Ask IH: How would you structure this deal?
I have an opportunity to join an existing early-stage, early-revenue SaaS project as a lead developer. The deal on the table is:
- Base, super-discounted hourly rate.
- Percentage of the top-line revenue.
How would you structure this deal? Are there specific terms you'd ask for? Any useful prior art to look at?
Because I'm sure it will come up, I'm not particularly interested in equity at this point (although I'd be happy to be convinced otherwise). Ultimately, my goal is to identify a deal that's healthy for both parties.
Thanks!
Get paid a cash money salary at market rate and whatever equity / profit share unless the team has proven success.
Hey Daniel. Do you have info on their monthly revenue? Suggest an 8% of the revenue + slightly better hourly rate. Or a combination of 8% revenue + a fixed retainer.
Yes, I do. It's modest, almost ramen profitable. The SaaS is a part of an existing profitable business structure though.
How did you come to these numbers?
A friend of mine is a developer in a cab aggregator business like Uber. He was offered a very attractive salary. But he proposed a retainer (lower than the salary offered), location free work and an 8% share in the revenue. They gladly accepted the offer. Why the 8%? No idea. Perhaps, it's not as low as 5%, or as high as 10% lol