I once quoted a cash price for a startup and since they were pre-seed/pre-revenue, they counter-offered with an equity package if I came on as part-time designer. Eventually they raised a seed round and were able to offer me a monthly cash stipend as well.
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Been seeing a few posts on what freelance designers charge as their rates. I was curious, has anyone ever exchanged design work for equity in a company? Is there even such a thing? $ for some clients, % for others? Or maybe a blend for one client?
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Thanks for sharing Josh! A few questions I hope you don’t mind. What made you decide to take that offer and join part time? Was it a good amount of equity that you valued more than the cash price? How long did you ultimately work for them until you started getting returns?
I took the gig for 2 reasons: First, to get into the world of design for startups and hone my UI/UX skills. Second, I already had a job that gave me a market rate salary, so I didn't really need more money anyway, and anything extra was icing on the cake.
I earned a bit of equity in this company but after 4+ years of working for them, the company failed and closed up. By this time I had moved on to various other jobs and evolved my career a bit. Eventually, my equity would equal $0. But I learned a lot.
I really wanted it to work out but as other people have mentioned, most startups do fail. So if you're going to do it, either do it for money or do it to learn a new skill. Sometimes you just fail and that's ok too, but it's good to walk away with some kind of learning or growth.
Love this insight. The amount of experience you gain in designing for a startup is unmatched.
I've charged on cash + equity for a pre-seed company before. The idea was novel and I wanted to do the project anyway, made sense. This is kind of common for early stage companies I feel.
Also, only if you were comfortable speaking on it, what’s the typical equity range you’ve seen offered by pre-seed/early stage companies for design work? Thanks for sharing Dave I really appreciate it!
It was specifically to design their mvp which was a mobile app and it was in the single digit %s. I’m not too sure what’s a common amount though, sorry!
Yup this is done not infrequently BUT if you’re freelancing be mindful of cash flow and that getting a return on equity takes a long time - 8+ years and most likely won’t happen at all as most companies fail.
Great point! When I was first thinking of this pricing model as an alternative to traditional freelance rates, I almost thought of it as an opportunity to practice being an investor. Learning which clients to offer design for equity based on the belief in the company long term.