[bmcleod]

A terrible deal, you're seeing a bunch of downsides and no upsides.

Unless the work is absolutely fascinating to you then you shouldn't even be considering this. I'm impressed that someone had the balls to put an offer like this on the table. Honestly, even if you loved the work I'd suggest telling them off because it's kind of an insulting trick when some people try to get geeks to work cheaply on "interesting" projects.

If they're somewhere where giving you shares triggers auditing requirements, which is the only reason I can think of them giving for this, there should still be plenty of workarounds. Significantly increased pay back over the following few months at least being the immediately obvious one.

[throwaway69]

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.

[bmcleod]

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.

[joezydeco]

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.

[steventruong]

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.