Chosen by Asker

I'd be very hesitant to accept work under those conditions: First, consider what your time is worth and how many hours you will be investing in this company. You may not be bringing cash, but your contribution in the form of the software is probably worth more to the company than the $100K invested by the founders, for a tiny fraction of the ownership they enjoy. In exchange for your valuable contribution, you are given the chance to "buy into" the company down the road. (BTW, what is the exercise price on the options?) Second, even if you believe the deal is fair, you also have to reckon with the possibility that the company may not be worth anything in the future. Would you retain rights to the software in that case? Could you afford to invest several years of your life in this venture if you never got any cash compensation? Third, the founders are no doubt looking for funding. If they do find an investor, don't be surprised if the new money insists on changing the terms of the option pool, and probably not in a way that will benefit you. Do you have a written agreement that ensures you won't get cut out or crammed down by subsequent financings. Fourth, you'll be holding an illiquid asset that may be very difficult or impossible to sell on attractive terms. Of course, everyone is counting on a major liquidity event and riding off into the sunset, but what if the company just limps along and can't find any buyers? No doubt, the executives will milk as much as they can and tell the rest of the shareholders that they are unable to pay a dividend. Still interested?

by gimmesome

3 months ago

Asker's Rating: