July 2023

Powerful Visual Content Marketing: Why and How?

Photos. Videos. Infographics. Animations. Data visualizations. You can hardly find a piece of content without any visuals these days. Words simply are not enough to engage and delight today’s audience anymore… That is where visual marketing comes in.

Not sure if you really need visual content? Let’s take a look at the data behind the power of visual content marketing.

Quick Takeaways:

Visual content is vastly preferred by consumers
Visual content drives social media engagement
Utilizing visuals can significantly enhance message retention and brand recall
Tailor the visual elements to suit your audience and brand message
Consumers Prefer Visual Content

It is a known fact that the human attention span continues to get shorter and shorter… only having 8.25 seconds of focused interaction does not work in favor of any marketing strategy.

Having solid and consistent visual content in all forms will appeal to your audience far more than just some words on a page. According to WordStream, 91% of people prefer visual content rather than written.

The importance of social media in todays marketing environment cannot be overstated.  A strong visual content strategy combined with a social media presence can take any business to a whole new level of engagement.

It is crystal clear that today’s consumers prefer some degree of visual marketing over text-based interactions, so how can you harness the power of visual content for your strategy? Read on to find out.

Visual Content Drives Social Media Engagement

Visuals are a must if you want to make a lasting impression on your audience and encourage them to share your content. An average reader can remember images six times easier than text. That means an image is six times more likely to help you keep the attention of your viewers.

According to Hootsuite, “LinkedIn posts with images have a 98% higher comment rate on average”. So not only does visual content grab the attention of your audience, it also translates into consumer interaction.

People are much more likely to share content they find valuable, relevant and meaningful, and one of the most effective ways to enhance your messaging is by incorporating visual elements.

According to AdWeek, people only remember 20% of what they read, but they remember 80% of what they see.

However, not all visuals are created equal. Don’t expect to see big changes in your social sharing and engagement if you are just plugging in stock images to every piece of content.

There is an art to creating powerful imagery, and there are many important things that can help you master visual marketing to generate more leads and sales:

16 Visual Content Marketing Statistics to Know for 2022 [Infographic]

Picking The Right Content Type

Stock images are not your only option when it comes to adding visual elements to your content. Adding infographics or short videos can make your blog content much more visually engaging and meaningful for your audience.

For longer content like whitepapers or eBooks, a visual theme, such as an animated character, can bring the entire piece together to keep your audience entertained and engaged.

But if you really are short on time or don’t have any resources to create visual content, using stock photos is still better than having no visual elements at all. Just make sure that your stock images are relevant and visually interesting.

Another way to add a little something extra to your visual content is to add your brand or business logo onto the piece of media you are working with. Careful and intentional placement of a logo gives your audience something to remember and associate with your name.

Don’t be afraid to get a little creative to engage your readers!

Make A Call-To-Action

According to the same Forbes Insights study, visual content like videos can drive people to take action. This is what makes visual marketing such an important tool for marketers, so make sure you take advantage of this by including a call-to-action (CTA) in your visual content.

CTAs can include everything from encouraging people to visit your website to signing up for your newsletter or making a purchase. But not all CTAs have to be obvious.

If you create a visually interesting piece of content that is full of valuable information relevant to your audience, they will be inspired and even feel compelled to share it without you having to ask.

Cater to your Audience

Now, what’s the whole point of visual marketing anyway? To appeal to your audience and figure out how to use the most effective and compelling content. That way you can translate that appeal to gain even more viewers.

Visual content is no an exception to one of the most important aspects of marketing and the use of visual content: how it is geared to the people who are going to view it.

The images and other visuals you post should represent, reflect, and embody your consumer base. When choosing what visuals to utilize, always be sure that they suit your audience and your brands message.

Along with that, there should be an element of consistency throughout all social media mediums you are using. Your brand should have a slight sense of visual identity that consumers can associate with your name.

A little uniformity makes you recognizable to viewers and memorable to anyone seeing your content. This allows you to take some risks, such as participating in a new trend on your social media platforms.

Overall, the most important thing to remember is that your content should always be centered around your audience and customer base.

Deliver A Seamless Omni-channel User Experience

It does not matter if you have the best visual content on social media with CTA links driving consumers to your landing pages – if your website is not optimized for mobile, strong visual marketing is nothing to them if they cannot access your pages on their devices.

