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Forum - Work for Equity - Wrong or Right?
Work for Equity - Wrong or Right?
Fri, 15/01/2010 - 14:18 — codepotato
Recently i have been working with a firm where their whole business runs of a website i have been building. I've been privy to the business plan for that company, and without a decent website, the business can't make money.
Now so far, i've racked up a fair few hours with this firm, and haven't invoiced as i know the client through my current employer (the client is my employer's friend), and we agreed i would invoice at the end of the work.
Now, i don't know if this is necessarily the best news, but as payment i have been offered part cash, part equity in his firm. I've thought long and hard about this, and i think the potential is there to win in this situation, but i would welcome other people's thoughts here.
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If the concept has money making potential, and (very importantly) you believe in and trust the management team, then I would definately consider it. However, make sure that you (1) have a shareholder agreement (2) consider the company valuation that forms the basis for the number of shares you will get (3) take tax advice - I have never been sure about what the taxman thinks about payments in shares.
Tim
How did this turn out did you take equity? I have personally been offered this method time after time and always say no. As i have found it generally does not work out.
Saying that I have lately took equity in a clients business but still not in return for work done on their site or anything like that. So would be interested in hearing how you went about this?
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