Equity Monday: India’s digital economy attracts ample attention, three funding rounds, and earnings season

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our week-starting primer in which we go over the latest news, dig into the week ahead, talk about some neat funding rounds and dive into the latest big news from the startup world. (You can follow the show on Twitter here, and myself here, if you are so inclined! Don’t forget to check out last Friday’s episode as well. All the cool kids are doing it.)

Some weekends are slow. This weekend was not. Here’s the round-up of news that we had to talk about:

Up ahead we have a fascinating earnings season, one that the media doesn’t expect to go very well. Stocks were up as we wrote the show, so it appears that Wall Street is more bullish than worried. We’ll see. Netflix reports later this week. Then, next week, we really get underway with Snap, IBM, Microsoft, and others.

We also touched on three funding rounds: More money for cancer-focusedAI startup Paige, $ 6.3 million for FitXR to keep working on its fitness VR work, and this small round from Russia, which reminded us that you can build a startup even in a failing democracy.

Wrapping, this earnings season is a big deal. Lots of tech investors are betting that an accelerated digital transformation is going to push most tech shops into a growth curve that makes their equity attractive, even at elevated prices. Quite a lot of capital has been sunk in this idea. We’ll see what happens when the numbers come in.

Equity drops every Monday at 7:00 a.m. PT and Friday at 6:00 a.m. PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Startups – TechCrunch

Salary + equity for sole software engineer joining after seed round

I have been offered to join a startup as the only software engineer, given 5% equity and a salary around 10-20% below market rate. I am wondering if this is a fair deal.

The startup offers a physical product which links to mobile devices. There is no revenue as yet but many groups of individuals are trialling the product and giving feedback. $ 400k in seed funding has just been secured. The products will be shipped to early buyers within the next 6 months.

The job in question involves developing for both iOS and Android, and also building the backend, analysing data, and creating a machine learning application which essentially becomes the product in the future via subscription service. The software itself is not groundbreaking, but the hardware and software combine to make something novel and useful. The physical device is not revolutionary so the focus is on the software, and many customers are already setup to buy or have bought.

I feel like I may be doing two or more people's jobs, though. What would be the right way to think about this offer? Thanks!

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Nearing the end of (paid) contract with a developer who is now requesting 33% equity to continue working on the App. We are now a year in and traction has already been proven. He has had good ideas and also could be helpful on the business strategy side, what would be a fair agreement?

I personally believe equity of 33-50% might have been appropriate if I was coming to him at the idea stage. To be clear I am the sole founder and this is my own idea.

The App currently has over 2.5k DAU, 11k MAU, very good reviews on the app store, and I've already invested around 30k in total (which includes the payments I have been making to him for development – albeit at a slightly discounted rate). The app is not yet making any revenue, but it seems like we have pretty sticky product with retention rates of 38% (day 1), 20% (day 7) and 10% (day 30).

I do however very much value him, he is a talented developer who has created this quite complex app on his own (with me providing all the designs and ideas) and also has a good business mind.

I don't want to scare him off, but I feel like he is being unreasonable with this request at this stage. It also feels like I am being held at ransom because it would be hard to find another developer who understands the product at this crucial stage where we're about to implement the payment/premium features. The alternative he says is his normal daily development rate, which I would not be able to afford yet until I get investment and I think he knows that.

Sorry for the noob question too, but if I give him equity, does that mean he also gets that % of the profits?

I would like to take him on as a CTO and perhaps have a 4 year vested schedule with a cliff, giving him max 15-20% overall. Is this fair or too much?

Any advice would be very much appreciated.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Work for Equity Contract

Hi,

Im the unoffical co-founder of a startup (joined after product was finished).

As i want to be a official Co-Founder (other Founder will leave company end of the year and give nearly all equity back) i need to do a contact with the oridingal fojnder so i dont work for nothing now.

So we decide to do the typical work for equity stuff

But in the internet i can not find a work for equity contract.

I dont want to hire a lawyer for this because its simply to expensice for us right now.

Do you know where to find such contracts like this.

The cintract should contain the work i do for now (30 hours a week) and what equity i get out from it.

I think thags how usually a contract looks like in this stsrtups szenario.

The founder said he will sing everything i give him so i know hes not trying to rip me off or something.

I would love if someone could help me out. Thank you so much!!!

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Equity distribution help

A good friend of mine has come to me with a business idea. He has already established a business plan, scoped out a lot of the details, and it is his original idea. He needs someone who can do the development and take care of all technology needs. I agreed to do all the dev work and basically be CTO, of a 2 person partnership. Instead of getting paid for the work, we’ve agreed that I would get a percentage of the company. This is where I get stuck. I have no idea what a fair percentage is. I’ve worked at one startup where I got 6% to come in as the 6th team member, with less responsibilities. I worked at another where I only got 3%, but also had significantly less responsibilities. I don’t want to cut myself short, but I want to be fair. Any idea of what % I should ask for? He wants me to come up with the percentage. Thanks in advance for any advice!

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Startups – Rapid Growth and Innovation is in Our Very Nature!

How much equity should you request for putting in sweat equity in a unfunded start up ?