This is just one example of poor omni-channel user experience. Consumers should be able to enjoy a seamless, consistent experience at every touch point and interaction with your brand, both online and offline.

Additionally, make sure you adjust your content for each social media platform you are using to promote your business. Be knowledgable of the demographics of the audience on each platform and the most valuable type of content shared on each platform to see the best results.

For consumers, there is nothing more frustrating than being directed to an incorrect landing page or getting conflicting messages across two different channels or platforms when looking for what they want.

Visual content marketing is all about the customer, so making their experience as enjoyable and convenient as possible will benefit your brand or business more than you’d think.

Still need some help nailing down the actual content part of visual content marketing? Check out our content builder services or schedule a free consultation with us today!

The post Powerful Visual Content Marketing: Why and How? appeared first on Marketing Insider Group.

We Analyzed Millions Of Publisher Links. Here’s How To Syndicate Your Content & PR For Free.

Methodology

We identified the top 100 most engaging publications from our Content Analysis Report tab, with the following filters appended:

Date filter: 1 yearCountry filter: All countriesJournalist filter: Content written only by journalistsDomain filter: Excluded https://youtube.comThe Data points

The top 100 most engaging publications

6 million + links analyzed876 million articles analyzed4 billion backlink engagements analyzed

Please note that BuzzSumo tracks online content – ie. articles, blogs, videos etc. Therefore the links analyzed will point only to publication articles – not webpages, footer links, etc.

NB: Not all links in this study will be representative of syndicated media. That said, the research proves that major, unrelated publications do pass significant authority to each other. Studying the connections between the content of the top 100 most engaging publishers goes a long way to inferring syndication, or at least strong connections.

What do the metrics analyzed in the chart mean?Average engagement 

We analyzed the engagement that a publication earns for each article they publish.

Why did we choose this metric?

If you pitch to a publication, you want your brand or client to get the most amount of attention possible. PRs have long focused on a publication’s “Reach score” when reporting on coverage. This is essentially the traffic or impressions a publication generates overall. The problem with reach scores is that they are extremely broad, and in no way tied to individual coverage. Social engagement, on the other hand is, and is a metric that journalists are increasingly targeted on. The total engagement of a publication is more focused than a reach score. But if a media outlet publishes reams of articles with relatively low engagement, then a high total engagement score is misleading. This is why we chose to focus on average engagement. It involves dividing the number of articles a publisher writes, by their overall engagement, and gives you a more realistic idea of individual article engagement – ie. the amount of attention a placement could drive in said publication.

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Backlinks 

We analyzed the top 100 most engaging publications. For each individual publication, we discovered their top 10 backlinkers. But these top 10 backlinkers were picked from the same pool of publications (ie. the top 100), so that we focused on links from only the highest authority publications.

Why did we choose this metric?

You want your coverage to be organically referenced by other publications, so that it naturally syndicates. Analyzing a publications’ ability to pick up backlinks from other publications will help you do this. A backlink is a reference. Even if it’s not verbatim content syndication (ie. where your story has been republished word for word), it infers syndication or a strong connection. Spotting the connections between publications can guide your pitching efforts, and help you focus on outreaching to media outlets the have the ability to spread your story further than their owned site. We focused our analysis on a closed group of the most engaging publications, as these are the ones that are most likely to drop high quality, relevant links. Another benefit of limiting the analysis to links shared between publishers is that they’re also more likely to represent syndicated content. If we had opened up our analysis to any site (ie. ecommerce, B2C sites, etc.) the links analyzed would be less relevant, and therefore less likely to be syndicated.

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Engagement of backlinks 

We worked out the engagement of the backlinks coming from a publications’ top 10 referrers.

Why did we choose this metric?

The number of backlinks pointing to a publication is interesting to know, and goes some way to revealing the authority of their network, but what if those backlinks all come from low authority sites with low traction articles? To prioritize value over volume, we chose to focus on the engagement of the articles containing those backlinks – ie. the ones that are most likely to drive true attention for your brand or client.

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A huge thank you to Henley Wing-Chiu for, Co-Founder of BuzzSumo, for painstakingly collecting the data 💙

Requirements for Successful Marketing Attribution: Technology

Summary

In the third installment of the series, we dive into foundational technology necessary for effective attribution. This should be used as a starting point to figure out the best tech stack for your organization.

