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    Startups Got an offer for 0.1% ownership of a startup. What does this mean?

    April 18, 2019

    Startups Got an offer for 0.1% ownership of a startup. What does this mean?

    Got an offer for 0.1% ownership of a startup. What does this mean?

    Posted: 17 Apr 2019 12:42 PM PDT

    EDIT 2: I checked with the company. It's options, not stock grants. I can't seem to independently verify their valuation online, so I can only go by what they say, and they have some top-notch investors on board, so I guess I can trust the numbers they are giving me?

    Edit: this is on top of base and benefits

    I got a verbal offer from a startup which offers me 0.1% ownership, and would be vesting over 4 years. I don't have much familiarity with this stuff after working over a decade at big companies. What would this kind of compensation look like and what kinds of questions should I ask so that I can effectively evaluate this deal?

    Company is series A, very prestigious investors, profitable, and they plan on going IPO eventually instead of raising more funds. They have high profile customers and have a long term vision, so equity doesn't feel as much like Monopoly money as with other places I've been interviewing with.

    What's the difference between 0.1% Ownership and stock options? Or are they different ways of phrasing the same thing?

    submitted by /u/Anagonye
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    How do people with no management and no experience in how to run a company start something up and maintain success?

    Posted: 17 Apr 2019 06:59 AM PDT

    Im talking Compaq. The guy wasn't a CEO and grew exponentially and was able to keep contributing to the company for years and years at massive scales with no experience. How does that happen? Is it just a figure it out as you go along thing?

    One of the things i don't understand is how you people grow and still deal with it. Im a very improvisational, learn as you go kind of person so I feel like that's dangerous in this kind of scenario where you might need experience. How did you guys go along with it? Just make mistakes and learn?

    submitted by /u/UAVTarik
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    MVP - Can it be as a prototype or only as an actual product?

    Posted: 18 Apr 2019 01:51 AM PDT

    Hi All,

    Since this January I have been building a prototype of my idea.The concept of my idea is, an online platform / tool where startups & for people who want to build a startup one day can support each other in multiple ways.

    When I came up with this idea, I did my research, checked what similar things are in the market right now and I built surveys to get feedback from both customer types ( 15 startup owners - 15 potential entrepreneurs).

    From my research I realized that there was a huge potential on that product, so I started building the prototype (UI,UX,features etc).

    I am almost done with the prototype now and I am about to start the developing part in about a month.However, I keep hearing and reading that I need to make an MVP first, share it with targeted audience, get feedback and according to the findings, I should then continue the development part of the final product.

    My questions are : The MVP, must be an actual product or an mvp of my prototype? How long should I spend on gathering feedback before I launch my product?

    Thank you!

    submitted by /u/tvaltinos
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    How shares are deluded in a startup company?

    Posted: 18 Apr 2019 01:09 AM PDT

    Let's say that I have bought 100,000 shares from 10 million pool as an early employee. From the statistics, just before the IPO, founders would have given up 70% of the ownership and by that, just before the IPO, I would still have 100,000 shares but the overall pool is now 33 million and by share will be 100,000/33mln = 0.3%.

    So how does current public companies like FB, Twitter and Apple have 800 mln of shares? Does it mean that my original 100,000 shares will be bumped up to retain that 0.3% or does it mean that I will be screwed somehow?

    submitted by /u/stevemartinov
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    General Advice Feedback/Chat Needed

    Posted: 18 Apr 2019 01:18 AM PDT

    Hi All,

    I'm currently the co-founder of a new media platform that has been in development over the past 10 months. We're almost ready to launch probably within the next month.

    However I am really running low on motivation and would just generally like to chat and see what others opinions are.

    I'll share my story below but the general topic I'd like to hear about is: Is the stress and lack of joy worth it?

    I read a lot of books and listen to a lot of podcasts about successful entrepreneurs and they always talk about how hard it was during the first, second, or even third year. Is this something everyone pushes through?

    This is my story, it's a bit long so if it's a bit tl:dr for you, I'd be grateful if you could share anything from the above text.

    Some background:

    • I used to work for a fairly successful startup where I was the Biz Dev guy who also had some marketing responsibilities.

    • I learned a lot while I was there (around 2.5years) and grew in the role to be a team leader.

    • I got into this job by knowing the CMO - I knew him years back in uni, different course and level (he was doing his MBA whilst I was just an undergrad). So even though I was kind of close to him, he was always my senior (east-asian culture).

    • I worked directly with the CEO almost from the beginning and although I really didn't like his work style, I knew this was someone I could learn a lot from and generally sucked up anything that would make many people quit - which many did.

    • Near the 2 year mark, I had reached the point where I couldn't deal with being in that work environment much longer and started thinking about my options.

