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I am creating a SAAS company and would like to know what to offer developer

I am creating a SAAS and am looking to hire a developer. I don’t have the money right now to pay them a salary but am going to offer them some equity or percentage of profits.

They will be responsible for the programming of the software and possibly the design of the UI/UX. I am responsible for the market research, marketing, sales, finances, SEO, legal/business, and basically everything else.

What should I offer them? What percentage of equity would be fair or should I give them percentage of profits? Thanks for your help!

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4 answers

I would first offer an intangible such as passion - a 'why' for your business that will make developers want to stay even if better pay can be found elsewhere. A good book with additional information on leadership regarding this concept is Start With Why by Simon Sinek.

In terms of tangibles, calculate what you're able to pay and research how it aligns with the market rate. Try to be fair yet realistic given your business. Generally speaking, IT professionals would want higher pay or general benefits if there's less job stability that's common with startups. It's common for startups to give their startup software company employees better private stock options/equity so they're enticed to stay as the company grows given the monetary reward increases.

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I'd be as generous as you can, especially since you aren't paying them. Make them a true partner and have them participate in all the upside you hopefully will achieve! The fist iteration of the idea won't be the last and you'll need someone who can brainstorm and iterate with you as you find product market fit.

Report EJ's answer

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Totally agree, EJ. Having people feel like a partner with a voice/seat at the table is a great way to have high morale that will entice people to stay - even if there may be greener pastures elsewhere.

Report Todd's answer

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I think taking a step back you need to ask yourself, are you looking for a partner or an employee? If you have nothing but an idea, then your equity is not inherently worth more than theirs, sales is not inherently more valuable than software development. so it'll depend greatly on their perception of fairness. I might consider something along the line of reverse vesting where their equity is a function of their participation over time, if you are committed applying the same rules to yourself might make it look even more fair

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