Why Startup Founders Are Swapping Equity With Other Founders
Equity swaps are a supportive way for cash-strapped founders to bet on mutual success
When Jack Abraham was 19 years old, he and Wharton School classmates Nat Turner and Zach Weinberg rented out a residential loft space they turned into an office in Northern Liberties, a gritty, industrial neighborhood in Philadelphia perched on the edge of the Delaware River. In the midst of gentrification, the area then was still dominated by ramshackle tenements with shattered windows and manufacturing plants with signs missing all the letters to spell out the company’s name. Late in the evening, it wasn’t unusual to hear gunfire — moments that terrified Abraham, a student who hailed from the cozy town of McLean, Virginia and arrived at Wharton with ambitions of becoming another great tech entrepreneur.
Despite the shifty neighborhood, Abraham, Turner, and Weinberg made the best of it, living and working in their makeshift office. It was a stark space with concrete floors, no air conditioning, and no internet access. (The solution: running an ethernet cable across the street to a nearby church.) Abraham’s most promising idea was Milo.com, a shopping engine that searched local store shelves on the fly to find the best prices and availability for different kinds of products…
