Equity Agreement for Service (Beta)
The Equity Agreement for Service ("EASE") is a free legal template for entrepreneurs to offer equity to service providers instead of cash.
It is being released as a "Beta" version to gather comments and input from the startup community.
Entrepreneurs need critical services at the earliest-stages of their startup journey, but many lack the financial resources. The Equity Agreement for Service (EASE) can potentially help these entrepreneurs by providing an alternative way to compensate service providers.
EASE contains special provisions that give unique rights and protections to both entrepreneurs and service providers, without hampering either side. The entrepreneur has the security of knowing they are not overextending equity potential, while the service provider can feel confident that they will receive an equitable reward for their contribution if the venture is successful.
It was developed by the Founder Institute, with assistance from experienced Silicon Valley startup lawyers.
The Agreement
EASE is being released as a "Beta" version to gather comments and input from the startup community. Please leave any comments you have so we can improve the next version!
Engagement Risks
The greatest risk of an equity-for-service engagement is picking the wrong service provider. As a result, we do not recommend using using an equity-for-service engagement with any service provider that you have not previously worked with.
It is always important to properly evaluate service providers, and it becomes even more important if you are considering equity compensation. At the very least, we recommend every entrepreneur follow the steps below to properly evaluate any service providers before engaging in an equity-for-service relationship:
1. Work with them on a small project: Ideally there is a pre-existing relationship, but if not, you should engage them on a smaller project to validate their capabilities and working style.
2. Validate their startup experience: Working with startups requires a level of flexibility many service providers do not have. Even if they are a very experienced company, make sure they have experience working with startups at a similar stage as you.
3. Interview previous clients: Get introductions to previous clients to learn about their experience. Do your own research online to find other past clients that they don't introduce you to.
4. Get a laywer: If you decide to move forward with an equity-for-service engagement, be sure to include a laywer. This agreement is not intended to replace legal counsel - it is only intended to reduce your legal costs.
Frequently Asked Questions
List of clauses and explanations
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