By Brenna Lofquist, Senior Marketing Consultant / Client Services Operations at Heinz Marketing

In the next installment of my series about requirements for successful marketing attribution, the next topic is technology.

Check out the initial post that sparked the inspiration for the series: Select the right attribution model for your business.

The first post in the series highlights data as a key requirement for successful attribution. If you want to read them in order, start here.

Now lets get into it!

Technology

Technology is very important when it comes to attribution. If you don’t have the right technology in place where systems are speaking to each other, data is flowing properly, etc. then you won’t be able to track what’s working and what’s not. Now having an attribution platform isn’t a requirement in itself, there are ways to track attribution without one. However, there is a baseline in terms of what other technology you should have in your stack to make all this work.

Attribution can be thought of as a hub that pulls in data from multiple sources. It then takes that information and provides you the data to make important business decisions — at least it’s supposed to (if you’re doing it right).

Marketing Automation Platform (MAP)

Put simply, MAPs automate marketing actions or tasks. They help streamline marketing workflows such as nurtures, email programs, scoring, data updates, and more. This might vary slightly depending on the MAP you’re using and what you’re using it for. The MAP is a key piece of technology because it’s a central database for all marketing information and interactions.

I like to think of it as the MAP tracks everything within your marketing stages (lead –> MQL). Once a lead is passed to Sales that’s when your Customer Relationship Management (CRM) platform comes into play (we’ll get into that in the next section). So to be able to track attribution, you need a MAP that is accurately tracking data.

In addition, MAPs are often used for campaigns which is another key data point used for attribution. They can also automate and track efforts across multiple aspects of marketing including email, social media, lead generation, direct mail, digital marketing, and more.

Example MAPs: Marketo, HubSpot, Pardot

Customer Relationship Management (CRM)

CRM is a technology for managing all your company’s relationships and interactions with customers and potential customers. A CRM system helps companies stay connected to customers, streamlines processes, and improves profitability. As I mentioned before, think of this as your main system where Sales operates out of.

What you’d typically see in a CRM are Sales reps tracking their activities whether that’s done manually or with automation, likely done via integrations. For example, if you are using Outreach.io for sales execution you can integrate it with Salesforce (CRM) and your sales touches will automatically show up in the lead’s activity history.

CRMs are going to track leads through closed won/lost opportunities and sometimes beyond that, depending on your sales cycle and if there are cross-sell/upsell opportunities or even customer retention efforts. It’s important to make sure your CRM is setup properly to track all activities and interactions because again, those data points are key in being able to accurately track attribution.

Depending on the CRM you are using, some have attribution capabilities built in (although this varies). I would take this with a grain of salt and make sure you explore the functionality in detail to ensure it will support your needs. I have seen a few platforms that promote their attribution features but I would call it a “light” version, if that.

Another important note: your MAP and CRM should talk to each other. You don’t need to sync all data back and forth between the systems however, do figure out when you should sync leads from your MAP to CRM (most often once they are marketing qualified). From there you can figure out which fields should be synced interchangeably, which should only be synced one way, etc.

Example CRMs: Salesforce, HubSpot,

Data Visualization or Reporting

I’m putting these two in the same section because in most cases, platforms can do both. Now this might not exactly be a requirement however, as I mentioned before you’re likely not going to get the full picture when it comes to attribution tracking and reporting with your CRM. That’s where data visualization and reporting platforms come into play.

And often times, these platforms have numerous other capabilities so as always, make sure you look into each one and figure out which is best for your organization’s goals and objectives.

Data visualization and reporting software makes it easier to understand, digest, and make important business decisions from data. They help create actionable insights your team might have not found otherwise. Data visualization in particular presents data in a visual form such as graphs and charts, instead of a bunch of numbers. This makes data more accessible and easier to understand.

Reporting platforms or software help take your attribution to the next level. Similar to what I mentioned in the introduction, you can think of a reporting platform as the hub. It’s main responsibility is to pull in all the data and help you analyze it to make smart business decisions.

Together these platforms can be super valuable and take your attribution tracking to the next level.

Example systems include: Power BI, Tableau, Looker, Domo, Datorama

Integrations

While I’ve only mentioned three categories of technology, integrations play another huge role in being able to track attribution successfully. While there’s no secret sauce to the right tech stack, you want to make sure that whatever technology you do have is integrated properly so your “hub” has access to as much data as possible.

