Startups Anonymous Est. 2013 · Read-only archive
Questions

Distributing equity for Sales

I have built a B2B SAAS product. I have shown the product to about 30-40 large, enterprise customers and I received good reviews. Also, many people have told me that there is a need for such a product in the marketplace. The deal size of this product will be in the range of $20,000 to $70,000.

Looking at the success of this product, some people want to work with me. They are committed to working full-time with me. The key focus now is to sell as fast as I can. Most of the people who have shared interest do not have the domain expertise for this product.

My end goal is to reach $5-7M in ARR and sell the company.

These partners want equity in the company for helping with Sales. How should we distribute the equity in such a case? I will also be fully involved in selling the product, since the product is very technical and needs to be communicated to developers.

Also, some people have offered to connect me with big CIOs who can buy this product. How can I compensate them for opening the doors for me/sharing the leads with me?

2 answers from the community

AAnonymous· Jan 7, 2015

If your partners are effectively mercenaries, they should get a salary + commission and a small amount of equity (like you would give any other early employee)

If they insist on equity, set up a vesting schedule that will scare of any partners that are focused on short term gain.

Handing out equity to people who have not yet proven themselves in your company is unwise. The startup graveyard is full of companies who hired top salespeople from F500 companies who were unable to deliver in a startup environment.

AAnonymous· Jan 7, 2015

If you've shown this to 30-40 companies and they like your product why don't u just close the deals? With that traction you can hire real sales people who have domain expertise.