"Most of that money [from venture capitalists and angels] is used to build a product," explains Haig Kayserian, the CEO of Kayweb Angels. "Once that product is built, you will probably have given away a lot of equity."
Kayserian sees what he calls "angel developing" as a way for entrepreneurs to accomplish the same end -- a product -- without giving up control of their companies in the process.
Kayweb is named for its majority owner, the design and development firm Kayserian founded in Australia seven years ago. That company, which now has a client list of more than 200 companies and additional offices in the Philippines and New York, takes on the startup projects that Kayweb Angels selects. Like a traditional capital fund, Kayweb Angels also has a board of directors that provides its startups with connections, guidance and help securing further funding.
Since getting started in October, the board has already invested work in three startups (all in stealth mode): whoisgreen.com, burringo.com and doitinperson.com. In exchange for $150,000 to $300,000 of work, each startup has given Kayweb 14% to 40% equity. As a rule, Kayserian says that Kayweb will take no more than 40% of a company in exchange for development work.
The shortage of startup technical talent, especially in New York City, has been well-documented. But will startups give up a substantial portion of their companies in exchange for that talent?