
Ask HN: Giving away 2% equity during bootstrapping for free housing? - susi22
I&#x27;m in the process of bootstrapping a startup with no funding (I&#x27;m at the very beginning). My friend has a rather large community house where he has offered me to stay for free for 2% equity (or something like that) per year but I could negotiate the deal. I&#x27;m very good friends with him.<p>Living there is cheap. Rent would be around 230 Euros per month (incl. utilities).<p>Is that something that I could consider? Why shouldn&#x27;t I? Will it scare away future investors?
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mchannon
This term means that your pre-seed-stage startup has a valuation of 138 000€.
If the real number is lower than that, you should take the deal provided there
are no further strings attached (voting rights, etc.).

If the real number is higher than that, then you should just stay elsewhere.

Every investor is different but I would be more likely to invest in a startup
where the founder parted with some small amount of equity to conserve cash.

You can structure the deal as a cash investment where you then turn around and
pay the cash as rent; later investors don't even need to know the reason for
the investment. It sounds like a great way to build momentum (having an
investor vs. no investors as yet).

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codeonfire
The thing about giving equity is how do you walk away? Suppose in a year you
want to quit that project, move, and work on something else. Is your friend
going to try to claim part of your new company? Second, living with and
starting a company with someone who is a friend is a good way to lose that
friendship. If you just have no other option or cash then maybe it is a good
deal for you, but at least try to negotiate and impose conditions like vesting
or buyout clauses that meet your needs.

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brudgers
If you're trading equity to an outside entity in exchange for cash or it's
equivalent, then it's not really bootstrapping. Or to put it another way,
wouldn't cash to spend on the startup for more than just housing be better?

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7Figures2Commas
> My friend has a rather large community house where he has offered me to stay
> for free for 2% equity (or something like that) per year...

Your "friend" isn't offering you anything "free."

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IpV8
Your friend isn't "offering" you "anything" free.

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rajacombinator
2% for about 2.7k is a pretty bad price. If you believe what you're doing has
potential to become valuable, you should definitely not take that deal. If you
don't, then why are you doing it?

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sharemywin
maybe you also leave a way to buy the equity out for some amount of money for
like 10k euro or something.

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borplk
Sounds like a bad idea to be honest.

