Hi SB, I have been reading "Employees' stock agreement" thread here and found a post by Tagmotion (see below). As far as I understand a contract used by the author is basically: "You develop a tech solution for me, I pay you a discounted rate plus give you a % of my profit for a period of time".
What would be your opinion on a modified proposal I've recently came across: a deferred payment? "You develop a tech solution for me working part-time. I give you a personal guarantee to pay you an agreed decent rate 1 year later plus I'll give you a % of my company 1 year later too". I am skeptical about this. It is like sitting on two chairs: an 'employer-employee' agreement in the sense that the company wants to retain total control (no changes to the ownership structure), and a co- founders agreement in the sense of a risk sharing, that is, in case of success profit will be shared but nothing is guaranteed in case of failure. Does anyone disagrees? Can this work under some conditions? Thanks, Dmitri. >> But I have a contract with my development team that gives them the EFFECT of having equity as follows. (They are not employees, but a separate business in their own right, to whom I outsource the technical development). They receive a small % of my entitlement to any............ - 'outcome' (eg trade sale) - operating profit (less expenses, which are defined, and include transaction costs associated with liquidity event/s) They give me in return......... a discounted rate on development This works for them because: - it's clean: they can participate in the upside without it taking up their headspace (which they have to give to a couple of JVs they've got in which they DO have equity). And they avoid any director's liability. It works for me because my ownership structure is clean, making it a better proposition for investors, as some others have said here. The trigger for paying them out is: when I lose control of the company. The assumption here, of course, is that any investment 'this side' of losing control will be for the purpose of reinvestment/growing the business. And not to get me to the Bahamas. >> I'm going to post no-name versions of the contracts here via Elias, as part of his wider project. -- You received this message because you are subscribed to the Silicon Beach Australia mailing list. Guidelines on discussion: http://tr.im/ujKF No lurkers! It is expected that you introduce yourself: http://tr.im/ujMm To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en
