What is the fair % to give to a new CTO/web developer entering in the company after 2 years the company has been incorporated (no revenue) ?

Type of shares are generally split into two: common/ordinary (depending on the jurisdiction) and preferred. The former are granted to founders and employees (most commonly as options with a right to purchase common/ordinary shares). The latter are generally issued to investors and include special rights such as liquidation preference, anti-dilution protection, etc. Preferred shares reflect the fact that the holder (investor) has paid a premium in consideration for issuance of such shares. Don't forget to consult with a lawyer.

Some questions you'll want to answer before moving ahead: How strongly do you believe this idea can become a successful product? Why do you think they approached you? How comfortable do you feel running a company owned by someone else? What happened in your previous CEO role? What confidence level do you have in the founders? I personally wouldn't take on such a role, because there's no way I would ever run a company I didn't own. Too much blood, sweat and tears need to be put in for the return of a salaried payoff. I know you're asking about equity but are they even open to giving you some? Around 20% is the minimum, one-third feels right. They're never going to give you more unless they are crazy or totally inexperienced. And they are probably going to want to keep some aside for the CTO. You do not want a failure under your belt so make sure this is a winner before you consider taking it on. The fact that they don't have a viable product with customers already sold to concerns me greatly.

You could: 1. make a connection between per project and equity allocation - so each time they complete a project, they get a small % of equity. Research has shown that people prefer small payouts than one big payout at the end (ppl can't postpone their desires...). 2. Keep them involved in the decision loop and share with them small successes. Make them feel part of the company/business. 3. Give out additional 'bonuses' for projects done well or for milestones achieved by the company. 4. If you have the capital/money to support it, then make it clear that they can exchange their equity for money - if a company is willing to buy back it's equity, this shows that the equity has value - which will make them want to keep it. The only challenge with this last option is that if you do buy back shares, it creates a tax event for both sides which isn't always advised. There are a few additional options. I've successfully helped over 300 entrepreneurs and would be happy to help you. After scheduling a call, be sure to please send me some background information so that I can prepare before - thus giving you maximum value for your money during the call itself.

You might be somewhat in trouble. You'll want to consult a lawyer, not to be adversarial, but rather to ensure you do things that are legal and are best from a tax-consequence perspective. You can't back-date option grants or stock grants, for example. There are recent scandals reinforcing that statement. And if you don't back-date, your stock (or options) is worth something now, and might even have to get a 409A to ensure it's valued properly. (That's a 3rd-party stock valuation report, typically costs $10k-$30k, which companies with ESOPs are required by law to do annually, but I wouldn't be surprised if this company hasn't yet.) There's all sort of other boogers which you couldn't even know about. For example, if an outside party made an informal written offer to buy the company, even if it went nowhere after that, that will change the 409A valuation. So this is why, in short, I'm giving you the unsatisfactory answer that you'll have to use a lawyer to make sure everything is done properly. This is, sadly, a object lesson in getting paperwork done properly from the start. I'm sorry to be the bearer of bad news!

I've been a co-founder of three ventures and have had to negotiate ownership stakes with my partners for each one. I've also conducted intellectual property diligence, as a consultant to IP/M&A attorneys, for multiple multi-million dollar software M&A deals. As Stoney said, it's a bit hard to come up with a firm number, given the number of unknown variables involved here. Also, it almost sounds like you and your product are being acquired by this larger company, while essentially selling or licensing a product you've built to this company in the process. If that's the case, you may want to speak with an attorney who's experienced in software licensing agreements and M&A. They may be able to steer you in the right direction of a valuation, as well as make sure you're very clear in what you're giving away, from an intellectual property rights perspective. Another thought that comes to mind is that if the company is providing you with a lot of support, including a salary, be prepared for them to possibly low-ball you on the ownership stake. Once you decide on an ownership stake to suggest, I wouldn't be afraid to start at the high end of your estimate, taking into account the fact that they may try and negotiate the share down quite a bit, given the financial contributions they'll be making. In my experience, investors putting money on the table typically and unfortunately don't value sweat equity too highly or fairly, when compared to cold, hard cash. Always happy to discuss further on a call and good luck!