Startup Development Through Equity Sharing
Rakesh Gupta, Founder & CEO of Kiwitech during a conversation with BW Businessworld's Sheena Sachdeva spoke about an unusual business model, which has been engaging with potential startups while providing them with development solutions.
How does Kiwitech support its partner companies?
Kiwitech has a unique model. We provide technological solutions to startups and our fee for technology development is in the form of equity. It's a 50-50 split. So rather than the startup paying us 100 per cent for the development, they pay us 50 per cent while the other 50 per cent is given as equity.
This creates a great deal of strategic alignment. Therefore, we are interested in their development and equity growth.
How did you come up with this idea?
I would say it is very unusual - we kind of stumbled upon it. Since startups weren't able to completely pay all their bills for development, we found we could take part in their growth in terms of equity as a convertible. This incident led to the inception of this model. We figured we could help startups and have them pay a part in cash and the rest in equity. The process saves the effort of startups on raising money and it also gives us a stake in the startup that has the potential to grow.
How do you sync or synergize technology within this model?
Kiwitech provides technology development to software startups. These startups have a software platform to develop and we provide the services of web programming, mobile programming, etc. to help them build interesting software products.
As they add features like version one, two, three, we continue to support them in adding those features. To make this happen, we have a dedicated team of people working with the startup.