A very early stage pre product market fit b2c start up is asking me to join them to basically put in sweat equity and work outside of the day job to grow the company. While I’m ok with that because I’d like to keep my day job, they are saying most people on the team are working full time hours despite being “part time”. They have no one doing it full time yet. In events like that, what is the appropriate amount of equity a head of marketing should ask for? So far they offered 1-2%, but I thought that’s just standard for full time roles offered to early employees plus a salary.

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Buying equity after being laid off?

My wife was laid off. She has worked with the company for 5 years and was able to fully vest about .3% (1/3rd of 1%) of the company as an undiluted % of the total.

This company is not a unicorn, but has revenue, funding to keep operating for a while and some good wins, but not breakout product market fit.

We are trying to estimate the tax impact as well as possible outcomes at different levels of success.

Is there a good guide for what we can legally compel the company to share? I.e. what must they provide? (I’m interested in basic information like the fair market value of the equity, but also more detailed information like financials)

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Equity Monday: Uber-Postmates is announced, three funding rounds, and narrative construction

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast where we unpack the numbers behind the headlines.

This is Equity Monday, our week-starting primer in which we go over the latest news, dig into the week ahead, talk about some neat funding rounds, and dive into the latest big news from the startup world. (You can follow the show on Twitter here, and myself here, if you are so inclined! Don’t forget to check out last Friday’s episode as well. All the cool kids are doing it.)

What a weekend! After some quiet, somewhat dull off-week periods, this weekend brought us twists and turns that were good fun. Most dealt with a possible Uber -Postmates tie up, so we wrote the show to talk about the transaction’s unconfirmed nature.

Then, it got confirmed. So, here’s the second edition of today’s Equity Monday, recast due to the deal’s official nature:

  • Uber will buy Postmates for $ 2.65 billion in an all-stock transaction. Uber shares were up this morning ahead of the open on the wings of the rumor — wings that beat even harder after the deal was confirmed. Uber investors seem pleased, for now, that after losing out on GrubHub their company has managed to buy a smaller player. Doing so may give Uber more leverage over restaurants and drivers, and boost Uber’s H2 2020 revenue numbers that will still be impacted by COVID-19 and its resulting economic impacts.
  • Q3 earnings don’t kick off for tech and other VC-backed companies for a bit, and heading into the week the public markets are up. Despite all the bad news. The inverse correlation between bad news (short-term, economic), and stock market gains is slowly moving from joke to sordid reality.
  • This week we’re keeping tabs on US and Chinese economic data, the geopolitical situation in Hong Kong and the India-China border, and Q2 VC data as it comes out.
  • We also dug into three funding rounds this morning, detailing Scalefast raising $ 22 million, DigniFi raising $ 14 million, and AirVet raising $ 14 million as well. More international rounds to come, we promise.

We wrapped this morning wondering if Postmates can provide a narrative boost to Uber, a company that isn’t going to have the best Q2 numbers in its history. With Postmates tucked under its arm going into the earnings call, Uber can double-down on its Uber Eats narrative, flash Postmates around the room, and promise that Rides data will get better as well.

Perhaps that would be enough?

Equity drops every Monday at 7:00 AM PT and Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Startups – TechCrunch

Should every founder get equity

Basically, we're a 5 man team.

2 of the founders do not contribute significantly to the startup and will be leaving to another country (will work with us remotely) in the near future. -> One of those gives us good insight and See's the big picture imo, but he basically left for 5 months and we've been doing fine without him; he does not really contribute significantly to concrete work like but gives us vision and insight in the stuff he says and we would act on those kind of. One thing to consider, he basically came back after we got "free funding" (50k worth) by wining competitions and we've been doing really well without him. Im considering giving him 10% to keep him around. And the other one just doesn't do much and I want to give him none

The rest of the team (3 others) are a lot more dedicated and contribute significantly to the Project to make the startup work.

My question is, should everyone get equity? We basically built this startup as a fun project between friends at first.

My equity separation looks like this: 30, 30, 30, 10, 0

Edit: this startup is about 10months old and we have a lot of traction considering covid

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Startups – Rapid Growth and Innovation is in Our Very Nature!

Is VC fundraising in exchange for equity considered a partial sale of the company?

TLDR: I was employee at a startup that gave me equity and secretively clawed it back then fired me few months later. Is the law around "sale of company" established to be a full sale of company or can it be a partial sale (e.g. equity to VCs)? Can I effectively pursue legal action against the startup?

I've worked at the startup before they had major traction and had equity as part of the my compensation with a 4 year vesting period. After my equity has fully vested and before the company publicly announced a major round of VC fundraising (first round ever), the company asked me to sign a new agreement without any equity. I was sent the a new employment contract at 9am and was asked to sign it by 5pm during a busy work day. I didn't have enough time to carefully review its terms or seek advice of counsel. Few months later, the startup fired me, so I curiously reviewed my 2 employment and noticed that the equity clause was missing from the new agreement, thus sparking this question.

Under the old employment contract, the terms of the equity were that I had to be a full-time employee at the time of "sale of company". Does partial sale of company (e.g. equity) to VCs count as "sale of company" and thus trigger a bonus for me?

Please ask clarifying questions if you need more details before providing an answer. I greatly appreciate your advice.

Apologies if I chose the wrong flair. Mods, please adjust accordingly.

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Startups – Rapid Growth and Innovation is in Our Very Nature!