How to secure professional services for your business without spending any capital Is now something you can actually do, and your business will thank you for it. No matter the nature of your business, there’s a good chance that you’re going to require some outside services when you start out. If you want to stay lean as you grow, you can’t afford to create separate departments for web design, accounting, and marketing. Outsourcing will help you accomplish everything your startup requires to the best possible standard without breaking the bank. You may also want to consider when’s the opportune time to raise money for your startup. The problem arises when you don’t have the capital you need to fund these services. In that case, you might consider exchanging services for equity; meaning that you pay for the services with shares. It can be a great way to reduce your up-front expenses and it’s a common practice. Here are some tips that will help you decide whether trading services for equity is the right move for your business. Can You Handle it Yourself? Just because you can’t afford to pay for services up-front, that doesn’t mean paying with equity is your only option. Another solution is to handle your services in-house, although that comes with a number of caveats. Often, we are blind to our own weaknesses but it’s important to recognize that your web design will not be as good as that of a professional agency unless it happens to be something you have training in. Investing in web design is crucial as it pays back with serious ROI by building trust and making conversions. If you happen to have a member of the team who does have skills in this area – and you can afford to take them
Learn How Equity Crowdfunding Works and How to Ensure the Best Results! Today, there are more options than ever available to start-ups and product manufacturers that need extra funding to make their visions a reality. Equity crowdfunding is one of the better options for start-ups looking for financial backing and offers unique advantages when compared to other methods. However, how is equity crowdfunding different from regular crowdfunding? How is it different from finding an angel investor? In this post, we’ll take a closer look at what equity crowdfunding means, what caveats you need to be aware of and whether or not it is a good fit for your business. How Crowdfunding Has Changed the Game ‘Regular’ crowdfunding has long been a game-changing tool for small businesses that need an injection of cash to get their ideas off the ground. Raising money through crowdfunding sites like Kickstarter and Indiegogo, means collecting donations from backers sometimes purely as a gesture of goodwill. This type of crowdfunding can sometimes come in exchange for a discounted pre-order, a bonus of some kind or even a modicum of creative input. Crucially though, the start-ups maintain complete control over their business and are not giving away shares or signing any contracts. This is the perfect fit for a product that is inherently exciting like the Oculus Rift and particularly when those ideas might be seen as too risky for conventional investors. People backed the Rift headset because they wanted to play a role in the advent of virtual reality. They also wanted to be the first to sample such an exciting new technology and wanted to see the cyberpunk future they’d been reading about in science fiction become reality. However, not all startup ideas are so exciting. What if your idea is more B2B than B2C?
Here Are Some Important Tips on Sharing Your Business’ Equity and Drawing Up Agreements with your employees Giving equity to employees is an excellent strategy for small start-ups, as it provides them with a way to reward their employees when they are still running short on liquid capital. And while it can be a daunting prospect to give away shares in your business, the reality is that it helps to ensure that everyone feels part of the same team and that you’re all working toward the same goals. It sends a powerful message that says: we’re in this together! However, how much equity is too much, and at what point should your employees be able to cash in? Let’s take a look at your options and how to go about dividing equity among your workers properly. Everyone is Different Of course, the first thing to consider is that every business is different and every employee is different. Your exact mileage may vary depending on the structure of your organization and the role of the employee. You may even want to offer your staff various options – perhaps give them a choice to forego a conventional salary entirely in order to earn more equity. Remember that the agreement needs to be appealing for both parties though and must never feel as though it’s just a way for you to avoid paying while you try and find funding. Considering Dilution of Equity You also need to consider the way you want to share out the equity while being careful not to dilute your share too much. Not every employee should be entitled to an equal share of the business, so you need to consider the contributions of each player and then give them an appropriate amount to reflect that. Of course, this
Co-founding six companies has provided amazing experiences. I am so fortunate that three have had IPOs and one has been acquired by Microsoft. The most recent one, Wochit, is on a familiar course with its recent $13 million round. Up rounds and profitable exits are of course great. But it’s the first few years, when an idea materializes into an actual business, when I get most excited. I get so excited, that I can’t stay away from startups. I make sure to meet a few every month. When I’m not co-founding, I’m investing or advising. It’s at the intersection of these roles: founder and investor and advisor, where I’ve gotten the spark for my newest startup, EquityX. As an investor, I tend to be part of the first money in. It’s usually through a convertible loan, meaning that when a VC round later happens, the money I provided converts to that round’s preferred stock, with some discount effects in consideration of providing early support. As an advisor, I also tend to get involved at early stages, but the arrangement is not as solid. Startups have to manage cash carefully so they often prefer to compensate with equity. But that equity is usually common stock which is uncertain and risky. Unlike providing a convertible loan, which naturally aligns interests with VCs, getting common stock can wind up being worth much less than anticipated, or ultimately be worthless if there’s an acquisition in which the preference of preferred stock comes into play. As a founder, I especially appreciate this dilemma. Execution is crucial, so it’s vital to assemble A-players all around, including service providers and advisors, in addition to full-time team members. But it’s hard to attract the best experts to assist a startup if all that can be offered is common
We are launching EquityX and you should get involved. This is the world’s first marketplace for top-tier startups and expert service providers to work together, with equity as a currency. It is revolution of startups getting affordable access to vital services. The compensation to service providers combines a stable path to cash, and with VC-level upside. Our marketplace format, including quality validation and ratings by participants, assures that the right parties come together and start producing results. We support startups finding the best expert, at the moment of need, without depleting precious cash. Their investors appreciate our solid legal documents and transparent oversight, plus the benefits of great service providers becoming shareholders devoted to startups’ long-term success. Service providers can clearly document the work they do with flexibility to be compensated based on hours, milestones or regular retainers. Over time they can prioritize whether to accelerate getting cash or putting more emphasis on equity upside. The quantity and quality of opportunities for all participants is enriched through the visibility and selectivity of the EquityX marketplace. https://youtu.be/GDr_VKB21Xk Feel the EquityX difference. Join us today!