

Employee compensation in a startup without funding - l3mming

I'm working on the software side of a startup that I feel has a lot of potential, but I'm conflicted because those in charge have asked me to sign an NDA that gives away the rights to anything I produce for the company. Normally I'd sign it without much hesitation, but the startup is in an early stage with no funding, and management will not agree to set any terms for current or future compensation (i.e. I am trusting that they will fairly compensate myself and others who are working with me). I think this company is headed in the right direction, so what are my options for making sure that if the startup succeeds I'll actually see a return on my time investment, and making sure the founders can't just use my contributions for their personal gain?
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cperciva
You an employment contract which gives you stock, and a shareholder agreement,
right? There's your guarantee that you see some benefit from the work you do
for the company.

If not, what are you doing there?

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l3mming
Unfortunately, no, I don't have one. The founders are holding off on cash and
equity compensation until after funding has come in. They seem like honest
guys, but of course only they know for sure.

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nandemo
Looks like you're being too nice. Why does giving equity depend on having
funding? And why should you sign a formal NDA while your compensation depends
on a mere verbal promise?

You should probably insist -- diplomatically -- on a contract specifying
deferred salaries and equity. Say, something that does not screw the company
in case it doesn't get any revenues.

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davidechen
This is a tricky one. Have you thoroughly discussed your concerns with the
management? Sometimes there is rational reasoning behind things that seem
unfair. I believe that being able to communicate about things like this openly
and establishing trust can be quite important in determining your success in
resolving this concern.

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johnny55
In my first company, I didn't give equity agreements to my employees... IMO,
it's one of the stupidest things I have ever done because we lost the trust
with the employees and ended up losing productivity. If the founders are
educated, they will protect the best interest of the company using vesting
clauses and legal firms. My guess is that the people are either inexperienced
at running a company or they have something up their sleeves for having you
sign an NDA without a vesting agreement.

