I know typically when someone wants to use a professional to develop a project for them the 2 parties sit down and figure out all the requirements, and then the web developer provides a price quote.

What I was wondering is if the following alternate way of compensating a web developer for his work is ever used. What if instead of a set price the web developer is offered equity in the company if this project is for a start-up. That takes calculated faith on the part of the developer if he thinks the company can succeed. This way he developer stands to make a lot more money in the long run, so how often, if ever, is such an arrangement done between a developer and the person that wants their idea brought to life?

I've done it a few times and has worked out well.

Ive always sold my stake in the company back however.
So offering them a 49% share of your company is good. If you make cash, they make cash.

It helps make a working application.

As long as all party's understand that the product, code etc is owned by the "company"
So yeah, sell / give away 49% of the company in exchange for goods or services.

Wow, ok that is great to hear. I was afraid the answer to my inquiry would be something like "if you don't have money up front you have no options".

So is 49% a random number you threw out or is that typical? It kind of seems like a lot.

I need a pretty basic PHP app developed for my startup and to give nearly half of the company away seems like a bit much.

Also, how do I go about finding potential developers who would be willing to consider such an arrangement? How did the companies you did such work for find you?

It really was a random number ( I wouldnt offer more than 49% )

I suppose its completely up to you how much to offer.
It doesnt need to be a percentage.. Lets say an account cost £10 per month, You could say. You program it and ill give you £x per month per account.

So, come up with a value that you both can agree on. Yeah 49% is a massive stake. But i suppose it all depends on how much work goes in.

If he/she is the one who , programs , SEO's and markets the lots they yeah, hand over more.

He he/she is a mere programming monkey, offer less.

Up to you.


Ask around here on forums, There are places where you can get coders to "bid" for contracts however that would require money.

So you will be best asking around on forums or people who you know.

Or go on dragons den and ask for money for a programmer

or learn

I suppose a problem with offering " equity " rather than money is that your asking the programmer to take a risk. They need to spend time doing the work, if they were to spend that time making money elsewhere then it may be a big risk for a programmer.

However , Theres plenty out there that have free time and like to gamble, so you should be fine.

Ok great. Thanks a lot for your input lynxus.

Is there a particular section of this site where I could look for potential candidates?

http://www.webmaster-talk.com/marketplace/

And of course have a look through the programming forums and see who maybe capable and approach them.

Thanks!

No doubt, you are thinking in favour of "Programmers" but still they are working for money if they want to earn from shares then why don't they go through stock market and buy shares of fast growing company?
If they have enough money, they don't have to work hard to earn money.
Isn't it?

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Hi Frank,

We can help you out with that. We have experienced programmer who is available for deployment. Please check your PM for more information.

Im betting you are not making any money yet and you are relying on your idea which will be developed.

I have heard a lot of these deals but have turned them down every time. I need cash for the work I do so it wouldn't suit me but you never know. If you were already earning cash so the company was buoyant then that may be looked at differently.

If you discussed your idea with a developer what would stop him stealing your idea and coding it up?

sidenote to php coders:
when you hear "i don't have money to pay you, but i can offer you a share from future profits", - you say "goodbye", and not waste your time.

I don't have money to pay you, but i can offer you a share from future profits.

That about sums it up. Every developer gets enough propositions of this kind in their career that it gets irritating. I find one in 50 propositions like this are worth reading to the end let alone actually considering worth doing. You'll have more luck contacting student developers or start-ups; they're more desperate to have projects in their portfolio.

Most of the web developers are offered propositions of this time. I too get. However, there is nothing harmful. Read it and learn from it.

Haha...I am kinda in the same boat. Have a great idea for a web app, great potential, bla bla, but no funds to finance the project. Approached a local web dev company and offered a stake in the project, but they said no, even though they hadn't heard my project pitch.

While I really wouldn't wanna give too large a % of company/project stake away, an upside is that having a tech person/people on board, who have a stake in the company means there will be 2 heads involved in developing the business, instead of one.

Go pitch on Dragons Den

but they said no, even though they hadn't heard my project pitch.

That's probably because they have heard it all before.

Originally Posted by Frank Drebin

I need a pretty basic PHP app developed for my startup

If a stranger asked me to do this for equity (and bear in mind that 49% of buttons is buttons) I wouldn't. I would consider a more complex development if I knew and trusted the other(s) involved.

If you only need a basic app then there are plenty of programmers who undersell themselves - I suspect you want or need rather more?