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MenuHow can i proceed with my startup with out a Tech Co-founder ?
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Your question is clear and understandable, but you either need to pay for the services, or give away equity - talented and trustworthy people won't work for free - nor should they.
The only question that remains is how can you develop the platform while paying less or giving away less equity.
Answers:
1. found a co-founder whose only role is the development of the platform for a relatively low amount of equity and no voting/management rights.
2. Pay beginner programmers who are looking to gain experience (cheaper costs).
3. I know a development company that might be willing to create the platform for you in exchange for a relatively low amount of equity. Additionally, you can draft the agreement so that the equity is given in stages - based on the work that you do.
the only costs that you would have is for drafting the legal contract because they insist on having their lawyer do the legal work and he charges payment (half upfront and half after the work is complete). The programming company also offers a "buy-back" option - this means that if within x amount of months you want to buy back your shares, you can do so, but at double the value of the programming costs.
Let me know if this is relevant.
Good luck
I've successfully helped over 300 entrepreneurs, startups and businesses, and I would be happy to help you. After scheduling a call, please send me some background information so that I can prepare in advance - thus giving you maximum value for your money. Take a look at the great reviews I’ve received: https://clarity.fm/assafben-david
This is a common feeling at the very early stage of a new venture. In my view you have three options that each have pros and cons:
1. Role out with the limited platform that you have and do everything you possibly can to improve the platform yourself. If you can prove market validation, then you can much more easily raise money or create new partnerships that will enable you to pay developers, instead of giving away a huge chunk of equity.
2. Find the right person to truly partner with and be happy to share the equity with them, since in the long haul you believe you can build it together. If you do find yourself in this situation, then you still should protect yourself by having legal agreements in place that makes the equity slowly vest over time for your new partner in case they either don't meet your expectations or leave before you reach a successful outcome.
3. Hire on contract, meaning create clear terms that you will pay a certain amount for the developer(s) reaching specific benchmarks on the platform. I would not hire anyone hourly that you don't already trust. This option means you will not be stuck giving away equity or cash in the long-term, but gives you a way to get over this current barrier.
None of these options are perfect and in one way or another I've actually tried all of them with varying results, both while at a large company and starting my own site. The key is that you have to be realistic with yourself and your priorities. You need to either hustle much harder and feel comfortable rolling out a weaker platform temporarily (option 1), give away equity (option 2), or pay for development (option 3). In all cases there are ways to protect yourself against some of the risks, but there is no way to do this without taking some risks. If it was easy more people would be doing it!
Feel free to book a call with me to get into more specifics, I can help guide you through this situation.
Great question - here are a couple of comments to consider:
-Having a cofounder (tech or not) can be extremely useful even if it means losing some equity. When the startup ride gets tough, this will be your person and your main support system. Right now it might seem like you may not need that even in the future, but when you are burnt out, dealing with difficult investors or sluggish growth, you may want someone as "in it" as you are. From my personal experience I know I never thought I would get burnt out or down about my own idea but in the end it happens to everyone and your co-founder will pick you up in these moments. I originally took more equity than my first cofounder and have now adopted a 50/50 model most of the time, primary because of the importance of having someone else as invested in it as me. And also, having 100% of something that doesn't make it is meaningless in the end.
-If you have proved your concept in the local market, it may be a good time to raise a seed round that can help you cover the investment to create the bigger platform.
OPTIONS FOR PLATFORM DEVELOPMENT
1. Outsource to a good company that can execute on your vision with limited funds and no equity. Keep in mind you will need upkeep and continued support over time (after the initial development), which means more $/time than the original quote and an continued relationship with the team
2. Build the platform on a sophisticated visual programming software where you can execute it yourself without code. I personally have used www.bubble.is and it is pretty awesome. You need to think like a programmer but you don't need to write code. You can do almost anything and it's easy to use. With this option you can manage changes and iterations yourself or with a freelancer.
3. Bring on a cofounder that you believe in and want to share equity with - someone who brings added value to your team and your product. You should want to share equity with this person bc they do something you cannot do and they are your partner!
Keep in mind that everyone who touches the code will have their own methods, and use their own preferred language etc. and this can make it hard to pass from team to team or person to person.
Happy to discuss further if I can be helpful!
