Hey, i have a beta marketplace startup which is doing great in my country with a new concept. I want to take it to the next level and take it to the international market. For that, i need a whole new programed platform from scratch and i dont think i need a CTO/tech co-founder who will take equity for just building the new platform. As i dont have the whole amount for paying for the full system, what do you advise me to do ? Is there a way to build the platform without giving alot of equity since i think i can handle the whole startup without another founder ? Is there a way to pull it off with out giving away equity or getting in debts ? THX :)
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.
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.
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Answered 3 years ago
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.
Answered 3 years ago
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!
Answered 3 years ago