If you go this route (and you definitely should) be sure to get yourself hired through your startup, so you can use your old company's logo and a quote from your boss on your PR page.

Good suggestion, I'll have to think about that.

Then again, the startup definitely has enough work to keep me busy full-time, and taking a 1/2 cut in pay to work 20 hrs a week on the startup is almost worse than going to $0 pay to go as fast as humanly possible.

why would you agree to a simple 1:1 ratio paycut to hours worked? minimally, you need to cover taxes, benefits, etc. that the company was covering previously, so your hourly rate should be higher from that. but since you're the one inconvenienced here, you should be asking for more on top of that.

Good point!

Yeah -- single tasking is probably much, much better than trying to split between two companies at once.

I'd pursue getting the CEO as an angel investor. It provides you with money to build the business but attaches you to only one person instead of an entire company. If you are successful, you can always propose a larger investment or relationship with the existing company as a whole -- and by that point you know the CEO already has a hand in both pots, thus an incentive to facilitate that relationship for you.

A thought: If they want you bad enough and you are in the U.S. or similar, make continued healthcare coverage and maybe some other benefits part of the negotiations, even if you go contract. (+)

Sabbatical? Some companies will offer/support that kind of a time off model.

Guard your IP.

+ I'm not certain this is possible, but I've heard sometimes vague descriptions of such arrangements. It seems to me that staying within a larger pool would be preferable to purchasing independently.

most freelancers include healthcare/insurance/taxes/etc. into their hourly rates by default. not all, but i think its reasonably standard. in the US, that is.

For health insurance, is there a benefit (so to speak) in staying within the former employer, now client's pool, as opposed to shopping independently? I don't know much about this and what is possible. I've heard mention in the past of some people achieving such an arrangement. Whether that information was correct, I am uncertain.

EDIT: I updated my prior comment, above, to better reflect my uncertainty.

yes. it will almost definitely be cheaper in total with your employer (i'm not taking who actually pays -- you, your employer, or both).

going solo, it will be more expensive unless you can get in with a group of some sort. for example, you can join up with the freelancers union and get help with your rates (i think -- haven't actually done the work to see whats cheaper).

Are you implying that by giving up 20 hrs to your current employer, you'll only have 20 left for your startup? If you really think that your startup is going to be successful with you only committing to it 40 hours/wk (in the absence of contracting back to your current employer), you should reconsider your startup.