TL;DR: I have a product worth ~20k€. The client startup propose we invest in his business for a cheap price. Is that a good deal?<p>Hello,<p>my friend and I worked during our spare time. We met the CEO of a startup who was interested to work with us and we made a deal with him: he offered us €4000 for the delivery of a product (setup of server + application development). We all knew (he and us) that the real value of our work was much behond this price but as he was our first (and only client at that time)... we sealed the deal.<p>After that step he told us he would be interested to work with us for the steps to come.<p>Here is his deal:<p>- He asks to pay today €3500 each to get 5% of the shares of his startup
- We give him
* the iPhone application we are currently developping
* the improvement of the product we developed during the first step
- He will pay us €3500 in return each for the products mentionned above (this is a way to show us that the €3500 we pay the shares will not be lost for us)<p>In 12 and 18 months timeframe, he will offer us some stock options (for free). In 18 month we should then have 7.5% of the shares each.<p>The problem I see is the that the work we provide him cost around 20k€ and not 3.5k€.<p>Knowing I have a relatively good confidence in the success of his startup. Do you think it is a good deal? If not what should I ask for?
I'm having some difficulty understanding your English, though it is probably better than my ability to speak your language.<p>It sounds like your client wants you to invest in his company and do freelancing work, and later he will pay you for your freelancing work, netting you some share in his company for your labor. Am I reading this right? If so, <i>everything</i> about this transaction seems abnormal to me. If I were you, I would run fast.