In Depth

Transparency++: Bangalore startup reveals founder's salary and equity, funding details and more

Jubin Mehta
17th Nov 2014
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image credit: onthewight.com
image credit: onthewight.com

Amarpreet Kalkat is a gritty entrepreneur, the man behind Frrole which has a social intelligence product. The company started back in late 2011 with a consumer facing model, it was a social newspaper. Gaining experience, raising angel investment and undergoing the Microsoft Accelerator program, Frrole pivoted to an enterprise model. Amarpreet has been very transparent from the early on when they had decided to go the ad route giving clear reasoning behind the move. Taking it to the next level, Amarpreet has now come out with a blog post which details out every detail from the founders equity to investment details to the salary the founders draw.

We had earlier written about "How much is your valuation and equity dilution in the first round of funding?" and now, this post which was written originally on 30th gives a proof with exact numbers:

Founders Equity

The founder equity before the seed round raise was divided as 60:20:20 between the three cofounders - Amarpreet, Nishith and Abhishek (Amarpreet had started, Nishith and Abhishek joined in later). 2.5% of it was issued to Rishab Malik, the lone advisor + part-time team member, before the seed round raise.

Seed Round

In the seed round, they raised $245K at a post money valuation of $1.065 million. It took them 4 months to get the money into the account (around end of March 2014) post the verbal agreement on the investment. Amarpreet still continues to wrap up some last vestiges of the seed round paperwork and record-keeping, so one can say that funding rounds take a long amount of time! (However, partial responsibility for the delay post March lies with the team)

Post the seed round, investor own 23% of the equity, 10% of it lies in an Options Pool, and the founders (+ Rishab) own the rest, in equivalent proportions.

Founders Salary

Post the seed round, the cofounders draw an annual salary of INR 12 lacs each (It works quite well for a single guy in Bangalore, and just about works for a family man).

Revenues

While monthly figures make a fast growing startup look a lot prettier, the team believes that quarterly averages are more appropriate indicators of overall growth than monthly numbers.

Their Jan-March quarter revenue was ~ $8k, putting them at an ARR of ~ $30K. Their April-June quarter revenue was ~ $19k, putting them at an ARR of ~ $75K and July-Sept quarter revenue was ~ $21k, putting the ARR at ~ $85K. They had a bad quarter there, visibly, although it was largely expected (on account of the end of Indian General Elections).

Already a few weeks into the Oct-Dec quarter, the team is seeing a clear resurgence with more than 80% of their pilot customers coming back to sign recurring deals, and they are looking at guaranteed revenues of ~ $60k for the quarter putting them at a worst case ARR of $240k, with half of the quarter remaining. The goal for the quarter is to get really close to an ARR of $500k.

As time progresses and the pressures of running a growing business allows, Amarpreet would continue to share more.

Read the complete post here.

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