Questions

What would be a good initial share structure for a new startup that will definitely be approaching VC's?

This is a Digital Media Institute. We are considering offering a fair share and partnership/director position to an extremely high profile music industry legend. What in your opinion would be a fair allotment?

5answers

Fair Share is good but a partnership or even a director position is something you may want to think about based on the value add the legend will do to your business apart from lending his name.
However if your business is going to piggy back on his name & reputation and he is not offering any investment in cash , its a good idea to offer him anywhere between 10 to 15 % of the equity with clearly defined expectations from both sides.
I am making an assumption that you are going to be a high value startup.


Answered 10 months ago

You may go up to 8% of Equity for the industry legend. Generally celebrities don't have time to actively participate in a startup's day to day activities or management, however, they may add up a huge value by endorsing the startup/brand. Therefore, 8% is a fair share. In case the celebrity is also putting in money or is ready to share his/her network and actively participate in the management, then you may go for up to 15% Equity.

I will be happy to talk to you if you need my help. Feel free to setup a call through clarity.

Thanks for reading
Shishir Gupta
CEO of StartupLanes


Answered 10 months ago

This all goes back to what's the value they are bringing? They are a high profile music executive but does that mean when the company needs money they can help raise or provide it themselves, are they going to provide connections to accelerate your growth, are they going to bring in education you could not readily find? Always remember to think past titles and think about what they will provide for the company, now and in the future.

Call me if you need more help.


Answered 10 months ago

Hello I am Priyanka.
Many people call me everyday for consulting, most of them tell me that they have a million dollar idea that can change the world, but they don’t have the funds to develop it. I am writing this post for them to understand the funding of idea in a better way.

MILLION DOLLAR IDEAS DON’T MAKE SUCCESSFUL STARTUPS

Startups fit Edison’s ratio: 1% inspiration, 99% perspiration. You have some inspiration, so now you need to do the real work. The good news is that a lot of that work is setting yourself up for future inspiration, so it’s not all a grind.

As background, almost nobody invests in just an idea. You may get very lucky, especially if you are seeking money among the 3 Fs (friends, family, fools). But professional investors are looking for a solid team (one with a track record), a proven market, and demonstrated traction. The more of that you have before you go looking for money, the better off you are.

You should also know that patenting the idea is probably not worth it. If you really want, go talk to a patent lawyer. If your idea looks to be patentable, you can spend months and tens of thousands of dollars trying to get a patent. And what then? Well, that gives you the right to sue somebody who uses the idea. Can you afford a lawsuit against a company making millions? If not, what good a patent will do you? I know a lot of startup people, and very few have bothered with patents. Better to spend the time and money on being first and best.

So what next?

Prove that there’s a market. Yes, you believe there is one. Lots of people believe that. You don’t want belief, you want proof. For an app, for example, you could bring in test users for market research. Show them a half-dozen app pages, including a mock-up of yours. Tell them you’ll pay for them to install any one app. Do they click on yours? Then you might be getting somewhere.
Discover who your early adopters are. The great book Crossing the Chasmexplains that successful high-tech products usually start out in a particular niche, some small audience that gets a lot of value and is willing to put up with a rough initial product. Who are those people for you?
Understand how they are solving their problem now. You may have no direct competitors, but you still have competitors. Before video games existed, people were still entertaining themselves. What’s the equivalent for your product?
Figure out the minimum viable product. Founders tend to imagine the world-domination version of their product. Instead, you have to figure out the smallest thing that your initial audience is willing to pay for.
See if you can test your hypotheses further without building and shipping a real product. For example, is there some way you could fill the need with a lot of manual intervention? Or is there a rough solution that you could cobble together from existing tech?
Figure out an initial marketing plan. Will you be buying ads? Is this a viral product? Before you make it, know how you think you’ll sell it.
Test your marketing plan. There is no sense building a product that you can’t sell. If your plan is ads, run some ads against a fake landing page. Do people try to buy?
Build and ship your MVP. Ship the minimal app to a minimal market. For example, you might put your app only in the Canada app store.
Iterate, iterate, iterate. Now that you have users, iterate until you are happy with the user experience, with the marketing yield, and with everything else youv’e done so far.
Scale up. Once things are working well in the small, go big. Release to the US app store. Buy plenty of ads. Try to get mentions in the press. And keep iterating, so that the product and the company continue to get more awesome.
When do you get investment? Take as little as possible and as late as possible. For the average app, you should certainly try to get through step 7 before taking significant cash.
I would like to share with you.

Source:https://www.quora.com/How-do-you-get-VC-or-angel-funding-for-a-start-up-idea

For further queries you can consult me.


Answered 9 months ago

These other answers are out-of-market. A 1% stake is the max you should give unless there are extraordinary circumstances and this 'legend' would really be personally involved with the entity. A full point is extremely generous. Between a tenth and a quarter point is considered in-market for a senior advisor. Happy to discuss further.


Answered 7 months ago

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