Integrations are going to vary widely based on the technology you’re using. Some tech have native integrations, some don’t. If not, you might be able to use a tool like Zapier to setup an integration through a 3rd party. If you are using Salesforce Align.ly could be an option. If you can’t setup integrations through the technology itself I would look into other options such as UTMs, tracking pixels, etc.

In summary

There’s no magical tech stack that’s going to enable successful and efficient attribution tracking and reporting. However, there are tons of great tools out there that can get you there. I’ve only listed three categories of tech, which should be a great starting point if you don’t have any or if you are looking to reconfigure your setup.

As always I would encourage you to do the research to figure out which tools and tech will work for your organization based on the goals and objectives.

I am always happy to chat attribution technology if you have any questions or thoughts on the post you can reach out to me directly at [email protected]. Stay tuned for next month’s installment of the series!

LiftFund Welcomes Second AmeriCorps Cohort

LiftFund is ecstatic to welcome five new AmeriCorps members to our team thanks to a partnership and grant from AmeriCorps. This grant was awarded as part of the Economic Mobility Corps, a joint venture from the Community Development Financial Institution (CDFI) Fund and AmeriCorps, and was meant to increase LiftFund’s capacity to provide financial literacy and education services to underserved communities.

The new Economic Mobility AmeriCorps members will collaborate with LiftFund’s team to promote business and financial education initiatives in the many communities they serve.

To learn more about the 2023 LiftFund Economic Mobility Corps members, their roles and areas of focus, check out their profiles below!

Jaelle R Jenkins

Entrepreneur Advisor

Jaelle has acquired a wide range of knowledge from her previous positions, learning the effect entrepreneurs have by giving their time, money, and honing their skills. In her free time, she enjoys creating digital artwork as well as viewing British films and television series.

Mia Brooks

Entrepreneur Advisor

Mia has over 20 years’ experience in activism, community development, small business ventures, and economic development in the non-profit sector. Her hobbies include historical research and holistic cooking. 

Heaven Handley 

Entrepreneurship Advisor

Heaven is a former LiftFund client who has grown a successful business and is interested in aiding fellow business owners in thriving with their businesses. She enjoys playing games with family and spending time in nature.

Dr. Laquetta Shaw

Entrepreneurship Advisor

Dr. Shaw has worked in Dallas ISD as and administrator, academic coach, and district trainer, as well as a dedicated life and success coach volunteering in various neighborhoods. In her free time, she enjoys watching movies, listening to music, and reading books.

Marissa McLemore

Events & Communications Assistant

Marissa has six years of customer service and community support experience. She enjoys collecting CDs and she loves Beyoncé.

About AmeriCorps

AmeriCorps, a federal agency, brings people together to tackle the country’s most pressing challenges, through national service and volunteering. AmeriCorps members and AmeriCorps Seniors volunteers serve with organizations dedicated to the improvement of communities. AmeriCorps helps make service to others a cornerstone of our national culture. Learn more at AmeriCorps.gov.

This material is based upon work supported by AmeriCorps, the operating name of the Corporation for National and Community Service, under Grant No 21NDGTX001. Opinions or points of view expressed in this document are those of the authors and do not necessarily reflect the official position of, or a position that is endorsed by, AmeriCorps or the AmeriCorps State and National program.

Optimize Google’s new Interaction to Next Paint metric

30-second summary:
Good page speed and user experience help your site stand out in search results
The Interaction to Next Paint metric is replacing First Input Delay
You can improve make your site respond faster to user input by reducing CPU processing times

The Core Web Vitals are a set of metrics that Google has defined to measure how good a website’s user experience is. They first became a ranking signal in 2021.

While the metric definitions have been tweaked over time, the introduction of the Interaction to Next Paint metric is the biggest change since the launch of the Core Web Vitals initiative.

What is Interaction to Next Paint (INP)?

Interaction to Next Paint is a metric that evaluates how quickly your website responds to user interaction. It measures how much time elapses between the user input, like a button click, and the next time the page content refreshes (the “next paint”).

To rank better in Google this interaction delay should be less than 200 milliseconds. This ensures that the website feels responsive to users.

How are the Core Web Vitals changing?

Google has announced that Interaction to Next Paint will become one of the three Core Web Vitals metrics in March 2024. At that point a website that responds to user input too slowly could do worse in search result rankings.

