What Can You Trade Performance-Based Equity For?
Fixed equity doesn’t let you get creative or give you flexibility. There are legal, tax and/or business reasons why you can’t grant options or restricted stock to anyone and everyone.
Performance-Based Equity (PBE) is different. It’s more flexible like cash, except that instead of paying out the cash, you keep it as working capital. For cash-starved startups and new businesses–or those with cash but a high run-rate–PBE conserves cash while rewarding actual performance.
Of course, you can trade PBE for employees’ time worked or tasks completed. That’s a given. But how valuable can that really be? Extremely: it’s just that, if you’re like most founders, you haven’t even imagined the flexibility PBE can give you. So let’s take a closer look at all the things you can trade PBE for.
1.Time Worked and/or Tasks Completed for Non-Employee Experts
With PBE, you can reward part-timers, contractors and outsourcing providers for their expertise–each and every time they help you. (Of course, you can also reward your own employees, but what makes Upstock truly stand out is that it lets you include practically anyone from anywhere in your team, employee or nonemployee.) Whether you have one external expert or 50 doesn’t matter. Whenever they complete tasks for you (or work a certain amount of time), you can reward them with PBE–or a mix of PBE and cash. Either way, you get the same experts while saving cash and giving them a stake in your success.
2. Physical Resources-Capital Equipment-Supplies
Say you want to furnish your office on the cheap. You’re still going to have to pay a decent amount of cash for used equipment and supplies.
With PBE, you have an alternative. You can incentivize friends, strangers and local businesses to contribute supplies and other resources to you today in return for participating in your success tomorrow. Whether you get a small or large contribution, Upstock can make this happen quickly and efficiently, all without lawyers, accountants or custom agreements.
Whether it’s for crucial introductions or leads, for putting together partnerships or for closing sales, Upstock lets you offer them something other than cash: PBEs.
Think about it from these brokers’ and dealmakers’ perspectives. If you don’t have cash or PBEs, they get a “thank you” for the introduction, but nothing else. If you have PBEs from Upstock, they get equity in your company, giving them an upside ranging from modest to life-changing. They’ll also have an incentive to promote your company’s product/service to others.
4. Office Space-Lodging
Imagine traveling the world working on your startup and compensating your hosts with PBEs (based on the length of your stay, the level of your accommodations, etc.). Upstock gives you the ability to receive lodging or even leases on office space anywhere in the world, all in return for PBEs with zero or significantly reduced cash. Just as with the other three scenarios, everyone wins.