

Is $20K worth of development worth 1% of company? - jharper

A friend of mine, who is a mechanical engineer, has secured funding for his startup.<p>The investor is getting 5% of his company for $100K.<p>Should I offer $20K worth of development for 1% of his startup?  I would come up with an approximate time commitment by converting $20K to hours using a $50/hour contract rate (which is what I can easily get in the market right now).<p>The product is a medical device that takes certain measurements of users.  I would be responsible for coding the number crunching software that takes the data as input and displays useful info to the user via the web. I would also be coding in Ruby on Rails, incidentally.<p>Can you guys give me any insight? ... Is my reasoning  way off base?  Thanks!
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wave
See what YC gives you and what they get:

<http://ycombinator.com/faq.html> How much do you invest? Usually $5000 +
$5000 per founder. So $15,000 for two founders, $20,000 for three.
Occasionally we invest more. The goal is usually to give you enough money to
build an impressive prototype or version 1, which you can then use to get
further funding.

What does Y Combinator get out of this? Stock in the startup, from 2-10% of
it. Usually about 6%.