INP will replace the current First Input Delay (FID) metric. While FID also measures responsiveness, it is more limited as it only looks at the first user interaction. It also only measures the delay until the input event starts being handled, rather than waiting until the user can see the result.

Currently only 64.9% of mobile websites do well on the Interaction to Next Paint metric and it will be harder to get a good INP score than a good First Input Delay score.

How can I measure the Interaction to Next Paint metric on my website?

Run a website speed test to see how fast your website loads and how quickly it responds to user input.

Open the “Web Vitals” tab once your test is complete. You can see the Interaction to Next Paint metric at the bottom of the page.

In this case only 38% of users have a good INP experience.

How can I optimize Interaction to Next Paint?

Interaction delays happen when the browser needs to perform a lot of CPU processing before it can update the page. This can happen for two reasons:

Ongoing background tasks prevent the user input from being handled
Handling the user input itself is taking a lot of time

Background tasks often happen during the initial page load, but can happen later on as well. They are often caused by third party code embedded on the website.

Responding to a user interaction can require a lot of processing. If that can’t be optimized you can consider showing a spinner to provide visual feedback until the processing task is complete.

Running JavaScript code is the most common type of processing, but complex visual updates can also take a long time.

Use Chrome DevTools to analyze performance

The Chrome DevTools performance profiler shows what tasks are taking a long time and should be optimized. Start a recording, click on an element on the page, and then click on the longest bars in the visualization.

This allows you to identify whether the code comes from a third party or from your own website. You can also dive deeper to see how the task can be sped up.

Check the Total Blocking Time metric to identify background tasks

The Total Blocking Time metric tracks how often there are background CPU tasks that could block other code from running. If the user interacts with the page while a task is already in progress then the browser first completes that task before handling the input event.

You can use tools like Google Lighthouse to see how this metric can be optimized.

If processing-heavy tasks on your website are part of your core website code you’ll need to work with your development team to optimize these. For third parties you can review whether the script is still needed, or contact customer support of the vendor to see if it’s possible to optimize the code.

Monitor Interaction to Next Paint

Want to keep track of how you’re doing on INP and other Core Web Vitals? DebugBear can keep track of your website speed and help you optimize it.

Start a free 14-day trial today and deliver a better user experience.

Conclusion

The Interaction to Next Paint metric represents the biggest change to Google’s Core Web Vitals since they were originally announced. INP addresses the deficiencies of the previous First Input Delay metric and provides a better representation of how users experience a website.

Check how your website does on the Interaction to Next Paint metric before the ranking change is rolled out in 2024. That way you’ll have plenty of time to identify optimizations and make your website faster.

Try DebugBear with a free 14-day trial.

Are you a small business owner or entrepreneur in Leon Valley looking to take your business to the next level?

The City of Leon Valley has partnered with LiftFund to offer a new loan program that can help you achieve your goals. The Leon Valley Zero Percent Loan Program offers loans up to $100,000 at 0% interest for qualifying business owners and entrepreneurs in Leon Valley.

Whether you need working capital, inventory, equipment, or other business-related expenses, this loan program can help you get the funding you need to take your business to the next level.*

Unlike traditional loans, there are no interest payments, making it easier for you to manage your cash flow and invest in your business. To learn more about the loan program, including eligibility requirements and the application process visit: https://www.liftfund.com/LeonValleyZeroPercentLoan.

Apply for the Leon Valley Zero Percent Lan Program today and take the first step towards growing your business. We can’t wait to see what you’ll achieve!

*This program is subject to LiftFund’s underwriting guidelines and availability of funds. Sales and Use Tax certificate and certificate of good standing required. Other fees and charges may apply. For a full list of requirements, use of funds and program details, please visit www.liftfund.com/LeonValleyZeroPercentLoan.

What Should My Website Include?

Is your website making the right first impression?

In this article, we’ll share our top features we like to include in every website we create.

What you choose to include on your website will vary on the industry you are working in, but there are several must-have elements that every website needs to have across the board:

1. A Clear Value Proposition

Tell your visitors exactly what you do with a clear, easy-to-find value proposition. This may seem like a no-brainer, but you would be shocked at how many websites out there don’t have one.

If people don’t have an understanding of what your company does, who it does it for, and how it does it differently, they are not likely to stick around to find out.

