Offer your insights or judgment on the input financial query or topic using your financial expertise. Reply as normal question answering

Be a partner, CTO or just a freelancer?
First, determine the workload he will expect.  Will you have to quit your other work, either for time or for competition?  How much of your current business will be subsumed into his business, if any?  Make sure to understand what he wants from you.  If you make an agreement, set it in writing and set some clear expectations about what will happen to your business (e.g. it continues and is not part of your association with the client).  Because he was a client for your current business, it can blur the lines. Second, if you join him, make sure there is a business entity.  By working together for profit, you will have already formed a partnership for tax purposes.  Best to get an entity, both for the legal protection and also for the clarity of law and accounting.  LLCs are simplest for small ventures; C corps are useful if you have lots of early losses and owners that can't use them personally, or if you want to be properly formed for easy consumption by a strategic.  Most VCs and super-angels prefer everybody be a straight C.  Again, remember to define, as necessary, what you are contributing to be an owner and what you are retaining (your original business, which for simplicity may already be in an entity).  As part of this process, make sure he defines the cap table and any outstanding loans.  Auntie June and Cousin Steve might think their gifts to him were loans or equity purchases; best to clear this issue up early before there's any more money in it. Third, with regard to price, that is an intensely variable question.  It matters what the cap table looks like, how early you are, how much work he's already done, how much work remains to be done, and how much it will pay off.  Also, if you do it, expect to be diluted by other employees, angels, VCs, other investors, strategics, and so on.  Luckily, more investors usually indicates a growing pie, so the dilution may not be at all painful.  But it should still be on your horizon.  You also need to consider your faith in your prospective partner's ability to run the business and to be a trustworthy partner (so you don't get Zuckerberg'd), and to market the business and the product to customers and investors. If you don't like the prospects, then opt for cash.  If you like the business but want to hedge, ask for compensation plus equity.  There are other tricks you could use to get out early, like forced redemption, but they probably wouldn't help either because it'd sour your relationship or the first VC or knowledgeable angel to come along will want you to relinquish that sort of right. It probably comes down to a basic question of your need for cash, his willingness to let you pursue outside work (hopefully high) and your appraisal of the business' prospects.