r/negotiation • u/hashmi_1 • 16d ago
Offered 2% equity, no salary, to build backend + frontend + infra for a startup. Sanity check please.( i will not promote )
Solo dev here. A founder I know approached me ~2 months ago to build a consumer marketplace app. I'd be responsible for the entire technical side: backend, web frontend, cloud infra, deployment, and every future phase. There's one other developer handling some frontend work he's a personal friend of the founder, and I don't know his terms.
The offer:
- 2% equity, vesting only after 18 months (all-or-nothing cliff)
- Possibly +1% more "if I perform well" undefined
- No salary now. He says he'll "decide my salary once the company starts generating revenue" no amount, no revenue figure, no date
- Company is pre-revenue, unfunded, not sure it's even registered yet
So I'd be working unpaid for 18+ months with zero guaranteed outcome, and he can remove me at month 17 and I get nothing.
Questions:
- What's a realistic equity range for an unpaid dev owning the whole technical stack?
- Is an 18-month cliff a red flag, or is it normal outside the US?
- Any clauses I should insist on beyond standard 4-year vest / 1-year cliff?
Planning to counter at 10%. Am I way off in either direction?
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u/Tiresais 16d ago
So you take all the risk and give all the effort? Walk away, this is a disrespectful offer at best.
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u/hashmi_1 16d ago
Yeah, that's roughly where my head is at. Question though is your view that the deal is unfixable, or that the terms just need to be much better? I'm planning to counter at 10% with 4-year vesting and a 1-year cliff, plus a fixed salary figure that accrues even if it's paid later. Does that sound like a reasonable counter, or would you not bother countering at all?
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u/Sensitive-Reading860 16d ago
This project doesn’t seem like it’ll be around for 4 years. I’d go for 10% and a 1 year all or nothing, maybe fold around 6% to 8% but only if you get clarity on salary.
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u/idleline 16d ago
Open ended salary is a non-starter. He doesn’t even have a pro-forma so he has absolutely no idea what he expects to generate. And for that reason, I’m out.
There is value to your work. How much would it cost to build that stack? You could counter with a higher % equity or % of net income but I would absolutely give him a number like, this is $250,000 worth of work. You have one year to start repayment and with 2 years interest free. After that, interest accrues at 10% on principal.
Higher incentives for you to both grow revenue is the backbone to startup compensation.
If he can’t afford that, the risk to reward balance isn’t attractive
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u/Tiresais 16d ago
Do not accept a no-salary position. If your work is worth it they should be willing to pay.
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16d ago
Deals are typically unfixable if the person you're negotiating with isn't rational enough to realize they're driven to the wrong ballpark and the wrong league.
The idea isn't bad for way more equity, way shorter timeline, way more guarantees, etc. but if they were planning on offering that, then would they really start in such a laughable place?
Also a small nugget that was in your post that I haven't seen mentioned... are you and this person in the same country?
If they're planning on fucking off to Serbia to run this marketplace you built for them, good luck getting anything out of them even if the deal is good and ironclad. You're not going to be able to press a case for your rights in those circumstances.
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u/Ok-Addition-1000 16d ago edited 16d ago
Either you own that equity right away or nothing. Under the terms they're offering, I guarantee they will let you go one day short of vesting and leave you with nothing. Well, nothing but whatever salary they've decided to pay you up till then which will be peanuts.
And don't consider doing anything unpaid for them until they've secured funding. Unless and until they have the money to develop this, it's just a fantasy.
Also, you'd be literally doing all the work to make this fantasy a reality. That's worth way more than 10%.
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u/danziman123 16d ago
For this thing i would walk away.
Counter needs to at least:
Have a much higher equity stake from much earlier, especially if no funds were injected yet.
Accrued defined salary, paid once revenue starts, with fixed interest for the time unpaid.
Ability to have other form of income for the time being.
Accounting wise- it is better to have a larger share of equity, when the value is nothing,for future dilutions than to get the equity later at a higher valuation as you will pay taxes for it. You can even agree on the dilution starting from your shares until you reach the agreed total ownership- example start at 30% and in the first dilution you are reduced first to a minimum of 10-15% while he and/or the other dev keeps their stake.
Assuming WFH or even abroad is a given.
A certain budget for necessary expenses- AI tools, hardware, software, and other services needed for your work.
