All the services are provided without cash expenses for the Startup. The Startup does not have to compensate the listed prizes with cash. As displayed above, some services are for free, without any strings attached. Some services (marked with a star*) require a success-based compensation either with equity or revenue (above, highlighted with “for equity”). The exact compensation model depends on the circumstances of the startup. The compensation terms are flexible and the collaboration will start with our Agile Service Agreement.
Agile Service Agreement:
In this contract you and the service provider define the specifications and desired outcome of your collaboration.
You will collaborate in an agile manner with plan, do, check, adjust cycles. The service value will be tracked so that you have full transparency. It is defined whether the services shall be provided for free (up to the defined values) or be compensated with with revenue-shares or a company participation (service-for-equity).
At a predefined time as agreed on in the Agile Service Agreement, the accumulated service can be converted into company shares or similar. The final model depends on an individual basis. We will recommend doing it with a Virtual Participation Agreement, which means that the service provider will be entitled to a cash payout at the respective value of a certain amount of (virtual) shares at a specified event. That means the service provider is not a direct shareholder and has no voting rights. The Startup has a contingent liability towards the service provider. The parties will agree on a company valuation at the time of conversion.
With a revenue-based compensation model a company valuation is not required. This model may be more attractive for Startups that do not seek external funding and achieve a positive cash flow sooner. In the Agile Service Agreement, the parties specify a certain multiple for the provided service value that should be paid back over a certain time. Depending on the forecasted revenue, a percentage is defined that shall be paid to the service provider over that period in order to achieve the targeted compensation.