I've been working on a side project for the past two years, on nights and weekends, to build a web application for an online teaching company which I'll call Teaching Company for the rest of this post. I didn't get paid for this work during this time.After seeing how far the software has come, Teaching Company is happy with the product and wants to go live. We've only made a verbal licensing agreement so far, where we would provide the software for their exclusive use for $5 per customer a month.Now that Teaching Company is all in on the product, the CEO offered to buy the software. Here is what they offered. Around 90K up front and 4% equity in the Teaching Company.The CEO expressed that this is a good deal since my software isn't worth that much at the moment and Teaching Company can potentially sell for over 50 - 100 million dollars years down the line. I somewhat changed all the figures mentioned above for the sake of confidentiality.I never had to build software for a single company. There's way more money to be made by competing in the wider market, although it's significantly harder upfront. I made the decision to build software exclusively for Teaching Company because I believe in their product, and more importantly, I care about my work-life balance and having time to spend with my family. With that said, competing in the market is technically still on the table since we haven't signed any contracts yet, and we've only made verbal agreements so far.
Of course, as the CEO said, the software isn't worth very much at this point since it's still in the beta testing phase—but that doesn't mean we shouldn't consider its future potential worth.My gut reaction is that this is not a great deal and I'm still thinking through what would be the best counter offer. How would you approach this negotiation? This is my first time going through this sort of thing and could use some advice. Your feedback is very much appreciated!