Should I take equity or cash from an indie founder?
Short answer
Most early arrangements are some mix, and cash matters more than founders like to admit — equity in a pre-revenue product is a lottery ticket with a multi-year expiry. A common shape is a modest retainer that covers your time plus a meaningful equity or revenue-share component that pays if it works. Take pure equity only when you believe in it enough to treat the cash as gone.
The longer version
Most workable arrangements are a mix, and cash matters more than the romance of the situation suggests. Equity in a pre-revenue product is a lottery ticket with a multi-year expiry date and no secondary market. If you take only equity, you are funding the company with your time at a valuation nobody has tested.
A shape that comes up often and works: a modest retainer that covers enough of your time to make it sustainable, plus a meaningful equity or revenue-share component that pays properly if the thing works. The retainer keeps you honest about the hours and keeps the founder honest about whether they can afford a partner at all.
Revenue share deserves more attention than it gets. It pays out years earlier than equity, it is far simpler to agree, and it does not require anyone to have a view on the company's valuation. For a small product that might make a decent living rather than get acquired — which is most of them — it is often the better instrument for both sides.
Take pure equity when you believe in it enough to genuinely treat the cash as gone. If that sentence makes you uneasy, ask for the retainer.
The full argument, with the rest of the picture around it:
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