This is basically when a tech-person is working with founders at an early stage and not investing in any monetary terms. And in some cases, at the same time may be working in multiple startups in different business problems. [Not as side projects]
Should it be cash-based, or pro bono mode or should some small amount at least?
Hi Saugata, this is very subjective. It really depends on what you and the other co-founders bring to the table; if you bring what could be considered equal value then a 50/50 split maybe more appropriate, however in my experience somewhere between 20-40% is considered reasonable.
Don't undervalue yourself, I've experienced a founder offering a pitiful 5% when I would have been responsible for developing the whole business (was a tech business), whereas he would have provided the initial capital and sales. In that scenario the risk would have been mine, as he wouldn't have needed to invest capital until the MVP was launched.
I keep it it simple and charge an equal stake.
That's assuming simple parameters:
The idea doesn't matter much.
But if the above two elements are in place then an equal split makes sense as long as everyone can execute (vesting schedule)
That's with multiple ventures for me or you. I don't care.
I don't care about how many hours you put in per week. I only care about how many paid subscription you bring in per month.
Likewise, If I am building, enhancing, scaling and maintaining a stable product and infrastructure, in a reasonable timeframe, then the number of hours I work during that time is meaningless.
Without detail, it's difficult to answer this fairly (for you or the company).
Each of those will have a different answer except it should not be pro bono if it is a for profit company.
I've had the exact same problem for the past 7 years or so.
It always depends on the case. Who has what capability to give the startup the best possible chance of success.
If it is a complicated product, the equity should be high.
If it is a commodity product that could be customized from some existing off-the-shelf solution, paying in equity is a bad idea from the founders' side.
Cash-based deals are the cleanest ones and produce the least amount of hassle later on if the business is successful.
And nobody should give out equity for one time contributions. It means the founders now work for you for their entire career as long as that business runs.