Our firm has played with that concept already for number of years. However in the last few years with easy access to funding capital it begs the question why exchange equity for those items? It would seem then that this would appeal to startups only if they can't get funding, which raises another question on how viable of a startup is it?
With that said, we concluded that a capped equity swap might be acceptable. As in where the service provider would be rewarded with up to 4x to 8x their or the industry normal business rate for the services they performed. So a lawyer normally charges $150/hr. He choose to only charge $50/hr in exchange for the other $100/hr be some sort of investment. At payout time he could receive upto $800/hr for services performed. Payment could be tied to any company metric. This would be much easier to track then say % share of equity.
I am interested in knowing this too. We want to create a private space where all who have applied can talk about their experience and provide input. For now just leave a comment here http://www.i4edge.com/ycombinator-apply-list/
I thought the same thing, except when they are reviewing it they must be taking brief notes like, hey my pet peeve no co-founder, or what ever. All I am saying is if they structured it to say a scale of 1-10 (as in 5 of the reviewer thought you needed a co-founder) or 5 out of 10 think the idea isn't good enough, or 7 of 10 thought the you didn't stand out, etc.
Don't know I applied as a team and still got rejected, ummm passed over. Should I take that more personally :-). Actually they have quite a tough job to do in reviewing so many applications. I the e-mail was actually almost too nice. It would have been helpful if it had some quantitative data as in what each person thought of it as in. As in a score or something even such as, we liked you but your idea really stunk, or no technical co-founder, or don't give up your day job.
Actually open call here. I am very interested in hearing any ideas that didn't get accepted. I hope to modify my site in the next day to allow a discussion on this and to talk to others. Y-combinator is a great way it seems to develop concepts, but not the only way. If other rejected ones are like us then we should really talk to each other. Feel free to e-mail me at [email protected]. Better yet here post on this page http://www.i4edge.com/ycombinator-apply-list/
My partner and I had a debate about using the word platform in our startup description. I thought it was the best word to describe our company product he thought it was too non descriptive. After reading this, platform is a great way to describe it in that its focus is to allow others to create and develop based on it.
It seems to me that this situation only exists for those well connected in the Bay Area. Perhaps smart money will be looking for new areas that are still underfunded.
When it comes to funding there obviously isn't a one size fits all approach that will work for everyone. I've done the bootstrapping too many times and it works ok for little simple ideas or features companies. However it is not nearly as good for getting bigger concepts out there.
I can understand some of the logic but it sounds like someone is afriad of competation. Startups like ours (I4 exchange ) will be able to get the funding and support we have lacked so far due to limited exposure to investors.
With that said, we concluded that a capped equity swap might be acceptable. As in where the service provider would be rewarded with up to 4x to 8x their or the industry normal business rate for the services they performed. So a lawyer normally charges $150/hr. He choose to only charge $50/hr in exchange for the other $100/hr be some sort of investment. At payout time he could receive upto $800/hr for services performed. Payment could be tied to any company metric. This would be much easier to track then say % share of equity.