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Should you give equity to a business development person, who joins late?

I have created a B2B service. It is a done in its current development stage and right now I need to get some traction. I need that to 1) prove and tune my product and 2) be able to approach investors.

I am a technical person and need to work with a business development agency or person to achieve my goal.

At this stage, how should I compensate this partner? I can only offer equity at the moment, but how much?


25 Replies

Travis Hunter
0
2
Travis Hunter Entrepreneur
Social Media Marketing Pro ♦ Growth Hacker ♦ Twitter Marketer♦ Linkedin B2B expert ♦ Facebook B2C Social media expert
Hi Nickolay be glad to discuss, you can connect with me on LinkedIn
Ashley Titus
0
0
Ashley Titus Entrepreneur
Founder at RAGS Solutions
Travis,
Could I also connect with you on LinkedIn as I am in a similar situation and could do with such support.

Chip Scully
3
0
Chip Scully Entrepreneur
Vice President at Adestra
Give equity only if you want that Bus Dev person to feel like they are part of the same team. I would think that would mean that you do offer equity. You can also tie equity to their success - though that likely makes it more complicated. Last time I check a bunch of engineers w/o Bus Dev does not get you too far, and visa versa.
Martin Omansky
3
1
Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Grant options based on performance. Tie the exercise period to some time frame. Our experience tells us that to Ttract a CEO, for example, you need to furnish options of +/- 10% over a 3-5 year period. Sent from my iPhone
Neil Gordon
1
0
Neil Gordon Advisor
Board Member, Corporate Finance Advisor and Strategy Consultant
You compensate people based on what you think it takes to motivate them to accomplish your goals. Seems to me "joining late" isn't the standard... I can think of lots of companies that are more than 100 years old that provide equity incentives to key employees.
Paul Garcia
0
0
Paul Garcia Advisor
President at TABLE
There are many ways to slice the pie, as you'll find discussed frequently on FD. First you need to determine what behavior you are incentivizing, then you determine how employees are rewarded for the desired behavior. Equity is not always essential. Is the biz dev candidate requesting equity? Are you suggesting equity because you cannot offer salary? Would a commission or bonus structure fit your process better without committing cash or surrendering equity? What's important to the candidate, an ownership stake or income? There's a difference and one may motivate them more to do the behavior you want.
Angelos Kapatos
1
1
Angelos Kapatos Entrepreneur
--
I am in a similar situation, but would like to hear from someone who has made this decision themselves more than once. My thoughts were a profit sharing system where I would award a percentage of the net proceeds on a monthly basis and award the equity after 5 or 7 years. I would like to hear thoughts of people that have done this, or if you have been on the receiving end how you felt about it when it happened.
Michael Masello
1
0
Michael Masello Entrepreneur
Digital Marketing Professional
I'll tell you from the business side, if the person is worth their weight, the equation is the same. Often the tech side feels undervalued, but when anyone is approached for an equity only position that they would be working 40+ hours/week on you should be viewing that person as a partner. Especially given the stage it sounds like you're in. If you're X months in with little to no revenue and you need a partner that is expected to be a co-founder expect to divvy up a significant portion of equity:http://www.themacro.com/articles/2015/12/splitting-equity-among-founders/
George Parrish
0
0
George Parrish Entrepreneur
Founder/President

From an Equity standpoint, you better hang onto 50.1% of your Equity, which means you only have 49.9% to give to Investors, Team, Accelerators, Incubators, etc. over how many rounds of funding w/ Angels, V/C's and/or Crowdfunding platforms/companies.

So, you better know how much you are going to give to ALL members of your team, Board of Directors, possibly some Board of Advisors before you entice someone with Equity in your company at any position. That way if your Bus Dev "demands" a 10% stake in your company, you can do the math, ok?

Martin Omansky
0
0
Martin Omansky Entrepreneur
Independent Venture Capital & Private Equity Professional
Always nice to see a fellow USC person in the mix. Anyway, you bring up the issue of voting control. A valid point, but beginners should be aware, however, that most investors buy Preferred Stock, which is usually governed by a Preferred Stock Agreement. The terms of this Agreement often severely limit management's freedom of action, and can function as a veto power that approximates voting control. Beware! Sent from my iPhone
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