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Places to Find Developers in Exchange for Sweat Equity

Question: I am in the process of getting my startup venture off the ground and have run into a slight road block.  I have developed the business case, and fleshed out the product requirements, but need a strong developer to the product.  Problem is, I have not gotten any funding yet, therefore cannot pay someone to build it.  Any suggestions on places to look for developers who are willing to put in sweat equity in return for ownership in the business?

A (Brad): While finding a developer to work for sweat equity is an option, I’d assert that you’d be better served by hunting for a technical co-founder that is passionate about creating the company you envision.  In my experience, it’s naive to think you can just “get developers to build the product” although it does sometimes work. Most of the great software startups that I’ve been involved in have at least one technical co-founder (and many have more than one.)

Regardless of the path you go down, you want to recruit quality.  If you have no cash to offer someone, be prepared to give up a meaningful amount of equity.  There’s no easy formula that translates between hourly work and equity ownership, especially in a raw startup, but be ready to have a thoughtful discussion with whomever you recruit.

If you aren’t willing to go the technical co-founder route, the best place to search is at your nearest college with a strong computer science department, especially if it is a school with a culture of entrepreneurship.

October 19th, 2007 by     Categories: Company Creation    
  • http://www.digmann.com Dustin

    My best friend is doing this right now (as a developer). Actually, I would say a good amount of younger developers pick up side projects like this at least once just to learn new technologies or any of the myriad of reasons why. Heck I’ve done it and would do it again.

  • http://www.linkedin.com/in/himanshu Himanshu Sahani

    Another option could be to use outsourced product development approach. The cost goes down substantially plus the new age outsourced product development shops in India are willing to work for the sweat equity.

  • http://www.security-works.com/blog Bryan Fish

    I’ll underscore Brad’s comments with my own perspective. The most important thing for us was finding someone that would sink their teeth into the problem we’re solving, not just the code itself.
    Put another way, I think finding someone to code from your specific detailed requirements can be short-sighted. I think you’re better off in the long run finding someone that can bring a second design perspective to the table. You’ll know you’ve found the right developer to build your startup when you find someone that will argue passionately about those requirements in the interest of building the right solution to the problem. Our product (now in v3.0) is a ton better having found that kind of person.
    And by definition, that kind of person is looking for more than just stock & cash… They’re also looking for the ability to contribute at a meaningful level. Sounds simple, but “a seat at the table” means a lot to the kind of person you want, especially if you want them on board for the long haul.

  • Frank Faubert

    Good advice, but you didn’t address the “where” part of the question… So, where are some places to find technical co-founders, and vice-versa? I’m curious from the other side of the equation, as a “technical co-founder” that recently sold his company, has enough money to not need a salary, but is interested in finding a new idea to run with.

  • http://www.zigron.com Tukh Malanga

    Well, there are bunch of companies out there who are specializing in building web 2.0 applications for some cash and equity. I know of one company Zigron.com, who is located in Pittsburgh. They provide their services for discounted rates and also help their portfolio companies with strategy. I believe they have around 30 engineers. For more information you can go to http://www.zigron.com/tech_startup_solutions.html.

  • http://www.feld.com Brad Feld

    @Frank – the best places are to exercise your network aggressively. The best people are going to be two degrees of separation from you. Casting a wide net – but through folks you know and whatever your local entrepreneurial ecosystem is – is probably the best starting point.

  • Ace

    I was a technical co-founder of a startup that just recently sold. I’m not big millionaire, but do have the ability to work for nothing or very little in exchange for equity on a project that I’d be interested (for a period of time).
    I’m not offering.. But there are others out there like me. To come in early in the game, someone like me would probably want a decent amount of equity, and ideally co-founder status.
    As to find such a person, network network network. Early on we put a job posting out for a developer and made it clear that there was no pay but there would be some ownership. Within 6 months he was on full pay, and did OK when we recently sold.

  • http://www.whygosolo.com Ann Bernard

    I found my CTO at BarCamp. So, my advice to you is get involve with your Tech community where ever you are. My CTO is now as passionate about the project as I am and it wouldn’t work if he wasn’t. The struggles and obstacles of a start-up are too many. You want and need people who fully see the potential and share your vision.
    We have five part-time developers who are also working only for equity at this time. Same with them, they truly believe in what we are developing and building. A few of them are looking forward to when we get funding because this is a project they want to do full-time.
    It took me 7 months to find the team, a lot of networking, involvement in various communities, and letting people know what I needed and looking for. I also received some help from GoBigNetwork. They found one of my developers for me.
    Good luck to you. It can definitely be done…you need to be passionate, enthusiastic and 110% in love with you idea and others will want join you.