    • I had always been interested in being an entrepreneur and would often bounce ideas off the CEO, talk in-depth about growing/scaling a business, business models and the like. Knowing this and probably sensing my dissatisfaction with my current position he actually made a proposal to start a new venture with him and the CMO.

    • The new venture is in a similar vein to what I was doing before but not something I would have chosen to do myself if I had free-reign.

    • We got a few grants to get the ball rolling and the CEO also outsourced much of the work I was doing internally to the new company we just founded.

    • We split the company 3ways into a 40/30/30 split. 40 for myself with the understanding that I'd be working fulltime on this venture whilst also drawing a salary from the grants/outsourcing, whilst the other two would support as much as they could timewise and non-monetary resource wise.

    • Since I was looking for a new project anyway, I thought there was nothing to lose and agreed to this arrangement. My feelings then were - worst case scenario: the venture fails but I would have gained invaluable experience, and I have still drawn a salary (not a competitive one but still not too bad for someone with my background and experience). And best case: well from the get-go we were trying to build this venture to be attractive enough to be acquired and to exit as soon as we were able. We were never building the next unicorn, and our desired exit amount would be peanuts to several potential buyers.

    However as I continue working with these guys there are several points that are really bringing me down.

    1. 90% of the time it is just me in the office. We have around 5 full time employees but they are all fully remote and all our communications are done via email and slack. I'm actually an introvert who really enjoys spending time alone but having to deal with all this stress by myself is really bumming me out.

    2. What I didn't know was that the CEO & CMO had already started another venture. Although what they do with their time is none of my business, splitting their time between two early stage startups and their first enterprise, well their commitment is going to be all over the place. On this point I am torn. I knew from the start that I would be the only one to be full time here and their support has been immense at the start, there's not way I would have been able to start any of this on my own but right now I think I need a full time partner to build with.

    3. Building on the last point, it currently feels more like they are angel investors who are providing really great mentoring and networking opportunities. With this in mind, I don't know if the split of 40/30/30 is fair, and if that is a split that I am willing to work hard for. However, like I said, this wouldn't have even happened without them.

    4. Work dynamics. These guys are much older than me and just from our last working relationship, they were always my seniors. Although we are 'partners' now, it still feels the same where their words are final.

    5. Working styles. Putting it nicely ceo is really conservative with money. I noticed a lot of weird payment habits at the old work place. Things like not reimbursing expenses for sometimes 4+weeks at a time, or not paying certain expenses even when there are no cashflow problems. He's also really sucky to work directly with, with micromanagement and a lot of delegation.

    6. I think the real telling feeling I have is this. If I were to build something again, I would not build with these guys. I know the chance of success would be even small than what we have now, but it's just not fun.

    I have run out of motivation for this venture, but I feel like I can't just quit without even launching, and I can't quit when the worst case scenario isn't even bad...

    There's a lot more that's not well organized in my head right now, but the above is the gist of it.

    Would love to hear your thoughts.

    submitted by /u/thrn
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    Another Company is Using my Business Name!

    Posted: 17 Apr 2019 08:31 PM PDT

    I recently started my first company in an fast growing industry. We came up with a killer name that is pretty key to our company's ethos, identity and vision.

    Recently I found that another company has launched social media accounts using an identical name as ours, in the same industry with a very similar service description. They are in a certain state in the US (which we don't plan on operating in, but we *do* plan on entering contracts and gathering clients within the United States. We are in Canada). Potential customers, when trying to find our company, could end up finding their company instead, out of name confusion.

    Both companies (ours and theirs) are in the process of launching, but we own the domain name(s), and we registered our social channels, and domains first. Is their existence (or other future companies like them) something to worry about?

    • Should I register the corporation ASAP? (We are a start-up and money is tight)
    • If we grow faster than them, but they end up registering the business name before us, will we be in trouble? Or will the fact that we were around first mean that we get the priority over the name? We aren't doing business yet, but we have a small presence and brand.
    • If another company in future registers our name before we do, will we have any recourse?

    I plan on registering as soon as we can afford to, but in the mean time, is our name protected in any way? Thanks in advance for any insight! (Starting a business is tough work)

    submitted by /u/TheFlyingPengiun
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    Marketing / Sales Advice

    Posted: 17 Apr 2019 08:18 PM PDT

    We're started bootstrapping a B2B saas company with two technical founders who have little sales / marketing experience. While we've quickly brought our product to market and feel we offer a competitive product and pricing to others in the space, we are starting to realize that's only one part of the equation.

    I was wondering with a low budget and little sales experience what might be the best avenues to start exploring in terms of marketing. What have people seen success with in the past? We are still in very early phases, launched a few weeks ago and have a few customers, but organic traffic is very limited. Thanks!

    submitted by /u/RetroRabbitBot
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    Having trouble closing sales.

    Posted: 17 Apr 2019 06:48 PM PDT

    Firstly, I'm the software engineer co-founder in my startup, so I may be out of my element, but I'm trying to see if I can help in any way.

