How does equity work in a startup company?

February 25, 2009 by Debt Equity Financing  
Filed under More Equity Answers

Can you answer thebill’s question about Equity?:

I produce videos for a startup company. I get paid after each finished project. Recently, I got offered to some “equity” but the catch is that my regular paycheck will be reduced. I have an idea what equity actually is but not quite sure how it works. I basically get a certain percentage of the company right and hope the company grows?

I guess my main question is what should I ask the company or what do I need to know before I sign the papers. What’s a good offer and what’s a bad one? Thanks.

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