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Website App Designer also an Angel?

We are about to build our website/app and the company that is building this for us, has expressed interest in our idea. We want to get this quickly to market as we are entering a niche space right now that has little to no competition and we are starting to seek angel investment. We are finalizing our estimates/financials of how much we will need to raise to build, market, etc. which is mostly determined by the initial costs of building and marketing the site and app.

The company who is designing our site, is helping to connect us to possible investors, but has also proposed the idea of them building the site for a greatly reduced cost - thus investing their time/staff and dollars towards our business as an angel investor.
We are trying to figure out what is a fair offer - if the website is estimated to cost between 80-130k to build over the generations, does anyone have experience with this type of relationship? Would we structure some kind of SAFE/convertible note in the amount of the dollars we are not paying upfront?


2 Replies

Gopi Mattel
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Gopi Mattel Advisor
Director, Chennai Area at The Founder Institute
80k-130k seems very expensive for a website. Should be doable between $2.5k to $10k. If it is a highly functional application, i can see budgeting almost up to $50k.
The other problem would be that your valuation in the beginning would be very low ( probably less than $0.5M) and you will give up a large chunk of equity for this task.
It maybe worth it if they are willing to do it for 100% equity rather than cash. But many companies may want you to cover their cost with cash and then the profit is what they are willing to trade.
I would instead work on how to get your MVP level development done using Freelancer.com or upwork.com people: for about 15k. A technology designer can work for you maybe 12 hours a week and manage the development through the MVP over three months for a cash payment of $5k plus some equity.
Good luck.
Brad Harkavy
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Brad Harkavy Advisor
General Manager at LiveData, Inc.
You need to separate out the cash value of their work from the investment discussion. Figure out really what the MVP costs and they see if the developers are competitive in real dollars.

Once you have established the real value of the work, you can figure out if cash or equity is the best currency to get the work done.
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