Related Questions
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How much equity should I give an engineer who I'm asking to join my company as a co-founder? (He'll be receiving a salary, too, and I'm self-funding)
You will find a lot of different views on equity split. I haven't found a silver bullet. My preference/experience is for: 1. Unequal shares because one person needs to be the ultimate decision maker (even if it's 1% difference). I have found that I have never had to use that card because we are always rational about this (and I think us being rational is driven because we don't want a person to always pull that card cause it's a shitty card to pull) 2. When it comes to how much equity, I like Paul Graham's approach best: if I started the business by myself, I would own 100% of the equity; if xxx joined me, he/she would increase my chances of success by 40% (40% is just an example) at this moment in time. Therefore, I should give him/her 40% of the company (http://paulgraham.com/equity.html) 3. In terms of range, it could go between (15-49%) depending on the level of skill. But anything less than 15%, I would personally not feel like a cofounder 4. Regarding salary and the fact that you will pay him/her, that's tricky but a simple way to think about it: If an outside investor were to invest the equivalent of a salary at this exact moment into the startup, what % of the company would they get? (this may lowball it if you think the valuation is high but then again if you think you could get a high valuation for a company with no MVP, then you should go raise money) One extra thing for you to noodle on: given you are not technical, I would make sure a friend you trust (and who's technical) help you evaluate the skill of your (potential) cofounder. It will help stay calibrated given you really like this person.MR
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What legal precautions can I take to make sure nobody steals my startup idea?
I've discussed ideas with hundreds of startups, I've been involved in about a dozen startups, my business is at $1M+ revenue. The bad news is, there is no good way to protect ideas. The good news is, in the vast majority of cases you don't really need to. If you're talking to people about your idea, you could ask them to sign an NDA ("Non Disclosure Agreement"), but NDAs are notoriously hard to enforce, and a lot of experienced startup people wouldn't sign them. For example, if you asked me to sign an NDA before we discussed your Idea, I'd tell you "thanks, but no thanks". This is probably the right place though to give the FriendDA an honorable mention: http://friendda.org/. Generally, I'd like to encourage you to share your Ideas freely. Even though telling people an idea is not completely without risk, generally the rewards from open discussions greatly outweigh the risks. Most startups fail because they build something nobody wants. Talking to people early, especially people who are the intended users/customers for your idea can be a great way to protect yourself from that risk, which is considerably higher than the risk of someone taking off with your idea. Another general note, is that while ideas matter, I would generally advise you to get into startup for which you can generate a lot of value beyond the idea. One indicator for a good match between a founder and a startup is the answer to the question: "why is that founder uniquely positioned to execute the idea well". The best way to protect yourself from competition is to build a product that other people would have a hard time building, even if they had 'the idea'. These are usually startups which contain lots of hard challenges on the way from the idea to the business, and if you can convincingly explain why you can probably solve those challenges while others would have a hard time, you're on the right path. If you have any further questions, I'd be happy to set up a call. Good luck.DK
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What is the best way to write a cover letter to an early-stage startup?
Better than a cover letter is to actually proactively DO something to help them. It'll show them not only that you've researched them, but you're passionate about the startup and worth bringing on. A man got a job at Square early on for just making them a marketing video on his own (back before they had one). Since you're a web designer, design a stellar 1-pager that's targeting their message to a particular niche. Something they could use on social media or something. If they're like most startups, they're not interested in reading cover letters. They're interested in passionate individuals who can add value to the organization.AS
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Business partner I want to bring on will invest more money than me, but will be less involved in operations, how do I split the company?
Cash money should be treated separately than sweat equity. There are practical reasons for this namely that sweat equity should always be granted in conjunction with a vesting agreement (standard in tech is 4 year but in other sectors, 3 is often the standard) but that cash money should not be subjected to vesting. Typically, if you're at the idea stage, the valuation of the actual cash going in (again for software) is anywhere between $300,000 and $1m (pre-money). If you're operating in any other type of industry, valuations would be much lower at the earliest stage. The best way to calculate sweat equity (in my experience) is to use this calculator as a guide: http://foundrs.com/. If you message me privately (via Clarity) with some more info on what the business is, I can tell you whether I would be helpful to you in a call.TW
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How much equity should I ask as a C-level executive in a new startup ?
As you may suspect, there really isn't a hard and fast answer. You can review averages to see that a CEO typically becomes a major shareholder in a startup, but your role and renumeration will be based on the perceived value you bring to the organization. You value someone's contribution through equity when you think that they will be able to add long-term benefits, you would prefer that they don't move company part way through the process, and to keep them from being enticed by a better salary (a reason for equity tied to a vesting arrangement). Another reason is when the company doesn't have salary money available but the potential is very strong. In this situation you should be especially diligent in your analysis because you will realize that even the best laid plans sometimes fall completely short. So to get the best mix, you have to be very real about the company's long-term growth potential, your role in achieving it, and the current liquidity necessary to run the operations. It should also be realized that equity needs to be distributed. You cannot distribute 110% and having your cap table recalculated such that your 5% turns into 1% in order to make room for the newly hired head of technology is rather demotivating for the team. Equity should be used to entice a valuable person to join, stay, and contribute. It should not be used in leu of salary that allows an employee to pay their bills. So, like a lot of questions, the answer is really, it depends. Analyzing the true picture of your long-term potential will allow you to more easily determine the correct mix.DH
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