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Business Development: I want to reduce some dev costs for my startup AND incentivize my main developer. Any suggestions for a possible agreement? Is equity sharing needed?
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Sofiia Sovchenko, fgh answered:

It's great that you're considering ways to incentivize your main developer and reduce costs for your startup. Offering equity can be a powerful motivator, aligning your developer's interests with the success of the company. Here are a few suggestions for structuring an agreement:

Equity Sharing: You can offer equity as part of the compensation. This could be in the form of stock options or shares that vest over time, ensuring the developer remains committed to the long-term success of the company.

Performance-Based Bonuses: Instead of immediate equity, consider bonuses tied to specific milestones or performance targets. This can provide immediate incentives without diluting equity too soon.

Deferred Compensation: If cash flow is tight, you might agree to defer a portion of the developer's salary until after the launch, possibly with interest or additional incentives.

Profit Sharing: Offer a percentage of profits post-launch as an incentive. This ensures that rewards are tied to the company's success and profitability.

Combination Approach: A mix of the above methods can be effective, balancing equity, performance bonuses, and deferred compensation to suit both parties.

For more detailed strategies on reducing software development costs, you might find this article helpful: https://www.cleveroad.com/blog/reduce-software-development-costs/. It provides actionable insights that could benefit your startup both now and after the launch.

Best of luck with your startup launch!

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