The dynamic equity splitting platform.
Do it Right from the Start.
- Create transparency and facts
- Stay flexible, nobody knows the future
- Always know the value of everyone’s contributions
2. Invite your teammates.
3. Enter your contributions and start tracking time.
4. Watch the cap table grow and evolve automatically.
- What is bootstrapping?
- A company is bootstrapped when it is funded by an entrepreneur's personal resources or the company's own revenue. Evolved from the phrase "pulling oneself up by one's bootstraps." If a company relies on external funding from investors it is not bootstrapped anymore.
- And 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.
- Why should I start tracking contributions?
- There are different benefits of tracking time and contributions. Some people have an increased focus when they actively start and stop tracking their work hours. As a team you have full transparency and accountability. In some countries you are even required to track work time and offer your employees a tool for that.
Considering different kinds of contributions is very fair and gives a comprehensive picture. Besides the advantages of fair and transparent equity splitting, a company can continue to keep tracking until fair market salaries are paid. You can always see everyone’s uncompensated contributions , which will be particularly helpful in case a co-founder has to leave the company, and that is likely to happen.