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Wow. I'd rather go on fucking Shark Tank. If someone is willing to take $5,000 to do the heavy lifting up front (therein taking most of the risk) for only 50% equity, their idea is either terrible or they aren't committed to seeing it through.
Or they live in a second/third world country, or they're a student, or...
Wow. I'd rather go on fucking Shark Tank. If someone is willing to take $5,000 to do the heavy lifting up front (therein taking most of the risk) for only 50% equity, their idea is either terrible or they aren't committed to seeing it through.
What risk? $5000 to cover yourself + $3000 marketing along with a (free) guy to do that for you which is a huge advantage that every person "launching" via a "Show HN:" submission could benefit from. If it turns out to be a crap idea you lose 50% of a crap idea. If it turns out to be a great idea you gain 50% of a business.
- 50% is too expensive.
- "Co-Founder" role is too much commitment.
- Reduce equity ask, package with a 1 year cliff + vesting schedule, market it to college students as a way to spend your summer.
- Maybe there's a model where an incubator can scale to thousands of companies, instead of dozens.
I'll match this offer as well for anyone who is interested.
Yes, it sounds like a bad deal for some people. But for a lot of people its a great way to:
1. not have to find work for a month,
2. work on something they're passionate about anyways,
3. have an idea of theirs that may not have otherwise seen light of day become a reality.
Pre-emptive FAQ: Isn't this a horrible deal? Incubators typically inject more money for far less equity! I earn $10K a month, I could easily save up $8K in a few months, and do this myself for 100% equity. True. If you can get into YCombinator, for example , you should obviously go for it. I can't compete with that. If you're earning $150K+, or you've already been working on your side-project for a year, this may not…
Just to counter some of the negativity in here, As a partner in a consulting shop just starting out, this isn't a bad proposition. It nets you rent money to work on scratching a pet peeve; if you're between clients and you've got something really simple you can wrap up in a month at a discounted rate this is a great idea. HN is filled with "passive income strategies" blog posts that revolve around short projects like…
Dev: Is rock star techie whose disadvantage is lack of motivation Dev: Builds MVP that Proposer thinks is going to be valuable Proposer: "Validates" it by showing it around Proposer: Sells flips MVP for considerably more than $8k
It's not necessarily bad, it's probably symbiotic.
So..
* Do all stars care about 5k? * If they do, why is short-term motivation of $5k show powerful? * 50/50 with equal voting rights? Disputes, ahoy. Two people that never worked with each other before.
Earlier quoted context omitted.
Or they live in a second/third world country, or they're a student, or...
Just to put this in perspective, I live in a Central European country, part of EU, I earn almost 2x national average and I have to work about 4.5 months to get that kind of money.