Crowdfunding the creation of the next version of LFGSS

love it, will commit some cash when the calling comes, :-)

So I need to speak to a lawyer on Monday (I'm actually speaking to 2) to make sure that everything paperwork-wise is in order for the equity offer and to ensure that I've structured things correctly with regards to how do this such that it doesn't prevent VC funding of a Series A at some point way into the future.

make sure you discuss how you reconcile the likely requirement of the VC for a shareholder agreement with the disparate group of shareholders that the seedrs structure will result in.

Will do. Though I think you should read the seedrs FAQ.

is seedrs the only way to hand the money over?

just tried to join, unfortunatly I answered the questions truthfully & got told I couldn't join. Spose the clue to what they want you to answer is on there B4 you go to the questions

I'll try again tomorrow, they say there may be a delay before I can invest (if I get to join) whilst they check where my money comes from

Dang. I'll ensure that I sign up for seedr tomorrow. Don't want to miss out. Thanks for the heads up H15LHR

where is the seeders faq

where is the seeders faq

Seedrs.com/faq

is seedrs the only way to hand the money over?

just tried to join, unfortunatly I answered the questions truthfully & got told I couldn't join. Spose the clue to what they want you to answer is on there B4 you go to the questions

I'll try again tomorrow, they say there may be a delay before I can invest (if I get to join) whilst they check where my money comes from

Yes.

For equity, it's the only way.

To not use them would open up a horrible can of worms for everyone involved. Plus investors should get the benefits of SEIS.

I don't know the questions seedrs ask, please check the Seedrs FAQ and make sure you're happy before you sign up. As an entrepreneur I'm only presented with that view of seedrs... it's up to you as investors to check it out before you register.

The summary of it all is:

• Microcosm offers % equity to Seedrs.
  
• Seedrs offer that for sale to you and they keep track of who has which bit.
  
• If the offered amount is fully sold, then Seedrs does due diligence and investigates me to ensure it reflects a sound investment.
  
• If Seedrs agree that things are fine, the round is finalised and I receive the money, they receive the stock, and you have your shares.
  
• The equity is common stock, with voting rights... no different from the equity I hold.
  
• Seedrs exercise the votes, you would speak to seedrs to vote in AGMs, and on business matters. Though on all user things I'm going to just ask users directly via here or Microcosm... it's only the business things that require voting rights.
  
  
  

In all of that, Seedrs have a responsibility to also ensure that you are an experienced investor that can afford to make the investment. Hence they ask whether you're a higher rate earner and I guess whether you've invested before.

So yes... read the FAQ on Seedrs and if you're happy to go forward sign up in preparation.

when are you going to go live on seedrs?

Planning on Tuesday/Wednesday, but that is the date of me submitting the proposition to Seedrs which starts their due diligence.

This is basically to allow me to see a lawyer on Monday to ensure that I've taken care of everything properly before releasing details, etc.

any idea of how long it will take for their due diligence and for us to be able to give you money?

Seedrs do not say how long it takes.

Simply:

Once all the money has been invested, we need to conduct a legal due diligence process on the business and enter into a subscription agreement with you before the investment is completed. In most cases this should be a quick and painless process, and once it's done we'll transfer you the money in exchange for your shares. If we identify problems in the legal due diligence process or are unable to agree legal terms, the process may get drawn out, and ultimately we retain the discretion to cancel the investment and return investors' money.

oh, so Tuesday/Wednesday is when we need to give money

Tuesday/Wednesday is when Seedrs will be submitted for the investors, and at the same time the crowdfunding options will open.

So donors/patrons (the below £500 help) is aiming for Tuesday/Wednesday.

Whilst the investors will wait for Seedrs to complete their due diligence.

Bear in mind that Seedrs don't know me... so there are things like verifying who I am, the company details, the company status, background check, company health, claims made with regards to my education, the business proposal, etc.

I'm providing a lot of this to them in ways that they can verify with third parties. But even if they're quick I can't imagine Seedrs opening it same day.

Joined seedrs.

Will await further instructions..

What are your plans when it comes to UX / design? Will you hire someone with a similar amount of experience as yourself, but in usability and design?

I'm not questioning this from an idea / technical / gettin it done point of view, but reading a sound realistic plan for ux and design would probably put me in the investor camp.

What are your plans when it comes to UX / design? Will you hire someone with a similar amount of experience as yourself, but in usability and design?

Yes.

The bulk of work within the next year is skilled grunt work: technical.

But where expertise can be brought in or sourced from the wider community for shorter projects to lay down a solid foundation for UX and design... then that's what I'll do.

To me, personally... UX matters more than design and is much harder to get right. But it shapes the flow of the site and information and dictates what the APIs should look like. This makes it something I want to investigate deeply very soon.

All that said, we're bootstrapped. This will be a scrappy beg, borrow and ask favours thing. We can only offer a stipend to people who help, we can't go and engage some firm to go off and investigate something for us.

