Opening the Books
In keeping with our policy of openness I'm going to lay out our initial finances to the world. I can't promise that this is something we'll always be able to do, but hopefully it will be instructive in the early days as we venture (forge? stumble?) toward profitability.
All monetary amounts are in Singapore Dollars
Our Company Setup
Initially I was the sole director of Deepcalm Pte Ltd, set up in April 2009 through the previously cheap but now horrendously expensive EntrePass process.Arun has now joined me as a director of the company.
Initial Seed Fund
My work last year has left $47,500 in the business. This is approximately the same (50k) as a standard grant for a web startup that you might get from one of the government agencies. A reasonable chunk of cash. It's also at least twice what Y-combinator would be offering a two person startup team.At one stage it seemed that Arun might be able to bring a smaller but still significant amount, but that proved not to be the case. So it is, what it is.
Our Ownership Split
It was decided, before the final funding situation became clear, that we should treat any initial funding for the business as a SPRING or Y-combinator grant. Typically an investor at this stage will take between 4-10% of the business in exchange for the seed funding.We settled on a figure of 6% of the company for whatever seed cash we had and would split the rest of the company (94%) between us.
As it's worked out this means our ownership stakes are:
Andy - 53% Arun - 47%
Salaries
I'm on a Employment Pass meaning my salary must be a minimum of $2,500 to maintain the pass which is conveniently the amount that Arun has worked out he can survive on. We've both agreed to pay ourselves as little as we can to survive until we get to profitability.Neither of us are local, although Arun is a Permanent Resident, so we don't have any advantages as far as local family we can stay with to reduce the rental overhead of Singapore, so we're both subject to Singapore's costly rental market!
I'm in a bit of an odd situation as technically I don't have to earn that much to survive as my wife works for a big multi-national. However in order to keep things equitable and also not to fudge our actual costs we're taking the same salary.
What This Means
If we were to make no money we could pay ourselves for 9 months. We will obviously need to be getting paid much before then! From the progress we've made so far we think we should be in a situation to begin taking payment in the next couple of months.We're also looking at doing a little consulting work if anything suitable comes up, to give us some extra 'runway'. Or you can always join us (if you're in South East Asia) for some Rails Training.
We'll keep you updated about our ongoing business finances and the thinking behind them in later posts.
