An equity partner is someone who owns part of the business with you.
If two people are equal partners in a business, they are equity
partners each with a 50% share. And each can have 50% of the say in
how the business will be run.
A business can have 100 equity partners, each with a 1% ownership
share.
The main difference between an equity partner and an employee is that
an equity partner gets owns part of the business so shares in the
profits while an employee just gets a salary.
From the perspective of someone who is starting a business or trying
to grow a business and needs more help but doesn't have the cash to
hire someone, making someone an equity partner can be the perfect way
to bring on more talent without coming up with any money. Instead,
that person trades his or her time not for a paycheck but for a share
of the business.
From the perspective of the person looking for work, the value of an
equity share in a business could be much higher than a simple
paycheck. If the company is really successful, owning a share of the
business would also become very valuable.
On the other hand, if the company fails, then owning part of a failed
company isn't worth anything.
That's why choosing your equity partners carefully with a business
that you believe in is important so your equity can become very
valuable -- in part because of your hard work!
