Why Startup Founders Are Swapping Equity With Other Founders

Equity swaps are a supportive way for cash-strapped founders to bet on mutual success

JP Mangalindan
Marker
Published in
7 min readJan 14, 2020

--

Photo: Ana Maria Serrano/Getty Images

WWhen 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. Turner and Weinberg bet on Invite Media, a platform that helped ad-buyers more easily bid on display ad space and make their display ad campaigns more efficient.

“I didn’t have any money at all,” recalls Abraham, who paid himself an annual salary of $34,000 initially and lived on packets of ramen noodles.

The trio wanted to support one another in their ventures but were cash-strapped. In Milo’s earliest days, for instance, when Abraham worked six or seven days a week, he slept on a narrow air bed and owned 100 black t-shirts from Walmart, largely because the entrepreneur hated doing laundry.

“I didn’t have any money at all,” recalls Abraham, who paid himself an annual salary of $34,000 initially and lived on packets of ramen noodles.

--

--

JP Mangalindan
Marker

Tech, travel and entertainment writer, gym fiend, dog lover, wannabe sartorialist and foodie … Email me musings: jpmanga@gmail.com