Version: 0.2

Author: Mitesh Shah (


A risk-reward based freelancing contract that allows startups to hire the best people with a sliding scale of risk-to-reward ratio.


Frustrated, cash strapped startups often end up using sub-standard freelancing work that creates vendor lock-in, reduces product quality, puts them behind schedule and ultimately reduces their chances of success. This is especially true in technology dependent startups that depend on an app or web based service. Amazing UX / UI design, and high quality easy to maintain code does not come cheap.

Conversely, those who are really good at something will not (and perhaps should not) work for below market rates.

Sometimes, founders end up giving away co-founder level equity to someone who is just good enough to build an MVP, and will not see things through for the next 5-7 (or more) years which is what it will take to succeed. Dead equity is hard to recover and turns off potential investors.

We are proposing a new way to solve these problems by using this template contract to hire those who are really good, and to align the relationship for mutual success.


Why Hourly?



** Please note that this template has not been written by a lawyer nor reviewed by one. It is a proposal directly from the organizer at Chai Combinator. **

Agreement Participants & Duration

This agreement establishes a contractual working relationship between __________ (the Startup) and __________ (the Freelancer) starting __________ (Start Date) and ending __________ (End Date, which only specifies when the Freelancer contract ends, not the end date for Royalty Payments).

Rates & Royalty

The Freelancer’s target rate is __________ per hour/week/month.

The Startup will, however, pay the Freelancer __________ per hour/week/month (the Actual Rate), and the difference between the Target Rate and Actual Rate (Deferred Royalty Base Rate) will accumulate into the Deferred Royalty system as follows:

Payout Conditions

Optional Equity Conversion Clause

Termination Conditions

Quality of Deliverables

Work Product

The Freelancer agrees that any and all work performed under this agreement is fully owned by the Startup and they are entitled to reuse, sell or repurpose it in any way it chooses to.

Signatures (with date)