Thanks a lot for your concerned post and suggestions. Their point was it would be more convenient for me if I take an increased salary after the six months instead of equity. They were also very willing to listen to alternative suggestions I might have. Also I do the think the people are pretty honest. They called up to clarify that it isnt the case that equity is not an option, its just that cash would be more convenient for me. I do believe that they are good and honest people and if I have implied otherwise in my post, Its a mistake on my part.

I would be the first developer as an employee. The CTO is the main developer there.

So it comes down to the question whether you trust and whether you can afford this adventure. Trust in this case not only relates to their personal conduct but also their ability to realistically judge where this business is going. In any case, it's a bad deal for you if you depend on the income. But if you have time and money to spare for such an experiment, you might be better off working for no wage at all during that time and taking equity instead.

Thanks for this measured response. I am not really looking for work, I am looking to work at an interesting problem with smart people and the experience of a startup.

I have always wanted to work at a startup. I am not after a VISA, though it will be good. I quit my previous job at a big company two months ago because I was tired of doing mundane tasks and was shit scared that I had stagnated.

I am not uneasy, just unsure. My biggest worry right now is if the company does take off, would i regret not asking for equity?

You are taking a risk of only being paid 1/3rd of your market rate for the next 6 months.

After that, you may be without a job. This is your downside, and it's what you should plan for.

In a best case situation, after 6 months you will start gradually earning back the money you missed out on, + a raise.

This means the only upside for you is the raise you _may_ get after 6 months. You should decide for yourself if you're comfortable with the amount of risk you will be taking for this upside.

As an extra caveat: it seems to me like it would be very easy for the founders to claim "there is no capital". Especially considering you are in a foreign country and are likely to not have any insight into the company's financials, it will be extremely hard and costly for you to prove otherwise if things go sour.

yes you would

Based on my discussions with the CEO, its more to do with the fact that they are trying to keep costs at a minimum right now.

So what's wrong with offering legit equity? Aside from possible overseas issues which doesn't seem to be an issue they're bringing up.

Can you give me a link where I can read more about this?

Thanks for the reply. I dont really feel like I am being screwed. Based on my interaction with the co-founders, they seem like really decent guys and they have been pretty honest about everything. I think its more to do with the fact that I expected some equity or at least a discussion sometime down the line.

They have agreed to do that as I mentioned. After the first six months they will pay me my market rate+ (marketrate- prev salary) + risk money for the next six months, of course subject to the availability of capital.

If you want to seriously consider this kind of cash back deal then you should look at the amount of money you're giving up as an exceptionally high risk investment.

What kind of a return would you want the upside to be for you to walk out right now and gamble 3 months of salary on a 25% chance of winning bet. Unless you've got significant wealth already then most measurements that take into account the diminishing returns of wealth will probably suggest a that you'll want the win to be at least 6 times that mount.

That's quite a lot of cash for a startup and it makes no sense to a startup that's worried about cashflow to make that kind of an offer when they could give out nice free equity.

Liabilities are much worse on a balance sheet than having employees with stock. Employees with stock in the company have an ongoing alignment with the company; employees who are owed cash are going to be slowly getting more irritated.

From my own experience, the line "subject to the availability of capital" means you're never going to see the money. Capital is always short or tied up in other areas not earmarked for salary.

That's the problem. There's no guarantee they will succeed or get funding. The pay back may not happen and you may end up with the short end of the stick. Not to mention investors wouldn't like to know that any seed investment might be gobbled up in paying back payroll instead of being invested into the company moving forward.