Coding for equity: if you smoke bamboo

Coding for equity - financial model of the relationship between an entrepreneur and IT- developers of the product in which a group of developers working partly shares and partly for a fee. In this case, the fee - is a kind of pre-negotiated amount, which performs more ... The main tool of motivation are the shares of the company, which launches this IT- product.
In Ukraine, this model of cooperation with the developers is not common. It is used as the large companies that have coding for equity - one of the business models and projects, in which an entrepreneur creates a direct agreement with the developer of such working conditions. The first model is the most characteristic autsorisngovyh \\ VC firms. One of the known world examples - a venture fund Sequoia Capital, which owns shares in the company's Global Logic. When an entrepreneur has a good business project, but do not have enough experience in the design, Sequoia Capital, decided to invest in the project, the entrepreneur can offer services to Global Logic, including the conditions coding for equity, thereby maintaining the cache getting and indirectly . I believe that if Sequoia Capital uses this model and for her it was viable, it makes sense to look at it for your business. I heard that in the Ukraine with the model work by companies such as N-iX, X-Tend Software Develpment, Eclipce and other. In a nutshell, coding for equity makes it possible for developers to earn ten times more than working on pochasovke, but bear the risk of not earning anything at all, in fact earn by selling shares and selling them is possible only if the product is ... For entrepreneurs, this model is advantageous firstly in that it is possible to bring a team of developers, whose motivation is not limited to short-term interest, and secondly that there is no need to remove cash from the project for product development.
However, not all developers can afford to work for such a model, because to live and feed a family need today. Therefore, coding for equity is beneficial to developers who have an alternative source of income, as well - free time to invest in its future profits. By the way, so the model coding for equity has become very popular during the crisis. Some programmers, sitting on a salary, but half-day ... Today, many IT- outsourcing company, seeing the success stories of different product solutions, more and more likely to work in such projects.
The curious thing. When we were looking for developers to Address. ua, in our view were not only companies ' outsourcers ', as X-Tend ( our Partner of ), but also a large number of design studios that have good experience in developing Web projects. They also are ripe for it to make similar decisions, and can say with confidence that they can compete with outsourcers.

Maxim Shkolnik.

part 1. http://dennydov. blogspot. com/2010/10/coding-for-equity. html.
part 2. http://dennydov. blogspot. com/2010/10/coding-for-equity_13. html.
part 3. http://dennydov. blogspot. com/2010/10/coding-for-equity_14. html.
part 4. http://dennydov. blogspot. com/2010/10/coding-for-equity_6827. html.

Max answers questions. http://dennydov. blogspot. com/2010/10/coding-for-equity_15. html.