Recruiting freelance help for your startup with equity

If you’re reading this, you’re probably looking for a few hands to work on your startup. You’re probably also tight on funds. And, so, you’re considering giving away a stake in your possibly yet-to-be-realized vision.

Since I’ve begun offering freelance services about a year ago, I’ve had several customers offer to compensate me with equity. I have yet to meet a single freelancer who took an engagement with a customer offering equity. Most of us won’t. I never have.

Once I hear “equity”, I’m typically turned off like a switch.

Freelancers, in particular, are in business for themselves. Most of us don’t want to be tied down to a single startup unless its ours. We may even be looking to develop our own products.

Instead of payment, you’re offering equity as compensation; effectively, you’re asking us to invest in your startup. Most startups don’t have successful exits. The common perspective, then, is that your equity offer is worth only the paper or electrons it’s printed on.

You may be able to retain neophyte developers who are looking to build up their portfolio but you probably shouldn’t. Some of them will work, effectively, for free. However, typically, you get what you pay for. A novice developer is just as likely to give you negative productivity than a usable product.

Before spending an hour telling us all about your glorious idea, first determine if you can possibly close us. Pitch us as you would a real investor. But you ought to be sure that we’re at least open to the idea. You’re almost certainly wasting yours and your prospective developer’s time if you don’t first. Again, most of us aren’t interested. You’ll save yourself a lot of time by asking the simple question of “will you work for equity?” first. Feel free to ignore this if you enjoy spending a lot of time pitching people and having nothing to show for it.

Remember, you are asking us to become an investor. Sell us on you. Sell us on your idea. Coffee is for closers!

Maybe, just maybe, you’ll get a quality developer out of the process. But you have to remember that you’re asking that developer to be an investor.

Posted by evan on Sunday, July 18, 2010

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