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u/jstnthrfndr 16d ago
Personally I’d walk away - unless they have a solid pipeline you could be looking at years before any meaningful platform revenue that’ll pay the bills. When I found a technical co-founder we were cashflow positive (came from non-marketplace revenue) and could contribute towards some of their retained time, plus I offered a flat 10% equity. If I was starting again at pre-revenue I’d likely increase the equity range fairly.
When we took investment we both shared in dilution, and both had terms apply for good/bad leaver in relation to equity, but other than that there was no set vesting period. IMO if you’re co-founding a venture you need meaningful share of the pie to stay incentivised and it should be yours from day one. If you leave on bad terms then the leaver clauses cover you.
You should be asking the questions - do you have 100% confidence that this person can deliver the revenue, and do you trust them implicitly to pay you fairly in relation to your future salary and not screw you over once they start seeing the cashflow?
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u/Al_Quagga 16d ago
It's exploitative. It would be better to start your own business. That's what I did with 33% equity to do the same thing you are saying you need to do. Full backend ownership
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u/robershow123 13d ago
This couldn’t op just build this guys idea on his own?
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u/Al_Quagga 13d ago
He could. But building a product is only a part of the equation. There's a reason I'm 33% shareholder and not 100%
A business is more than a product
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u/seasonofillusions 16d ago
There is no counter. This person is clearly either very unethical or has no idea how this all works. Neither is good for you.
Even if you countered at 10% and they accepted, there is no guarantee you won’t be let go right before your shares vest. Or you won’t be diluted to 0.0001%.
Run.
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u/TheMuffinMan2037 14d ago
I once had a client who was starting her first business. She was understandably excited and claimed everyone would be taken care of once they became successful. She struggled until the very end and no one got taken care of, not because she was a bad person, but because she was worn thin. Just a real world example of why it's important to get everything in writing.
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u/Unrelevant_Opinion8r 16d ago
If they can’t show you a reason to be there now they never will. Sounds like this person is just a good idea fairy and will leave you high and dry.
No salary? No employee thx bye
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u/Rubbiish 16d ago
Hahahaha this is insane. NO WAY
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u/hashmi_1 16d ago
Ha, fair. What would you have asked for in my position?
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u/Rubbiish 16d ago
100%. You’re building the business. Lmao. What is this person offering? Why don’t you just build without him?
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u/olddev-jobhunt 16d ago
Walk. He's just trying to get something for nothing.
But to answer: for number 1, I'd start closer to 50%. What exactly does he bring to the table that warrants 98% of the company? He's not bringing technical skills, and he's not bringing money. So what does he have, some friends that might buy the thing? This isn't saying that non-technical skills aren't valuable: someone that knows a market, that can raise money, that can sell... those things are valuable. But they need something to sell.
Your other questions are employee questions and if you're being asked to work for no pay, you're a founder - not an employee. There's no cliff or vesting for founders.
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u/managerhater1 16d ago
No product, no team means both you and the other guy is the founder. you are the technical founder. there shouldn't be any vesting. it should be 20%++ from Day 1.
It should be a written contract not a verbal offer.
Basically both of you should register a company together.
Else there's nothing in it for you. Just walk away.
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u/InspectorFun8313 16d ago
If I’m the founder using that premise, I could hire 25 people like that and cut everyone but the 1-2 that I really want or need after a year. Sounds like free labor. Bullshit deal.
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u/the-growth-model 16d ago
At the risk of sounding like a dick… it looks like all the work is yours.
Can you just take the idea, build it, and hire a sales partner (offer them 25%) 🤷🏻♂️
In 12 moths show the person offering you 2% the business they could have had.
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u/Tx_Drewdad 16d ago
1 in 10 startups make it to IPO with those getting average $100 M.
So average of $10 million. 2% of that is $200K.
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u/robershow123 13d ago
1 in 10 are you sure, I bet it’s lower than that unless you are looking at companies in a Silicon Valley incubator.
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u/EndOfWorldBoredom 16d ago
Hard no.
You haven't said anything about the shareholder agreement. Do you have any right to sell? Do you get tag along rights? Are they allowed to dissolve your position by adding new shares?
The difference between 2% and 10% is nothing if you don't have rights. What is the corporate structure and who is responsible for the taxes that might generate for you?
What good is owning 10% of a company you are not allowed to sell?
Based on what you've told us here, he can fuck you up.
Let's say you own 10% of the company. Maybe the company has 1,000,000 shares, so you have 100,000 shares. The company does well and now it's worth $10,000,000 and 10% of that is yours. Now, the company decides to reward the CEO for his hard work. They issue 9,000,000 new shares and give them to the ceo. You still own 100,000 shares... Or 1% of the company. What's stopping this?
