33% of startups are formed with less than $5,000, and 58% are launched with less than $25,000. We know that protecting cash is a priority for you. Paying with equity is the perfect solution for many founders. However, until now that required either a DIY handshake agreement (which most service providers will not accept), or paying thousands of dollars to get a formal valuation, create an option pool, and pay attorneys to draft the agreement.
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How it works
The SOAR Agreement is a contract for equity created by the team at Equify. It does two things: (1) it grants the holder a non-qualified stock option for stock in the Company, and (2) it grants the holder a right to the value of the underlying shares, realized on exit of the Company (acquisition or IPO).
For example, imagine Wanda is a designer. In exchange for 30 hours of UI/UX design work for SuperFly Corp, the company paid her a small amount of cash and gave her a SOAR for 10,000 shares at $1 per share. The chart below shows how Wanda’s shares — granted on the Equify platform — grew in value as SuperFly took off.
Superfly Corp. (SPC) is formed.
SPC asks Wanda to become a service provider, paying her with 10,000 shares of equity
- In the SOAR, Wanda’s shares are priced at $1 per share, unless SPC receives a valuation within 3 months
- 3 months pass without a valuation. Wanda is notified that her share price is $1.00
SPC raises $1 million in seed funding at $1.50 per share.
SPC raises $3 million in a Series A round at $2.50 per share.
SPC raises $5 million in a follow-on Series A-1 round at $3.50 per share.
SPC is acquired by HyperFly Industries for $7.00 per share.
How much does Wanda make for the $10,000 worth of equity she earned? $60,000
Since Wanda never exercised her SOAR, at the time of acquisition of SPC, she is entitled to the value of the shares underlying her SOAR, less her strike price. In this case, she will receive $6.00 per share ($7.00 – $1.00 strike price).
This will be taxed at ordinary income levels and will likely be paid just like other stockholders get paid (e.g. if there is a holdback, earnout or escrow in the acquisition, some of her payment may be delayed).
- Documents Included
- Real time tracking
- Board approval management
- Track your shares across companies
- $297 / year
- Additional documents
- $297 / year
- $600 / year
- Contact for pricing