When you are starting out, equity might be the only currency you have to trade to others for the services that your organization needs to take off. Many cash-strapped startups cannot pay with cash in the pre-funding stage. Besides, when your partners own part of the company, everybody’s interests are aligned and the potential for success increases.
There are way too many tech startups looking for tech co-founders or developers to work for equity. So you can improve your odds of finding a programmer. If you are looking for a rock star developer or technical cofounder for your app startup, here are some ways to find developers to work for equity.
Paying with Equity
The idea of paying for services with equity means that you pay for services by offering shares of your company instead of money. The main idea is that when your business takes off, the people that helped you out can then sell their shares at a profit. Alternatively, they could keep the shares and have more of a say in how your business operates going forward.
In some ways, everybody wins with equity. The startup wins because they get the services that they need to create the first models that they can then use to pitch for more funding. The people that work for equity can win because if the company takes off, they can end up making more money than they would have made working for cash. They can also hold onto their shares and make a valuable partner more easily than they could have tried to partner with a more established business.
So, why doesn’t everyone work for equity? For one thing, it’s a huge gamble. If developers work for a startup in exchange for equity alone, and the startup goes under, the developers lose all of the time that they put in and are left holding worthless shares. If startups rely too much on equity and their company does make it big, they can end up losing the company to predatory shareholders. Normally developers with full-stack dev expertise make very good money working with funded companies with low risk.
Many of the tech experts you are trying to woo are already working on their own startups or some side hustle.
For everyone involved, funding with equity is a balancing act with huge risks and huge rewards.
Now that we have a better understanding of how equity works, how do you find developers that work for equity?
Starting the Conversation
We’ll talk about a couple of ways to look for developers willing to work for equity, but there are a couple of general things that you should do first.
For one thing, you should have done the homework on your product. You should be able to show, in solid numbers, how, when, and why your product is going to become profitable. Any decent developer willing to work for equity will want to see your market projections on things like the size of your audience, the cost of development, your revenue streams, and when those revenue streams will result in shares of a company that are worth the time that they are going to put into getting your app to that point. They get pitched often with new startup ideas. So do your homework to stand out.
You should also run the math on your share structure. How many shares do you have? How many have you already promised? How many can you afford to give to anyone person while managing the risk of losing control? All of these are things that you should firmly understand before offering equity to developers.
Now that that’s out of the way, how do you find all of these developers willing to work for equity?
Attend Startup Events
This option, as well as the next option, are avenues that you may have limited access to, depending on your geographic location. If there are startup events in your area, this can be a great way to network with other startups to get a handle on who they work with and how they pay for that work. These events can also be ways to attract developers looking for work. Most developers don’t go into business to work with startups, but many developers looking to work with startups will probably be willing to work for equity if the right opportunity comes along. Look for events like StartupGrind, Startup Meetups, Startup weekends, Built in Brews , Hackathons, Techstar events, and different school events.
If there aren’t startup events in your immediate area, consider tapping into your resources and connections to see if there is enough interest in your area for you to start hosting. Encouraging events like this in your area can encourage more startups and encourage a greater community of developers in your area. All of this creates a healthier ecosystem for the technology sector in your region.
Attend Developer Events
Just like there are startup events attended by developers, you can attend developer’s events as a startup. You won’t have developers coming to you as you would at a startup event, so you’ll have to have your pitch ready. However, these events can be a good way to get easy access to a large number of developers all in one place.
Unfortunately, being a startup, it can be harder for you to be personally involved in bringing these events to your area if you don’t live in a tech center.
Browse Online Communities
Those first two options are great for startups that are particularly interested in working with developers in their immediate facility. However, if you are willing to outsource your development team, you can always find developers willing to work for equity by looking in online communities.
One of the easiest ways to find developers to work for you is through job platforms. Unfortunately, these don’t let you pay with equity and frown on your paying for work off-platform. Instead, consider online communities like the following. There are many others like them but these are our favorites.
CofoundersLab is a free online community of entrepreneurs. It doesn’t give you direct access to developers but it does give you access to hundreds of thousands of other entrepreneurs and their experience. Members also get access to monthly masterclasses and regular email newsletters full of helpful advice and industry information.
Founder2be is another free online community meant for people interested in starting or finding startups. Unlike CofoundersLab, it can put you in direct contact with developers willing to work with startups and, therefore, potentially willing to work for equity. In fact, it also connects you with other looking-for-work experts like marketers. It’s not as large or well-known a community as CofoundersLab but it is much more diverse.
FounderDating is kind of like CofoundersLab in that it is more geared toward executive types than developers, so it might not be the place to actually find developers but there are great networking opportunities. One great thing that FounderDating does that CofoundersLab doesn’t is offer certifications. That’s one good way to help potential developers know that you’re serious and you know what you’re talking about.
Founders Nation is another site like Founder2be that is actively interested in connecting startups with people like developers and marketers. As a result, it is a potential site to visit to meet with developers interested in working for equity. Again, you might even fill some other empty seats in your company while you’re there.
Paying for Exposure
All of the options that we’ve looked at so far have been free. If you can spend some money looking for people who will work for equity, you can still save in the long run. The next couple of options will cost some cash but can also pay off big.
Startup studios are kind of like the high-tech version of business incubators. They create their own micro-economies by bringing many startups together in one place so that they can share expertise and resources. This also creates an atmosphere that is attractive to people looking to work for startups in exchange for equity. Once again, startup studios do cost money, but they’re also designed to compound your investment and turn your startup into a profitable business. Unfortunately, the biggest obstacle to joining startup studios for many people is access. They aren’t super common right now and, while they’re catching on quickly, they’re still a thing that not everyone has easy access.
The Netherlands based Proto.camp is a platform specifically meant for connecting entrepreneurs with people interested in designing prototypes for them. In other words, forget just looking for developers, these people will take the entire prototype stage completely off of your hands. The downside? While the platform does offer some free guides and resources, actually using the platform is pretty expensive. It’s on a per-week basis, so if you’re confident that you can find someone right away, you can budget your time and money on the platform pretty effectively. It costs around $10K for 4 weeks worth of development.
Codeventures is a startup studio for non-technical founders building tech startups. With Codeventures, you apply and they have the option to take up your startup development. From there, there are a couple of different packages that you can choose from based on how involved you want to be from that point on. Which package you choose determines how much you pay and how much equity you give. For example, you can get an MVP developed for $4K and 10% equity. It is a compromise between all equity and all cash. It isn’t free, but it’s a great option for doing anything from finding coders to finding a complete ready-made team.
- Tradeshows and Expos
Trade shows and expos can be a great way to network with startups, big names, developers and marketers, as well as to get your name out to enthusiasts in your field as well as potentially catch the eyes of the press. It can be harder to find developers at these events because they aren’t just for developers and startups. However, that bigger atmosphere attracts bigger crowds that you can use for more versatile purposes. Unfortunately, expos and tradeshows option cost money. The more you want access to, the more you’ll end up paying. That doesn’t mean that it can’t be worth it. If you have an MVP, it is worth to showcase it at these events to get in front of customers and partners.
There are a lot of options out there. Which one you choose depends on your resources, your need, and your ability to access different venues. However, the point remains the same: there is hope for startups looking to work with developers for equity. Go get them.