Besides pushing entrepreneurs to their limits, Founder Institute has always been simplifying and speeding up startup processes. Once again, our legal team has structured a document that sorts out the arrangements between founders and collaborators.
We encourage you to use the Equity Agreement for Service (EASE) when dealing with providers of critical services such as design and product development that your business needs to move forward faster.
Our experienced Silicon Valley lawyers have prepared the EASE template to help founders. However, this is just a Beta version of it, and we invite you to share your feedback on the document so that we can further improve it.
Equity for Service Concept
Whether founders are at an early “idea” stage or their businesses are already gaining customers, product testing and advancement is a constantly ongoing demand. Especially on a tight budget, outsourcing design and software development assistance might be the most convenient option. For startups, in particular, equity serves as a powerful tool for rewarding advisors, mentors, team members, and any other type of consultant.
EASE contains special provisions that give unique rights and protections to both entrepreneurs and service providers, without hampering either side. This legal framework will save you time, and negotiation efforts, as well as commissions for lawyers. All it takes is filling in your details, adjusting the terms by ticking the boxes, and signing.
You can now rest assured that you are not overextending your equity potential. On the other hand, service providers can also utilize the handy EASE agreement because it gives them the security of receiving an equitable reward for their contribution.
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How to Use EASE
We previously published our Founder / Advisor Standard Template (FAST) agreement which has thousands of downloads and helped numerous mentors and entrepreneurs build lasting relationships without complications. The principle here is the same - founders sign a contract with the designers or the software engineers that will work on their project for an agreed period, and in return, they grant them equity.
The stage of the startup, and the kind of delivered work, influence the equity distribution. For example, if your business is established and shifting beyond the initial stage, you will pay less equity because the service providers will scale a product that already exists. But in case you’re building from the ground up, the equity percentage will increase correspondingly. In the template document, you’ll find a table outlining the characteristics of the three startup stages and what is the difference between them.
Don’t forget to define your vesting schedule - there is a possibility to vest monthly, upon completion of the job, or following a custom model. Simply check the box for the variant that fits you best.
How To Engage a Service Provider/Consultant
You should trust that your service providers are competent and reliable. Therefore, before assigning essential tasks to them, it is best to inquire how they work, what their expertise is, and whether they have successfully completed projects with other startups. Having both parties aligned on a clear idea and vision will ensure a beneficial working bond.
Consider these interview questions for assessing potential service providers:
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What are your qualifications for providing this service?
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How long have you been providing this service?
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Describe a recent project. What went well and what were the challenges?
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How do you handle situations when a project is going over budget?
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Will you personally be working on my project or will it be delegated to other staff?
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Can I speak with a previous client?
Download and learn more about EASE at https://fi.co/ease
Founder Institute is the world’s largest pre-seed accelerator. Our structured programs are taking place in more than 200 cities in 60 countries worldwide. Since 2009, we have helped over 6000 entrepreneurs turn their ideas into fundable startups and scale their businesses.
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