Venture Studios are the new hype, similar to accelerators a couple of years ago. They are popping up everywhere and many service providers also want to have a slice of the pie. Working on exciting new projects and benefiting from the financial upside sounds like a dream project to many agency owners. But how can it be done in a professional and lean way?
Founder and CEO of KAPSLY Ventures. Lives in Zurich and holds an MBA from the University of St. Gallen.
Did you know that the value of sweat equity in the USA equals 1.2 times their GDP, which is over 20 trillion USD1? I was stunned when I read that. Now the market for service-for-equity is probably not so big (yet). But it is definitely a serious option to get the resources you need to build a business. It is much more direct than fundraising and finding investors because here you can take the direct route. You can read a lot about fundraising and find programs that guide you through it. But what about service-for-equity and finding the right service investor? Not much on that. So keep on reading if you consider this option to build your startup.
Service investments are still very rare and not many people talk about them. It is not professionalized and celebrated like venture capital and closing a funding round, but it will get there.
One of the main reasons startups fail is because they run out of money or have the wrong team. You're thinking, "that has nothing to do with me," that's probably true. But maybe you could do something about it and actually help startups succeed while increasing your team's utilization and generating higher profits for your agency. This blog post is for service agencies who want to help startups build their company and share in their success.
Why do cofounders usually start to fight? Either because they can not agree on how to split equity in the beginning or later when a cofounder leaves prematurely. The former can be solved over a long weekend usually. The later can lead to costly legal battles and the ruin of your company.
Last updated on July 6th, 2021
As an early-stage Startup ourselves we know that (Startup) life can be challenging during the bootstrapping period. Startups who are looking for funding need to prove their business model before talking to investors, usually by getting user traction or some kind of market validation. So that means either investing a lot of their own time or finding supporters to accelerate the process. Assuming that finding and compensating potential cofounders, supporters, freelancers or other service providers is simple and realistic, is it also more effective than receiving traditional money investment, especially in the early phase?
Splitting equity is often a neglected topic and done at the last minute. However, it provides an important foundation for the success of your company, so I have asked myself if there is one formula that would allow everyone to get it right.
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