Forums: Discussions for entrepreneurs and small business.

Greetings everyone,

I have read through several posts on this site, what a great bunch of like-minded people. My career goal is to become a serial entrepreneur, unless I started a Google or Yahoo, in which case I can retire :=). In the meantime, I am starting to work on my startup idea, a community networking site. I plan to get development work done (and also do it myself at first) and the site operational before approaching VC or even angel investors. I believe the overhead is small enough for me to manage until I can field test the site and see what kind of traffic it attract. I would like to recruit at least 1 developer (maybe more) but I only want to pay equity for their labor. I know there probably isn`t one answer for how much equity to offer (in terms of %) but if anyone has had experience with this and can offer some guidelines or what works for them, I will greatly appreciate it.

Also, I plan to do this out of my house for the time being, probably buildng my own generic server or buying one off Craigslist. I am also trying to figure out which provider to use, I think I just need 1 static IP for this to work but it seems kind of expensive with Yahoo DSL for that, so if you have other suggestions let me know.

That`s all for now and thanks for taking the time to read my post.

Good luck with your project.

Food for thought - paying equity for labor can be very expensive.

First there is the ultimate cost of the equity you paid

Secondly, because (as you mentioned) it`s so difficult to place a value on the equity (ie valuation on the company) - the company generally has to "pay more" in equity to get the needed services.

An additional consideration, is whether equity alone will enable you to "hire" the best talent available and whether you will be able to "live " with that person as a "partner" in your enterprise for the long term

Robert Johnson

 

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com

Robert,

Thanks for your input, you have some good points. The alternative is to seek funding upfront with just an idea, and from what I hear, I have to give up a good deal of equity also. I would much prefer to get a prototype of the site out first and get some real traffic before getting funding. Perhaps I should just develop the prototype myself though it will take longer since I have to learn new technology but it will give me far more control.

Bob

Bob,

The old adage says - "there is more than one way to skin the cat" and there is more than one way to bring capital into a business.

One key to success is to be sure the offer is appropriate for the stage of the company -then "match" the offer up with potential investors.

Robert Johnson 

-------------------------

Business Growth Masters, LLC -
Capital Catalysts for Entrepreneurs
Home of the Scalable Business Plan and QuikStart Capital Programs
http://www.bizgrowthmasters.com
info@bizgrowthmasters.com