Instead of thinking of it as an ongoing subscription model, it could be structured as equity in lieu of cash for whatever services are rendered. Lawyers and advisors will sometimes do this.
This should be reviewed with a lawyer, because I believe it adds tax/accounting complexity for both sides (but maybe not in UK?). Also, if we're talking common stock, this would force an early startup to balance keeping their share price low and thus paying a lot more stock for the value provided, or raising the share price (possibly too high, too soon) in order to pay less.
Edit: Saw your reply to the OP, below. I do agree that an experienced, rational entrepreneur would likely steer clear of any arrangement like this, to have a clean cap table and to avoid dilution. But of course "the right way" to do things changes over time, and there is a real shortage of technical talent. So I don't think it's crazy to see something like this become a trend.
As developers get more valuable, they get more expensive, and their rates go up. But from that it doesn't follow that 1099 developers should be paid in equity. Equity has baggage.
Comments
Instead of thinking of it as an ongoing subscription model, it could be structured as equity in lieu of cash for whatever services are rendered. Lawyers and advisors will sometimes do this.
This should be reviewed with a lawyer, because I believe it adds tax/accounting complexity for both sides (but maybe not in UK?). Also, if we're talking common stock, this would force an early startup to balance keeping their share price low and thus paying a lot more stock for the value provided, or raising the share price (possibly too high, too soon) in order to pay less.
Edit: Saw your reply to the OP, below. I do agree that an experienced, rational entrepreneur would likely steer clear of any arrangement like this, to have a clean cap table and to avoid dilution. But of course "the right way" to do things changes over time, and there is a real shortage of technical talent. So I don't think it's crazy to see something like this become a trend.
As developers get more valuable, they get more expensive, and their rates go up. But from that it doesn't follow that 1099 developers should be paid in equity. Equity has baggage.