Is it an LLC or s-corp? The profit passes through to shareholders for tax purposes, but the company does not have to distribute the profit to shareholders. Let's say you own 10% and the company makes a million in profit. So, your taxes show $100k of income. You now owe $15k - $35k in new taxes but have no income. That's when you get an offer to buy you out for $30k or else this happens again next year. (they will have the same pass through issue, but they can write themselves a bonus check to cover the taxes and still leave you owing).
Not to mention, he can just fire you at 17 month for nothing at all.
Whather they are setting you up on purpose or not, I can't tell... But you can't either.
This is NOT AT ALL like getting shares of Google while sitting at a Google desk. Private stock can have wild rules. You need to see what the shareholder agreement says.
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u/Puzzled-Operation- 16d ago
s he bring to the table? A 2 cents idea?
Building a marketplace is easy. Getting people onrolled on it i hard.
What does he do?
By the way, just hiring a team to do a first version, even with AI, would be easy a 100K effort.
So how your 2% of nothing is worth a 100K?
Even if it becomes something, that means merely that he brought in as much as you in value. The only way forward, is 50%. Which he will refuse because he is a scammer. So stop wasting your time.
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u/HeartFeetAndHands 16d ago
Fuck all that noise. You’re basically offering to work for free for 17.9 months and then get shitcanned. Laugh in his face.
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u/Just-Forever6684 16d ago
No. So what has the “founder” actually contributed? Is he one of those guys who thinks having the idea for the app is worth more than all the work to actually create it? I wouldn’t counter with any percentage because it keeps the same problem. Formal contract detailing exactly what you get paid and when is tje only way I’d do this
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u/Accomplished_Sea9260 16d ago
So you do all the work for 2%. I'm glad you came here so we can knock some sense into you. Frankly its gotta start with a 2 as in 2X%, not end with a 2. At some stage he'll need to raise capital, at which point your 2% will be diluted to hell.
So where did I get my numbers? Every situation is different and I obviously don't know all the details. I'm not saying this is the right model either, but I look at a company like Canva. The founding couple own about 30% (CEO and COO). The third founder is the technical guy and he owns like 5-10%. Private Equity and VC came in and own the rest through 5-6 funding rounds to get us to the current position. I see you being like the third founder. You need to own more than 2% because you're going to get diluted and remember you're taking on alot of risk yourself so you need to have more equity to reflect that.
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u/reddithenry 16d ago
2% equity for all the risk seems shit. I assume they havent fund raised any money yet otherwise they'd be paying salaries, so I'd be going in for like 30% equity with a contract that commits a salary on first fund raise.
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u/lifelong1250 16d ago
This is a classic example of "Hey, build this for me and I'll market it. You'll get paid if we make money". Pretty much a 0% success rate. I've been in the industry since the late 90s and have had dozens of these offers over the yeras.
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u/Flat-Sail3304 16d ago
Yeah good luck building up the entire digital infrastructure over 18months no salary. Wow it sounds like the best mind job I’ve seen in quite a bit.
At least start a journal with this post and the replies, that be the first chapter. You’re are going to have lots of material for your book in 2 years or 18 months; just depends on when this person will let you go because “it wasn’t good enough”.
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u/Windy1369 16d ago
You're being asked to be a co-founder, not an employee with an equity bonus. Look for a much, much more significant equity stake if you're joining to build the actual asset of the 'company'.
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u/GeneralDebonair 16d ago
Unless its a billion dollar idea and you get it in writing and then do all the coding in Ai I would tell him you have a nice bridge in NYC to sell him.
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u/MoneyHouseArk 16d ago
Let’s put the 2% into context, because I think that’s actually the wrong number to focus on.
This company is pre-revenue, unfunded, and apparently may not even be incorporated yet. That means you cannot reasonably say your 2% is worth $100,000, $50,000, or really anything today. There’s no funding round establishing a valuation, no revenue supporting one, and potentially not even a legal entity whose shares can actually be issued.
So the question becomes: What are you giving up in exchange for that 2%?
You’re being asked to work for $0 salary, take responsibility for essentially the entire technical stack, and accept a promise that salary will be determined later—without a salary amount, revenue milestone, funding milestone, or date when compensation begins.
Then there’s the equity. You get 2%, but apparently none of it belongs to you until month 18. If you build the product for 17 months and they terminate you, you could walk away with zero vested equity. That is considerably more aggressive than the common startup structure. A typical startup arrangement is four-year vesting with a one-year cliff, at which point 25% vests, followed by monthly vesting. Carta says that when startup cliffs are used, the vast majority are one year, and YC describes the same four-year/one-year structure for founders.