  • http://www.famboogle.com Alex Lorenz

    Through almost 15 years of entrepreneurial ventures I have found that it is very hard to find the right partner/co-founder for any enterprise. While a co-founder can be critical to most startups, I would caution against hiring a co-founder for “co-founder’s sake.” That is to say that you may be better off raising some angel/family/friends money first, and actually paying for the expertise of a contractor.
    I have learned you can divide professionals into 2 types: Employees and entrepreneurs – with entrepreneurs likely to represent less than 0.01% of the population. Your risk in hiring a co-founder is that the particluar individual may actually be an “employee type” who is just not finding a “real job.” As soon as waters get rough, that individual may be more interested in sailing back to his familiar pool of employment than in weathering the storm.
    Hiring co-founders through networking sounds great, but I have seen too many businesses break up over little disputes between the partners. Pressure rises, egos conflict, and things are said. Remember how important chemistry is in any hiring decision, in any team. Now multiply that importance by 10 and you see how critical it is in partnerships.
    Unless you have known an individual for a long time, be very conservative about a parter/co-founder role. You are better off without a partner than you are with the wrong one!

  • http://www.trafficwave.net/ Brian Rooney

    My story went like this:
    I had a great idea. I had a few customers committed to buying when the idea was ready. One of my hobbies is being a semi-pro musician. As I was discussing the idea and concept with a drummer I had just recently met. As I was explaining that I had a solid idea and commitments from potential clients but needed a programmer, he said, “Didn’t I tell you? My other degree is in Electrical Engineering.”.
    He built prototypes as a personal challenge. He did a great job. He enjoyed the work. When things began to take off, he indicated an interest in ‘growing with the company’. After a number of months, we formed the partnership and have been going strong ever since.
    That was over 7 years ago and we’re still growing.
    Brian Rooney
    TrafficWave.net LLC

  • http://laurentk.tumblr.com Laurent Kretz

    Very interesting discussion. I am on the business-entrepreneur side (vs engineer-entrepreneur). I outsourced, had good and bad (very bad …) experiences with off-shore, long distance, freelances or development boutiques.
    I took the route of having a prototype before finding a technical co-founder, which has some pros and cons.
    However soon, i will be facing the “find a technical co-founder” issue. I will speak loudly about the site in the tech community, browse the local tech schools, test the relation on small projects, …
    I am not american and live in New York, and I was wondering if anyone here had been on the same situation (foreigner in an environment finding a partner) ? What was your experience ?

  • http://www.sxnetworks.com Maximiliano De Muro

    Solution: outsource your IT needs, put your focus in product and business development / networking.
    But take care, look for the rightshore.. the better GMT.. the same culture and also the good relationship with your new partner… forget India… try Southamerica.. Uruguay is the #1 software exporter of the continent!
    If you need more information about this don’t hesitate in contact me!

  • http://cybernetconsultinginc.com Rob

    Try CyberNet Consulting Inc (CCI), they do significant work for equity. CCI provides outsourced product development services at a fraction of the cost. Leverage CCI’s best practices and technology expertise in software product development for new ventures and startups. They provide best of breed technology solutions to accelerate your time to market. Their services include design and development, product prototype and product functionality development. They help entrepreneurs with their innovation-driven endeavors.
    Please check out http://www.cybernetconsultinginc.com/itservices.htm

  • http://techstars.org David Cohen

    You can also check out http://programmermeetdesigner.com/
    I know of startups that are doing well where the founders met this way.

  • http://blog.wavepeers.com Adriano Grassi

    I just like to say that this is the best post I have seem, also i want to thank everyone replies since they all helped me a lot, I am just starting a business and found a very devoted co-founder in India which actually works out great because I am up all night here in the USA working on the company and that is day time there, the only problem we face now is calculating a formula of sweat equity into company shares.
    Do any of you guys know what is the best formula out there? the problem is that if we keep diving the company in exchange for work pretty soon both of us will have very little for ourselves.
    In case anyone is interested our blog address is: http://blog.wavepeers.com we still looking for more people to join our venture both technical and business perspective.

  • http://www.partnerup.com/ Mike@PartnerUp

    In this case, I agree that choosing a technical co-founder over choosing a developer might be a better option, especially since there probably is not cut-and-dry specifications for the application to be programmed, so a co-founder could help to shape all of that. A developer could also certainly help with that, but I would lean towards finding someone who is both a developer and a business person.
    The company that I work for, PartnerUp.com, actually is devoted entirely to helping people put together a startup team. It’s free, so you might find it to be a really useful resource.

  • http://eGlobeBiz.com eGlobeBiz.com Helen

    All above comments and posts are very helpful. We are in the process finding a co-founder who like global Web TV or Web Conferencing. Here is the opportunity:
    http://www.eglobebiz.com/en/enforum/viewforum.php?f=92
    http://www.eglobebiz.com/en/enforum/viewtopic.php?t=2694

  • http://www.ioworld.com AlanH

    I’m in precisely the same situation but based in the UK. We’re developing an application but need developers working for (at least: in part) sweat-equity. So, if there are any UK-based developers (or similar resources as posted above) that anyone knows about…

  • disqus_l3B08Ai7FH

    if you are 15 years old then i would try sweat equity. if you are an adult with bills then one must be paid.