In this episode, Hall welcomes Sergio Paluch of Beta Boom. Beta Boom is a pre-seed fund focusing on startups in emerging tech hubs around the world. They believe that tech innovation has no boundaries and that founders from underserved groups present one of the biggest opportunities of this era for both investors and society. Beta Boom invests in and supports all founders in emerging tech hubs, and focus on reaching female founders, minority founders, younger founders, older founders, and anyone else that does not fit the old pattern.

Before founding Beta Boom, Sergio was the founder and CEO of Boom Factor, a Silicon Valley innovation consultancy where he led numerous product design and development projects for over 50 clients ranging from YC-backed startups to Fortune 500 companies like Bank of America.

In this episode, Hall and Sergio speak about the current state of investing in startups and how it’s evolving. According to Sergio in just the two years Beta Boom has been operating, he’s seen a lot of new, early-stage funds, incubators and accelerators that are opening and targeting underrepresented founders. He thinks that domain expertise, passion, and perseverance are stronger indicators of founder success, than pedigree or qualities that come from privilege, and in addition to that, founders from diverse backgrounds can better address opportunities in huge, and often overlooked markets.

I had a startup the other day approach me about investing. In the discussion it came up that one of the founders recently left and took half the equity with him.

It appears there was no vesting on the founders equity. Vesting means one has to earn the equity by continuing to work in the business over a period of time.

Founders think they don’t have to vest their equity since they founded the company, but it’s important that founders do so.

The primary reason is to make sure the founder stays active in the company for a reasonable period of time.

Other founders and employees will be working for equity so it’s not fair for a founder to stop working and take all their equity with them.

Investors funding a startup often require unvesting founders share and have them earn it back. If a founder leaves then the unvested shares go to those who continue to work in the business.

Even if there’s no investment driving the decision, founders should put an agreement in place that determines what happens if one of the founders leave.

With an agreement in place, a founder can leave at any point and his or her unvested shares will go back into the company.

This protects the founders and the investors.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today!