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Vouchers for Equity: Powered by EU Regional Digital Mutual Funds

Vouchers- redeemable for blocks of their staff's time- are issued by creative agencies in return for equity from start ups, who spend these on outsourced design,code & other services. Participating agencies pool the equity received in a mutual fund.

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High value vouchers are given to start ups (typically for blocks of days) in return for equity in their business (between 5% and 20%). These can be used to pay for outsourced design, coding, marketing, legal and other professional services. The founders choose from a menu of participating supplier agencies, freelancers and consultants. If the founders are developers themselves, they might choose marketing, design or legal services. If they are non-technical, they might use the vouchers with a software company.

The supplier companies participate in the DIM Fund by giving significant blocks of staff time against which the vouchers are redeemed by the start-ups. In return for their time, the supplier companies are not given cash payment but get equity, which they don't receive directly but instead is pooled with other supplier companies equity and put into the DIM Fund. Because the Fund therefore consists of the accumulated equity from all the participating start-ups, the risk of each supplier's individual investment is spread.

When a participating start up achieves an exit or IPO, the Fund ploughs the cash or shares it receives back into the Fund, thereby giving an incentive to the supplier companies to participate further as the value of their shares increases. As it becomes more profitable, the Fund will issue cash dividends.

The Funds should be regional or even city-based to grow a sense of civic mission and solidarity. Tax incentives would allow suppliers to offset a cash equivalent of staff time spent and ensure any capital gains were tax free, at least at the beginning.

How will your concept support web entrepreneurship?

The concept is designed to address the typical problems faced by start ups of rapid burn rate and short runway, which are caused by the expense involved in outsourcing key services like design, development and marketing to supplier agencies that have no stake in the start up. The scheme gives founders the flexibility to decide what they need to spend their money on according to their missing skill sets. It reduces the cash outlay involved in outsourcing and also incentives suppliers to deliver maximum value and work with the start up for long term mutual benefit. The contributing suppliers are not staking their equity against one company’s success but have a stake in all of them.

What kinds of resources will be needed to get this concept off the ground and scale it?

A Fund administration body is needed with the following expertise and roles: -valuation of start ups -regulation of fees for professional services (in order to issue accurately valued vouchers) -legal support to start ups for trade sales and IPOs All the members of this body would not need to be full time, although a project manager and a communications manager would be needed even for a city level pilot. The supplier agencies are key, so it would be useful to offer incentives to get them involved for the first year, perhaps a 50% contribution to the staff costs they incur.

How could we get started?

This is an ambitious project and it would be best to start a pilot at a regional level or perhaps in a large metropolitan area like Paris, London, Birmingham or Milan. An event in the pilot city or region for all the agencies in these key areas: web and mobile development, UX / information architecture, market research, graphic design, SEO, communication and PR, legal. The event would present the concept- a consortium of the region's established suppliers in the creative industries which supports start ups through free time and in return pools equity. A similar event for start ups would then take place and after making adjustments to the plan following feedback, a third event would bring the start ups together with the suppliers.

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Photo of Paul van Zoggel

Why didn't I see this concept before? I few days ago I commented on starterbarter and taxbreak concept, to do it with vouchers.

I would would offer my skills online, like 10 hours 50 euro an hour. This is a 500 euro voucher. You can claim it I just need to accept. I wont get paid but have shares in startup.

No money spend, real value created.

Tim, are you pursuing this concept on your own?

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