Hi there people of the startup world,

I’ve been considering and planning starting a company for quite a few years.

However, I don’t want any equity involved in this.

Essentially, it would be a business that’s run similar to a nonprofit focusing on personal finance, financial education, helping people with their budgets, product reviews etc etc. So being for the people, rather than for making money (while not being a charity). Revenue would come from monthly subscriptions and possibly product sales down the line.

As I’m looking to tread on some toes with this and shake up some industries, I’m not interested in raising VC money, shareholders, or ever selling this business as I’m of the strong belief that this would introduce biases and self interests, which is exactly what I’m looking to avoid.

Any ideas on how this could be made attractive to co-founders (unless I find someone who is also passionate about this) without giving equity that would be meaningless in the first place?

I’m considering business wide bonuses based on business performance on a set % of profit. This could obviously be tied to role and seniority, or if possible an internal employee share scheme, in which case internal equity could be possible (pending legality and implications).

Any feedback or ideas are really appreciated! Thanks a lot

  • tfehring@alien.topBEnglish
    1·
    1 year ago

    The structure you’re looking for is closer to a cooperative than a nonprofit. These do have equity, but they don’t have outside shareholders - instead, the company is owned entirely by its employees and/or customers. Financial services companies with similar structures include credit unions, mutual insurance companies, and Vanguard.

    The main unique challenge faced by this type of organization is its limited access to capital. It’s hard to raise enough money to build a product that can generate revenue without offering the potential for any kind of return to your investors. (Yes, in principle you can raise debt, but in practice that’s generally not viable pre-revenue, save for de facto equity instruments like convertible notes.) Many categories of financial services firms have relatively high fixed regulatory and compliance costs, so if you’re trying to bootstrap, finding a way to generate revenue without falling into those categories will help.