

Should I offer equity to a potential business partner?  - rcmorin

A single, non-technical founder comes up with a startup idea and recruits an offshore development team to build version 1. The product is popular and 10,000 users sign up and feedback is promising. The founder has some new ideas to improve the product and a business model to earn revenue for the next version. At this point all expenses have been paid for by the founder.<p>The founder and dev team work together part-time over 3-4 months on a new version that includes new features and enhancements. The founder can no longer afford labor costs, so he decides to negotiate an equity deal with the development firm to create new features, and pay for the recent enhancements.<p>The offshore team is involved in other consulting projects and requires detailed functional/non-functional requirements, micromangement, and communication is infrequent and strained by time zone differences. The founder questions the firm's level of technical talent and their ability to scale/optimize in anticipation of rapid growth and an angel funding round.<p>The owner of the offshore team offers 2 dedicated, full time developers for a time period of 4-to-n months in exchange for ownership in the startup.<p>What would you do? How much stake should the original founder retain? Should the development team be treated as cofounders or investors? How much equity stake would you offer the offshore team? Would you re-recruit a new team of developers/founders onshore to rebuild the product?
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noodle
if i were in your shoes, i would probably look for a local cofounder and
continue to treat the offshort dev team as supplementary contractors if/when
necessary.

you've already encountered issues with standard set of issues with offshore
teams, and it will likely only get worse as more issues come up if you
actually do end up giving them some ownership, power, and legal control.

