[run4yourlives]

Conversely, 5% of nothing is nothing. :-)

This is a great idea though overall. For one, it's an easy way to get a good design for "free" for the owner. From an up and coming designer's POV though, it's a great resume/portfolio addition that could actually have a payoff in future years.

Me, myself and I take note.

[vlad]

Equity should not be a prize in a contest. When a company gives up equity, it should be for a specific purpose to get something one cannot otherwise, such 1) in exchange for investor money (YCombinator), 2) in exchange for a professional service from a top firm to file articles of incorporation, trademarks, and advice on setting up bookkeeping, and, 3) for a key hire. I hope somebody who's done more than run a shareware company chimes in if I'm wrong.

[run4yourlives]

Equity in a company though is only worth what a company is worth. He's open in saying that this is a part time project with no real focus/push behind it, other than his desires. In other words, it isn't worth much at this point.

So, to relate:

2) in exchange for a professional service from a top firm to file articles of incorporation, trademarks, and advice on setting up bookkeeping,

I'd put website design on that list, as I'm sure you would. Of course, top firm is only relative if you can get a "top firm" to consider your company worth the investment. In this case, I think the owner realizes the value of his company, and just wants to present an option to someone who may find it acceptable.