    I've noticed what I think may be a problem with sales, what it is, I was hoping some of you may help suss out. As backdrop, we are in the education space. Our software is for educators/admins/superintendents.

    We have a tremendous social following, which has driven over 150 contact us forms in the past 3 months. Our sales guys have done over 40 demos. The amount of time for a demo call is about an hour+, so a pretty substantial amount of time. To date we have 1 paying customer, 3-4 verbal agreements, 50 or so ghosted contact us forms. From what I gather, price was an issue in the beginning, but we have since lowered it and have not stalled on that point since. Schools are kinda different than normal businesses as well, they budget for the following year and if you are not on the list, you need to wait a year (large expenses) to convince the powers that be to create a line item for you... So in that vein we started offering pilots either some small set up fee or free depending on how big of whale the customer is. We have 6 schools piloting. That, I think is a problem in and of itself. A pilot should only last a week or 2 or 4 for the customer to know whether or not the software is of any use to them. Unfortunately funds won't become available until the budgets come around again.

    Any insight, or questions that I can answer would be most welcome.

    submitted by /u/lewicki
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    Can I drop a cofounder if they've never signed anything?

    Posted: 17 Apr 2019 10:02 PM PDT

    Hi,

    I know it's kinda unethical or whatever. But I brought on a friend. I had already built everything. He grew the Instagram account by a bit, from 40 followers to around 90. No sales. Aside from that, he hasn't done anything. He's not even replying anymore.

    I met someone else that's really good at marketing, and I think it'd be better if we both split it 50/50. As the current co-founder isn't doing anything.

    Again, he hasn't signed anything and everything is super informal/early.

    _____________________

    submitted by /u/SendMeYourHousePics
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    University Patent Commercialization - Ever Successful?

    Posted: 17 Apr 2019 06:35 AM PDT

    I've just learned about the entire US University movement to commercialize their patents in order to form start-ups around discoveries, with the goal to make the university money. The way they do this is to get someone to license (pay for) any given patent and form a company around it.

    ​

    Is there regular success around the country for an outsider to browse through a university's inventions, license it, and start a company? It seems like there would be, but everything I read sounds like this never works...I am perplexed.

    ​

    "To quote this article, Stanford has disclosed over 10,000 patents since 1970 and only 3 have generated multi-million dollar patents..." http://www.ipwatchdog.com/2017/11/20/universities-patent-research/id=90200/

    ​

    Interested to hear any first hand experience from this sub!

    submitted by /u/slocheeta
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    What makes an accelerator valuable?

    Posted: 17 Apr 2019 03:49 PM PDT

    I know everyone believes accelerators are extremely valuable to help grow your company and there's multiple reasons why. I have never personally joined one, but I'm very curious to hear from people who have gone through accelerators and those who are thinking of joining.

    What was the most valuable experience you had in accelerator? Why did you want to join an accelerator? How did it help you? What do you think is the job of an accelerator and how should it best support its members? What do you wish it did for you that it did? What did it do for you? Any additional thoughts would be really valuable!

    submitted by /u/droptillyadance
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    Should I accept payment from my partner to quit?

    Posted: 17 Apr 2019 11:10 AM PDT

    Okay for clarification should I accept my partner's offer to pay me to leave my current position at my day job, where he also works, to finish development on our core software and look for a new day job? Sorry about that beast of a sentence.

    My concerns are twofold: 1 would accepting payment in this fashion impact the ownership of ip for the code that I'm writing and 2 does this sound idiotic.

    I trust that my parter is willing to and motivated to pay me to get out of our office because, though I'm not currently employed as a software developer there and have nothing in the way of an assignment clause, I'm increasingly being tasked with work that is getting close to the heart of what we're doing in our startup venture.

    If I were to accept this monthly payment, to be paid out until I'm employed elsewhere or our project is solvent ( meeting with companies now that have asked how to get early access now), would it impact my ownership of the ip as the sole developer. I have every intention of passing it on to the company as things settle but I don't want to get dicked if I can avoid it. Live in the USA.

    Thanks for any perspective or advice the community may be able to offer.

    submitted by /u/Pourquiopas88x
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    Are there any resources that exist that connect talented and ambitious app/web developers with people who have ideas?

    Posted: 17 Apr 2019 07:01 AM PDT

    I have an idea for an app that would likely involve a lot of complex algorithms and take a lot of time to build. Something that I don't have the knowledge, money, or willingness to risk taking out a loan for.

    But it's a good idea (in my opinion) and It's the only idea I've had over the past several years that I'm willing to write up a business plan for. I feel that if given the opportunity, I could convince a few ambitious app developers or someone with the knowledge base to work with me on as co-founders over an equity deal.

