I often get questions from startup founders that are bootstrapping or have yet to receive funding in regards to how they can find other team members that will work for equity or if I will do work for equity. This request is usually a follow-up question after complaining about my hourly rate or complaining about how expensive it is to build their company, but that’s another story for another time.
I’m not entirely insensitive to startups needs and hardships. I totally get the need to build an awesome team. And I definitely know how expensive it can be to build and launch a startup. But, if you’ll please excuse me, if I don’t jump on every request to work for equity. Shoot! If I did, I wouldn’t be able to pay for the electricity to keep this computer on to work your equity project.
What I’m saying is that I think there are some things that some newbie entrepreneurs need to understand up front before embarking on a journey for founders that will work for equity.
Technical Founders vs. Non-technical Founders
First, are you searching for a technical founder or non-technical founder? Finding a non-technical founder is immensely much easier than finding a technical founder. This predicament usually, has to do simply with the makeup of the workforce and demand for technical talent. The simple fact is that there are a lot more strategist, business developers and marketing talent out there then good then a good iOS developer for example.
Next let’s think about the risk vs. reward you’re asking any individual to take on.
Let’s just say you want to build the next Facebook. You’ll need a team of roughly three people to build the product. Obviously, this can be slightly different depending on the complexity of the project.
- 1 Designer
- 1 Frontend Developer
- 1 Backend Developer
- 1 iOS developer
You’ll find that landing talent for each one of these roles that will work for straight equity will be directly correlated to the amount of effort and time needed. A designer may need to put 120 – 160 hours to help launch a product. Whereas a developer may be 3 – 6 times that of the designer.
Those talent resources, have to weigh working for you for free or being paid by a paying customer. Is the risk of working for you for free now with the opportunity for a bigger pay off in the future worth not being paid now? How good is your idea? Is this something they could only do if they work with you and your team?
It’s important to state these are not theoretical numbers. Let’s say a developer would need three months of full-time work to build an MVP for your idea. If we assume an average hourly rate of $60 per hour at 480 hours – that’s an investment of $28,800 you’re asking an equity founder to invest in your company.
Thinking of it in real dollar terms makes it all sound a little more real and I think helps founders understand why it’s so hard to find equity founders.
Everyone’s got an idea
I think what a lot of new founders don’t realize is that other people have ideas too. A lot of the developers I know have their passion projects they are working on or want to work on so working for you for equity will take away from their passion projects. This kind of relates to opportunity costs as well. There is an opportunity cost for a team member to take on your project vs. their own.
Your idea has to be better than theirs, and a provide a greater chance of successful execution if they work with you.
The Best Places to Find Equity Founders
Now that we’ve laid out the hurdles to finding a co-founder you can see why it’s not easy to find a good co-founder to work for equity. But, if you think you have a winning idea, and bring something to the table that is invaluable then here are some resources you can use to start networking and finding other team members with whom you will work.
Friends – This seems obvious, but the best place to start is the people you already know. Maybe you don’t know a developer or designer, but a friend does. Send some emails to trusted contacts, make some phone calls, and post to your Facebook and Twitter followers about your opportunity.
Meetups – Almost every major city has meetups for developers, designers and entrepreneurs. Do some research and join some of the most popular meetups in your area.
CofounderLabs – The CofounderLabs website helps connect people look to work for equity. There are a lot more non-technical resources on there than technical but it’s worth a gander.
Hacker News – This is a super popular forum/job board for developers and hackers. Go ahead and post your opportunity here. Heck, its worth a try right?
Incubators – Like Meetups, Incubators are a great place for networking. Many of the best ones in your city will probably have scheduled events and meetups for their community. It’s worth participating in those communities in your area. If you don’t need them now, you’ll most likely need them as you grow and scale as a resource for creativity and innovation in your area.
Bringing it All Together
All this means, is you have to be realistic about what you’re asking from people. There are real costs for people working for free. It means giving up actual money for some future promise that may or may not ever happen. That’s why you need to have a great idea and find people that share that vision. Most importantly you have to bring something to the table that is invaluable, that will inspire others to jump on board. Whether that’s your expertise, connections, or resources to do something no one else has been able to achieve yet.
Also, you have to be realistic that maybe you have a good idea, but it’s not right to execute with founders working solely for equity. Are there other avenues that may work better such as loans, or angel investors that may be a better avenue to get your project off the ground.