Partnership instead of payment for a service?

Sometimes when working as a programmer I am offered shares in a company instead of payment. In some cases it is all shares and in others it may be a smaller payment with some shares.

Is shares in a company vs payment worth the effort and risk?

What if it is a startup that basically has no value at the time?

How would you decide what your work is worth and what the shares are worth?

How much is a persons idea or contacts worth and how do you measure this value?

Thanks for your help and feedback!

 

Great questions Markus!
But hard to answer except on a case-by-case basis. I wish Apple/Microsoft/Facebook had offered me a thousand shares to do some coding for them fifteen years ago. lol.
Ask yourself:

• How much do I need the money?
• How long until I see some return on these shares? Weeks. Months. Years. Only you know what you are willing to wait.
• What do I think are the prospects for this company?
• Is it listed or just a start-up? Start-ups can be good IF you pick the right start-up.
• Can I pay my rent?
• Why are they offering me shares instead of paying me?

 

Those are some great things to think about, I think one of the most interesting might be "Why are they offering me shares instead of paying me?".

When I consider these offers it has to be related to something I enjoy doing, otherwise I would probably not give them much thought.

 

I almost never take equity in a company in return for development because this means the client doesn't have the funds to push the project, and they don't really care about the equity and thus the value of the company. Initial equity should always go to someone with money who's going to provide funds to launch a company. Equity should not be given to a programmer - it should be given to an investor who can then provide funds to pay the programmer.

For example, your job is to develop what the client wants. Say he wants to give you 20% of the company. Fine, you take that. However, the development is just one aspect of the company and your client doesn't even want to devote money into actually making the product work.

Naturally, after the development, testing, etc. comes the actual promotion. Ultimately, marketing fees are going to end up costing substantially more than whatever your development fees would have been. So what does the client do? He finds a company who is willing to take equity instead of payment. Since marketing fees would have cost much more than your fees, any amount of equity over 29.99% that he gives the marketing firm means he's officially lost control of his company. From there, you put your hopes and dreams of payment into this marketing firm producing results, and even then, if he gave away too much equity, your client may no longer have the authority to pay you anyway.