    I have a lot of ideas on how to market it, make it work, how it would work, how it would be monetized, etc. I just need the talent to make it and keep it running.

    How do most startups like these start? Thinking about businesses that are almost entirely run off the app like Uber or Tinder. Do these companies generally use outside firms to build the app, and eventually transition into hiring their own in-house developers. Or do they start from within?

    submitted by /u/parlonida
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    Investor reached out to me

    Posted: 17 Apr 2019 04:47 AM PDT

    Hi guys. Today I have a couple questions but can not disclose most of it for obvious reasons. My startup launched an MVP and I was approached by an investor, legit Venture Capitalist with over $100M AUM. Some background: I'm a serial founder, and the company recently launched.

    But... My company launched 2 weeks ago, so is still hard to find if not by ads, and Google. Another but: this fund only invests in Series A+ and I'd say 60% of their investments are Series B+. Why would they approach me if I'm even too early for a seed round?

    However, I have a meeting and don't know what to expect from it. Any advices?

    submitted by /u/AlwaysBeClosingDoors
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    Looking to start an app with an uber eats format.

    Posted: 17 Apr 2019 10:40 AM PDT

    It would be for the pet industry and the first of its kind and desperately needed. (Sorry I don't want to disclose too much information at this time)

    I have zero business background but have experience in the pet industry.

    Looking for advice:

    1. Where would be the best place to start? Do I get trademarked? How do I protect my idea?

    2. Would I be better off pitching the idea to a larger, more established company? Or would it be more beneficial to figure it out on my own?

    I'm sure I will have more questions. Any nudge in the right direction will be greatly appreciated.

    submitted by /u/RogueXstud
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    Startup Consultant for Equity - How Would You Structure an Agreement?

    Posted: 17 Apr 2019 10:34 AM PDT

    I was approached to be a consultant for a 2-year-old startup, and since they're just getting cash flow positive, they've offered equity instead of cash compensation. The opportunity is interesting and I have some time to commit to it, but I want to make sure I'm protecting myself and my time instead of chasing a dangling carrot. Hoping you wonderful people might have some insight.

    What I'd be doing for them:

    High-level design and backend calculations to bring their core product out of MVP. I would be sending the calcs to developers who would implement my work, so I won't need to get into the nitty gritty of it. (The woman that did the original MVP calcs has a 2nd business and that 2nd business is now taking up most of her time.)

    A little about my current thinking:

    Equity in the startup could definitely have upside, but I have another business that I run that bring in the cash flow now. Ultimately, I want to protect my time and prevent my attention from being pulled away too much from my current business, just in case the equity in the startup never amounts to anything.

    What's been discussed so far:

    The founder of the startup verbally said the way he'd envisioned compensation is to track my hours at whatever rate I normally charge and then that amount would get converted into ownership. However, I have no idea what he thinks the valuation of the company is. And there was no timeframe given for when hours would cover to equity. I also haven't received anything in writing at all yet.

    Questions:

    Soo I'm looking for some help on how to structure an arrangement.

    • What should I be thinking about?

    • How much should I be asking for?

    • Is the hourly method the right approach? Or should I be asking for a set % that vests monthly/quarterly/upon completion of certain milestone?

    • How should we be coming up with company valuation?

    • What am I not asking that I should be?

    This is new territory for me, so I appreciate any and all insight!

    (And please let me know if there's another place I should be posting this.)

    submitted by /u/minoliphaunt
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    I need to know how much does it cost to develop a SaaS platform from scratch, targeting 10 thousand accounts for tomorrow

    Posted: 17 Apr 2019 08:50 AM PDT

    I've been asked just that.

    The final platform must be "similar" to current platform that will be phased out.

    Current platform supports 100 accounts and hundred of functionalities and must be used on smartphones tablet and desktop devices.

    It's a workforce management platform, with tasks management, staff communication and management, quality control, etc developed during 10 years.

    It's an old legacy platform, currently used by 100 accounts (companies) with 20-30 staff member per company.

    The java legacy code could be in principle refactored. It's difficult to understand how much does it cost to refactor and the migration involved.

    Developing everything from scratch has several pros and cons as everybody knows.

    I wonder if anybody is able to give an estimate for such multitenant, multilanguage SaaS platform on the spot with such little information and such a vague objective: that is part of the problem.

    submitted by /u/albeddit
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    Is it worth going into a mature market?

    Posted: 17 Apr 2019 02:56 AM PDT

    Hello everyone,

    I always like to succeed in business but one thing I always have a concern with is that is going into a mature market worth pursuing? I do see many people trying out a product in a mature market but doesn't go very well and end up stopping. So, I'm guessing the best approach is trying a market that is new/young. I guess that is the easy part but the hard part is marketing a new product in a young market.

    What are your thoughts about this? Would you recommend me trying out a product in a mature market or not?

    submitted by /u/yahya173
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