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I own a startup that is user-based. We are close to finishing the building of the prototype so therefore it has no users, no revenues, nor any investment.

I have 4 unpaid co-op students working full-time for a term. In order to encourage them and value their work, I would like to share equity with them, preferably equities that expire after 1 year since their co-op ends after 3 months and they probably won't be at the start-up anymore.

We will be launching soon and will probably generate some but not much revenue. The idea is to provide expirable equities for them to split the revenues generated within a year.

I did some research and could not find anything such as expirable equities. Does something like this exist in financial terms? If so, what would it be called? What percentage do you think I should give them?

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What you are describing seems to be a revenue sharing agreement. As to the percentage, this is situation-specific and would therefore be difficult to answer as the question is currently asked. For example, a few thought starters:

  • What can you share from your projected revenues ?
  • How much incentive do you wish to give with this agreement ?
  • What are the expectations of your co-op students ?
  • What are the applicable laws and regulations in your area that may prevent or mandate you to do this ?
  • What are the tax implications of the agreement for both the co-op students and yourself ?
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