Equity distribution in early-stage startups is a slightly odd subject. Obviously at this point the startup is worth nothing – or less-than-nothing, if expenses are being recorded as debts on the future company – and who wants to argue about percentage points of nothing? Sometimes the whole subject is just ignored.
On the other hand, whatever the addressable market size of the idea at hand, the spectre of founders squabbling over enormous wealth is lurking somewhere in the subconscious of everyone involved, so it is equally possible to go the other way, and invoke complex calculation methods of one kind or another, however irrationally over-fussy.
While complex approaches are arguably better than failing to address the issue at all, a simpler method is more typically adopted: if there are two founders at the beginning, they are usually assumed to have 50% each, if three, 33 1/3%, etc – as in this Seedcamp agreement template.
If they add additional co-founders, there is a re-distribution by agreement, such that the original co-founders see their percentage ownership reduced, to ‘make room’ for the new partner. The process is repeated each time a new equity-holder is added (ignoring such things as special share types – usually considered as over-complicated at early stages).
I consider that there are several problems with this:
Continue reading “Startup Equity Distribution – an incremental approach”
This is in many ways a companion piece to my previous post – it started out as a version for LinkedIn, but rapidly evolved into something with a different emphasis.
The internet revolution has changed the landscape of our lives, and yet the disruption has only just started. Existing ways of doing business are largely unchanged from the way they were 20 years ago. Hilarious disconnects exist all over, when ultra-slick digital-only processes crash into messy physical transactions.
There is a reason for this. Coders like to code – they like the safe, ordered, complicated-but-not-truly-complex world of programming. And coders are the ones who feel empowered to invent digital businesses. So, of course, the early digital businesses are the ones that can be achieved with purely digital workflows, and don’t require the startup team ever to leave their own world.
Continue reading “Developing a Digital idea without Developers”
This event was put on by Tech Meetups, an international setup with events all over the world – the first of theirs I’ve attended.
I was unfortunately late, so I missed the presentation from HootSuite, who aim to allow management of multiple social media campaigns. My loss.
ProdPad: As I arrived, Janna Bastow was presenting a tour through the set of tools offered by ProdPad, the startup she founded with her partner, and which they have successfully bootstrapped. ProdPad offers a suite of services clustered around the earlier stages of product development for teams – starting with ideas, offering tools for capture and management, for gathering comment and feedback on them, all recorded and transparent to all stakeholders – specific permissions can be given to users outside the organisation.
Continue reading “Startup Productivity Tools event 28th Nov”
This post from Newspodge brought PitchMark to my attention – a service that attempts to offer confidence to content creators and inventors by acting as a time-stamped repository of record, and backup legal support. The service isn’t free, but although it doesn’t look expensive, in the age of freemium everything it perhaps looks so at first. Close investigation of exactly what it offers will be important – the devil is in the detail with this sort of thing.
This is perhaps something that could be built-in, or partnered with, the Co-Founder Jamming idea.
(apologies … many and very humble apologies, indeed .. to Jane Austen).
It is a truth universally acknowledged, that a single startup wannabee, in possession of only some grand ideas and a sub-set of the necessary skills, must be in want of a co-founder.
As an aspiring startup founder, possessing only some of the skills needed to make any of my ideas fly, not even sure if one of my own ideas should be the first one I work on (see earlier post), I need to find a co-founder or two – or five.
How do I do this? Well, as far as I can see, I’m already going along the accepted pathway. Attending tech networking events, talking to people, putting myself about, writing to people, trying to be as noticeably helpful and interesting as is consistent with not seeming creepy. And it’s great – I am consistently impressed by how positive my experience at each event is, by how interesting/interested the people and their ideas are (posts passim).
But is it enough?
Continue reading “Project Proposal: Co-Founder Jamming”
Another thought provoking evening out.
Two in-depth presentations, followed by a dizzying parade of 30 second pitches. Event details here.
First presentation up was from one of the founders of Canadian tech outfit Mobify, Peter McLachlan. I didn’t know them, but it seems they have provided tools and support for many major brands to translate their web offering to mobile formats. We were treated to a compressed history of the outfit, a classic tech startup of three Computer Science graduates having some insight and then plugging away making clever things happen one after another – by their own admission, many of them blind alleys.
Continue reading “Co-Founder Speed Dating & Pitching #4”
An event nicely tuned to allow early-stage startups to show and tell without being under pressure to sell themselves hard – the idea being that they are looking for constructive feedback from the attendees rather than collaborators or investors, with equal time allowed for presentation and Q&A for each slot. The evening is structured to allow lots of time for networking, both before and after the presentations.
Each of the four presentations made me sit up and think, which is obviously to a large degree down to the discrimination of the organisers, the cheerful and effective Three Beards, but also suggests the incredible fertility of the startup scene, and the enormous range of smart/ingenious/useful/revelatory wrinkles that are still to be shaken from the unfolding digital fabric.
Continue reading “Don’t Pitch Me… Oct ’13”
This Developers & Entrepreneurs Meetup wasn’t actually my first. Over the last couple of years, I have been to a couple of other similar events. Nevertheless, it’s the first one I’m going to write about here, so I’m grateful it was a good one!
This wasn’t a ‘pitching’ event, but a well managed discussion around a fairly well-defined topic. We heard from two speakers about their own very different experiences in finding their co-founders, and what sort of conversations and agreements they had come up with (Jose Bort of pickevent.com and Kwesi Johnson of Imakethathappen.com – both startups that have launched recently) .
Both were very open, and their stories were interesting, which got things off to a good start, and from then on there was a fairly free flow of contributions from around the room.
Continue reading “Tech Debate: “Equity vs. Salary for co-Founders””