We'll have to get by on a great deal of love and support for the skills we don't have inhouse. I definitely recognise that I don't possess all of the skills I need though. That's why I feel I'm evolving into a CEO, I spend more time not coding than I do coding... and you know what, so long as that brings this into being I'm fine with that. I just want, no... need, this to exist.

I managed to register with Seedrs but did have to check one answer to their 'risk assessment' on Google. They have a list of questions which are basically aimed at checking you recognise the risks associated with investments of this type.
The one I had to check on was in relation to future share issues and share dilution.
It's not something I have come across before but, in a nutshell, if someone owns shares in a company and that company issues more share to raise capital, the percentage ownership of the company is reduced.
http://www.investopedia.com/articles/stocks/11/dangers-of-stock-dilution.asp#axzz2BqWv2AUx

Still happy to invest btw!

Yes, dilution happens.

In effect by offering you shares I'm not giving you mine... I'm creating new ones. So I get diluted... the percentage my shares represent is now less.

However, in theory the value of the percentage has increased in a way that offsets the percentage going down.

In practice dilution happens many times, each time investors join or employees are hired on the basis of some shares. It's a very natural part of a new company attempting to grow. It happens far less often for extremely stable and mature companies.

As the company grows, new shares are created to increase the total value in some way which results in dilution. And if dilution occurs during downsizing then it is usually done so as to retain value in some way.

I read a post once on the complexities of planning for this, it's over here: http://answers.onstartups.com/questions/6949/forming-a-new-software-startup-how-do-i-allocate-ownership-fairly/23326#23326

The principle is roughly:

The founders should end up with about 50% of the company, total. Each of the next five layers should end up with about 10% of the company, split equally among everyone in the layer.

And the example is:

Example:

Two founders start the company. They each take 2500 shares. There are 5000 shares outstanding, so each founder owns half.

They hire four employees in year one. These four employees each take 250 shares. There are 6000 shares outstanding.

They hire another 20 employees in year two. Each one takes 50 shares. They get fewer shares because they took less risk, and they get 50 shares because we're giving each layer 1000 shares to divide up.

By the time the company has six layers, you have given out 10,000 shares. Each founder ends up owning 25%. Each employee layer owns 10% collectively. The earliest employees who took the most risk own the most shares.

So dilution is a natural part of what happens. But should result in an increase in value. Earlier investors end up with more for less outlay as they assumed the highest risk, later investors end up with less for more outlay as they assume the least risk.

It's a risk calculation. The example given is using equity to hire, but the same thing runs through investors who buy equity.

note to all... all of the answers to that quiz are in the 'read this before you click 'i accept'' bit of the T's and C's when you sign up for a seedr's account... you did read that, right? ;)

I managed to register with Seedrs but did have to check one answer to their 'risk assessment' on Google. They have a list of questions which are basically aimed at checking you recognise the risks associated with investments of this type.
The one I had to check on was in relation to future share issues and share dilution.
It's not something I have come across before but, in a nutshell, if someone owns shares in a company and that company issues more share to raise capital, the percentage ownership of the company is reduced.
http://www.investopedia.com/articles/stocks/11/dangers-of-stock-dilution.asp#axzz2BqWv2AUx

Note: I've already advised the other developer (and the designer if we get to YCombinator) to not obsess about dilution and being diluted, for us with the biggest slices today it will happen severely.

The only thing we should obsess about is building the product and growing the company... and for that, obsess over the end users.

That's our focus.

The sweat investment is worth nowt without us sweating some more... especially as the thing doesn't yet exist and isn't yet bringing in revenue.

Yes.

The bulk of work within the next year is skilled grunt work: technical.

But where expertise can be brought in or sourced from the wider community for shorter projects to lay down a solid foundation for UX and design... then that's what I'll do.

To me, personally... UX matters more than design and is much harder to get right. But it shapes the flow of the site and information and dictates what the APIs should look like. This makes it something I want to investigate deeply very soon.

All that said, we're bootstrapped. This will be a scrappy beg, borrow and ask favours thing. We can only offer a stipend to people who help, we can't go and engage some firm to go off and investigate something for us.

We'll have to get by on a great deal of love and support for the skills we don't have inhouse. I definitely recognise that I don't possess all of the skills I need though. That's why I feel I'm evolving into a CEO, I spend more time not coding than I do coding... and you know what, so long as that brings this into being I'm fine with that. I just want, no... need, this to exist.

Completely agree that UX is more important than design, especially for something utility driven as a forum. And with a strong UX you can allow re-skins of the design with less risk of ruining the product.

Imho a dedicated UX person would be incredibly valuable. Someone that can take full responsibility for usability etc and see it through the design and front-end build face.

Good to hear there's a solid plan. Makes it more interesting. Now, where's my checkbook?

you wish to tick boxes or find your cheque book?