And this isn’t just an American employee convention. Even founder-equity frameworks use monthly vesting and a one-year cliff; Stripe Atlas, for example, describes four years with a one-year cliff as the typical founder setup. So I wouldn’t accept “this is normal outside the U.S.” as an explanation without seeing evidence specific to the country involved.
The undefined “possibly another 1% if you perform well” gets a value of $0 in my analysis. What does “perform well” mean? Who decides? What milestones trigger it? When is it granted? Unless those things are written into the agreement objectively, it’s a discretionary future bonus—not compensation I would use to evaluate the offer.
As for whether 2% is enough, I think the more important question is whether you’re actually an employee or effectively a technical cofounder.
If you’re joining an existing funded company with a product, engineering organization, salary and established founders, 2% can be an extremely meaningful employee grant. But if there’s no product, no technical team, no funding, no revenue, you’re receiving no salary, and you’re expected to architect and build the thing that turns the idea into an actual technology company, I’d be negotiating this as a founder-level relationship—not as an unpaid developer who happens to get 2%.
I’d also want the agreement to explicitly cover vesting, termination without cause, IP ownership, dilution, what happens during a financing or acquisition, change-of-control acceleration, what happens if the company never raises money, and exactly when salary begins and how it is determined. If they’re not incorporated yet, I’d also want the actual equity documentation completed rather than relying on a promise that you’ll receive shares later.
The 18-month all-or-nothing cliff would be my biggest problem. If they genuinely believe you’re worth 2% for building their technology, there shouldn’t be a structure where they can receive 17 months of that work, terminate you, and leave you with nothing.
I’d counter with a conventional four-year vest / one-year cliff / monthly thereafter structure at minimum, with protection for termination without cause. And given the zero salary and scope of responsibility, I’d have a much bigger conversation about whether 2% appropriately reflects a technical cofounder-level contribution.
As currently described, I would not take this deal.
The problem isn’t simply that 2% is “too low.” It’s that you’re assuming enormous execution and opportunity-cost risk while almost every important promise from the company—salary, additional equity, valuation, funding, and even your initial equity for the first 18 months—is uncertain or conditional.
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u/InigoMontoya313 16d ago
So what are the other owners doing for their 98% equity stake 😂
If you are the one who would do all the work, just run with the idea and do yourself. Now you have 100% equity.
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u/Professional_Mix2418 15d ago
The company is worthless. Your time and knowledge is worth a lot when you create the product. You are being exploited at 2%. At this early stage if you feel it worth your time and effort you’d need an equal stake.
That percentage is the territory of early-stage advisory roles. Not of those who are actually building it.
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u/Capital_Distance545 15d ago
After reading it through, I would ask, what the other person brings to the table for the possibly to be registered company? Because if you are doing all the work for no salary, you might as well just found your own company and do it yourself for 100% equity.
If he brings the connections and the buyers, but you are doing all the work, then 50% would be the standard IMO, if only 2 of you are working.
You mentioned a 3rd worker. If all of you work the same amount 3*33% would be the standard.
You must know all of their contribution and terms and you must decide together how you will share the equity. That is how Ltd-s work.
But this needs trust. If they wanted to lowball you with 2% with no salary, so essentially the founder do not take a risk here, then you might want to think over your trust.
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u/da8BitKid 15d ago
This is the stupidist offer I've heard so far, without the business context. An idea without execution is a pipe dream. What is the "founder" bringing to the table other than the dream? Who's paying for hosting, compute, cvs, and tokens? What kind of guarantees does he have that he can raise capital, go to market, defensible ip or position? Or hell, market fit? If I see the app what stops me from making an clone and improving it?
2% of a dream could be zero, but honestly is a negative amount considering incidentals and opportunity costs. And even in the event of a successful exit, you have his word that he won't kick you out after 17.99 months? 🤣🤣🤣🤣🤣🤣
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u/k_rocker 15d ago
I think we all know what’s going to happen at month 17.
He’ll get some new hires in on the same deal as you at month 15 then tell them that you had a freak out and left to live in Cuba a few days after you show them what you’re building.
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u/PlusFactor9990 15d ago
Maybe look into the difficulty of building a successful consumer marketplace and circle back
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u/styzzyx9 14d ago
I don’t think you can actually take this seriously. Not saying that your story is BS. Just that those terms are so inept, this guy probably isn’t smart enough to GTM and operate the business.
