startup projects that are willing to pump in colossal amounts of money in their project.

 Development is not a Get Rich Quick Fix

Many developers will hardly agree to equity sharing because a big percentage of appreneurs or even entrepreneurs who want them to work on their project want to get rich fast. Unfortunately, development is not a quick fix to getting rich. Owning a startup is a critical venture that needs lots of time, dedication, and commitment.

You will also need to have a set budget for the same. In the event you want to share equity, the partner you choose should show long term commitment. Developing your project is just but the initial step in securing your startup investment stake.

Finally

The process of hiring developers is a challenging one but it’s possible. As an entrepreneur, however, you may want to find other alternatives to avoid stalling your project such as; identifying a committed co-founder with whom you share the same vision, getting funding from angel investors, or wealthy people who can fund your startup business in exchange for equity, or even self-financing. The good thing about angel investors is; you don’t need lots of time or effort to establish the appropriate fit for your business. All you need is to plan ahead and research extensively. Remember to have your business plan, elevator pitch, and pitch deck ready, prior to approaching investors.