Splitting equity can be frustrating and difficult. Better way is to track time & money contributions in bootstrpd and let the tool do the math! See capital shares automatically connect to your contributions. You can see a cap table in 10 minutes!
Create transparency and facts that will provide value for the entire team as well as possible investors.
Splitting equity can be expensive when you have an argument and need to get a lawyer involved. Measure equity shares transparently based on everyone’s contributions and use the bootstrpd Cofounder Agreement template to agree on the split.
Keep your team motivated! Time tracking can make employees more productive with their time. When everyone’s contributions are valued transparently the team will feel more appreciated and motivated.
What is bootstrapping & why is it important?
Naturally, every new business starts bootstrapping. The majority of businesses are bootstrapped and only a small fraction ever receives venture capital. That is why we believe there must be a simple alternative to traditional business funding that is applicable to every business model.
When is bootstrapping a good idea?
If you can avoid external funding, bootstrapping is the best way to build a business because you keep the full ownership and control. That means the rewards can be much higher. In case you need to raise money later, your company valuation should be much higher, again allowing you to keep more shares.
When would you recommend bootstrapping?
Almost every business that is not very capital intensive. Especially lifestyle/cottage businesses. Startups in areas that require a lot of research or are highly regulated, like healthcare or banking, will have more difficulties.
Is there a best way to do bootstrapping?
Every business is different and operates in different circumstances, so there is probably not the “one” best practice. Like for all businesses it is important to have processes in place that create transparency and guide decisions. A bootstrapped company often can not compensate supporters with market salaries. Hence, a transparent system can help ensure fair alternatives to incentivize and motivate supporters.
What is equity splitting?
A company that has more than one founder needs to split the equity/company shares among the founders. Each co-founder is going to become a shareholder with a certain percentage once the company is incorporated. The percentages can be either defined upfront and remain static or co-founders split equity based on the value of contributions and it remains dynamic at least for a certain time.
Why is it better that it’s dynamic?
Nobody knows what will happen in the future. Circumstances change and co-founders may have to work less, or even leave the companies. With a dynamic model, you will always have transparency and be up to date on the total value of everyone's contributions. It gives you a good indication of who should get how much equity. Over time the values will level out.
Another major advantage is when a cofounder has to leave the team and needs to be paid out to return the shares you know exactly the value of uncompensated contributions. Read more here.
Is the data safe?
The data is stored on AWS EC2 servers and is therefore highly secured. Also, a snapshot of the data is taken every hour. There are also daily backups to highly available S3 storage.
Die Daten werden auf AWS EC2 Servern gespeichert und sind dadurch hochgradig abgesichert. Auch wird jede Stunde ein Snapshot von den Daten erstellt. Zudem gibt es tägliche Backups auf hoch verfügbaren S3 Speicher.
Book a FREE 30 minute call with us! If you want more detailed advice, let us know. (€100/hour)