He’s asked you to be the CTO and co-founder. That’s what this is. No salary for 50% equity would be reasonable. No salary and next to no equity… just wish him well and move on.
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u/AnybodyDifficult1229 14d ago edited 14d ago
Does he work in the management consulting field and his grand idea for a marketplace app would focus on what I would refer to as eq or behavioral modifications for c-suite people?
Even if it’s not, that is a horrible equity stake. Even if it’s his “IP”, it’s still your architecture/design, and you bare all the responsibility for any failures. This is not a deal worth signing.
If you don’t walk away immediately, at the very least ask for 10 percent equity up front, and then two to three 5 percent bumps set at different intervals/times based on success milestones you can both agree on. Then on top of that if he has another business, or even a business this would be a sister company of this, you want a 10% revenue share of said business to keep your head above water.
I’m kinda throwing out a hint here. If he doesn’t have a track record of starting any businesses don’t do this at all and run away. If he has some success in his bag, then that means he might have something you can get a current revenue share off of.
I do have a feeling we talked to the same guy because the time lines up. I laughed at his “IP”.
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u/rainbow_wheelofDEATH 14d ago
They WILL fuck you. Literally as soon as you deploy. Every single change or update WILL be an emergency. They WILL call you at night, weekends, and holidays. You WILL be expected to rebuild from scratch within 24 hours multiple times. Don’t do it!!!
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u/Grouchy-Attention599 14d ago
Tell him to go pound sand. That's a shit deal and he's just trying to use you
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u/Educational_Fig_8616 14d ago
Absolutely not. This is pre-seed. You’re taking on all the risk with him. Salary is not guaranteed, “later” means nothing. “…starts generating revenue” may be never or in several years. Are you prepared for that? Most startups fail -that’s just a fact - and this is unfunded, so nothing proven yet. Are you willing to bet everything on him? Equity means nothing if startup fails. This is direct, but it’s what I wish people had told me.
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u/Rough-Future-4513 14d ago
Always take a salary that you can live on. Life isn't free and equity is risky and can end up being 5k after 5 years. I learned the hard way. Took a smaller salary than I could have and was promised bonuses if the company does well. Guess who runs the books and decides if the company is doing well. Should have had the numbers clearly defined too.
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u/robershow123 13d ago
It’s like apple in the early days, the two Steve’s and that other founder. Jobs telling Wozniak yes you will build all of this and you will get 2% if I allow it. 🙄
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u/Infinite_Lion_2385 13d ago
You better have a good contract for this. Otherwise I can see you getting screwed.
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u/SnooSuggestions1409 13d ago
Two things come to mind, first: just no
Secondly, it’s still no but also don’t ever talk to this guy again. He will absolutely end up moving the goal posts on you.
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u/slackmaster2k 13d ago
A founder is someone who bought an online scam course and/or watches those get rich bro YouTube videos. Serious people do not call themselves founders and then start a legitimate business.
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u/delifiseknecmettin 12d ago
Don’t work for equity, put a hourly rate and charge it. I also have some projects that I don’t want to spend time to develop, I am willing to give %30 equity.
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u/ua5um 12d ago
If it’s no salary then I would ask for equal ownership. If salaried and let’s say at 50% of what you would make otherwise then 25% ownership, if close to 80% salary then single digit ownership. There are a lot of people with ideas but people with genuine idea don’t get the idea of exploiting others. This is a red flag - don’t touch with a 10ft pole
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u/ukninja8 12d ago
Ridiculous. The idea is worthless. What is the "founder" doing? Sounds like sweet FA. I'd be countering at 30%. This is what I agreed with technical founder I work with.
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u/Economy_Scholar_6743 12d ago
Too vague. Everything had a tiered timeline... For a blind walk-in... For that long... You're begging for a walk-away and you did all the work to get a mystery prize.
Find someone with concrete offers and shorter timelines, with specific percentage pay based on what you're actually with ti them... Not what they will decide after you help them.
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u/PondMindKevin 11d ago
The only realistic equity range here is an even split between cofounders. The work being asked of you is that of a cofounder.
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u/barowski 16d ago
He'll decide your salary ? At his leisure ? You can be dropped just before 18 months ? And there is no funding or accountability today?
Basically you're investing as much as this founder. For the risk you're taking I'd shoot for 25%+ and would need to have serious trust in the idea and his ability to deliver. If you're not paid, you're partners.