I am being invited to join an early stage startup. Actually, it's in pre-startup mode right now. They have an idea, they have a well connected angel/seed investor, they have the content and a designer. What they don't have is an engineer or a tech lead. That's where I would come in. How much equity should I ask for?
It all depends on how much salary you draw.<p>W = opportunity cost value of other people's labor (i.e. if their time is worth $20/hour and they will have to put in 1,000 hours to earn their share(s), W = $20,000)<p>X = value of the idea with nobody to implement it (converges to 0).<p>Y = value of the investor's cash investment<p>Z = opportunity cost value of your labor (i.e. if your time is worth $50/hour and you will have to put in 1,000 hours to earn your share at future time t, Z = $50,000)<p>Your fair equity is ( Z - salary ) / ( W + X + Y + Z ).<p>Many nontech people get pretty upset when you come up with this formula and turn the crank- they think their time is worth more, their idea is worth more, and your time is worth less. (Or they didn't think, they guessed or willed it to be different).<p>Please try the formula approach and let us know how coming at it with a formula (where you fill in the numbers together) did for your negotiations.
I'd love to hear some comments in response to this as well.<p>Based on what you described, it sounds like you're coming in at founder level, so you should be a co-founder and have equity on par with the other founders.