2. Links to Social Media

You want people to follow and engage with your company on your social media. So, on your homepage place social media buttons in a consistent, conventional place, where people can easily find them when needed (i.e. your header or footer like Wistia does below).

Social Media Include on Website

Increasing your social following helps increase the number of eyes that are on your content and are more likely to click back to your website on a regular basis.

3. Intuitive Navigation

Your navigation should be easy to understand and use for a first-time visitor. You want someone to arrive on your website and know exactly where they can find the information they want and need without being confused.

Include Website Navigation

It should also reflect your buyer’s typical behaviour on your site by bringing the pages they visit most often to the forefront. For example, if your blog is your most highly trafficked page, make it easily accessible through your navigation. Don’t hide your big sellers!

4. Contact Info

How many times have you been in need of customer service, but couldn’t get someone on the phone to save your life?Don’t put your prospects in the same position.

Contact Details On WebsiteVisitors should be able to find your contact information easily on your website. Most commonly found in the footer (like in the example from our website here), your website should include a mailing address, email address, and phone number in case someone is interested in reaching you.

People want to work with people. Having this information readily available offers comfort by letting people know they can get a hold of someone if need be and also adds credibility, making it clear that this is the homepage of a legitimate business.

If you’re worried about being on the phone all day, display “opening hours”.

5. Client Testimonials

Research shows that 79% of consumers trust online reviews and testimonials as personal recommendations from their friends or peers. So, if your company has positive reviews from your previous or current customers, capitalise on them!

Let your potential customers know that you’re not just boasting about accomplishments. Testimonials build trust and let people know they can feel confident in choosing you — you the social proof that shows it. 

Add Testimonials To Website

6. Video

Now, this one feature that you don’t have to implement, but you certainly can’t go wrong with it. Having a quick introductory video on your website that explains what your business does, is one of the easiest and most effective ways of engaging a user (especially one that is new to your brand).

The video on our services page is a great example:

Add Video To Website

 

Try to keep your videos on the shorter side (less than 3 minutes) so that you do not lose your visitor’s interest. The idea is just to do give someone a quick overview of your company; not your entire origin story.

7. High-Quality and Original Images

Stock images are convenient, but they won’t build credibility for your company or engage your audience. The same can be said for low-resolution or small images.

Using real photos of your team and office on your homepage paints a realistic portrait of what people can expect when working with you, while high-quality images show professionalism and attention to detail.

8. Overview of Services/Features

Your value proposition and video may give customers a brief overview of what your company does, but it in terms of content, it is still important to include these features, products, or services.

Add Services To Website

Having this information present on your website offers a bit more detail for prospects and also helps your page rank higher for those services in search engines.

9. A Clear Call-to-Action (or Two)

When someone arrives on your homepage, let alone any page on your website, it should be clear what action you want them to take next.

On your homepage, this is usually a “top-of-the-funnel” action such as subscribing to your blog and/or a “bottom-of-the-funnel” like requesting a consultation. Sit down with your team and decide on what one or two actions you really want people to take when land on your site. Having more than this will only confuse your visitor and clutter your buyer’s journey.

 

Considering a Website Redesign?

Need help optimising your website or perhaps your website built from scratch? Find out more about our web design services here >>>

Guide To Splitting Equity Among Co-Founders Guidelines

The distribution of equity is a critical decision for any startup. It determines the ownership structure, aligns incentives, and can significantly influence the startup’s trajectory.

While this can be a complex and sensitive process, clear communication and thoughtful decision-making can lead to an equitable solution. This article explores the essential considerations when splitting equity among co-founders.

1. Contribution of Each Co-Founder

One of the primary factors to consider when splitting equity is the contribution of each co-founder. This includes the initial idea, capital, business connections, and the time and effort dedicated to the startup.

The person who conceived the idea may argue for a larger share, but remember that execution is equally, if not more, important. The co-founder who quits their job to work full-time on the startup brings in crucial funding or offers industry expertise that can significantly drive the startup’s success.

Therefore, it’s essential to assess the value of each co-founder’s contribution and assign equity accordingly. This may result in an unequal split, but as long as it reflects the value each co-founder brings, it can be a fair arrangement.

2. Future Commitment and Roles

While past contributions are essential, future commitments and roles also play a crucial role in equity distribution. A co-founder who will be working full-time on the startup or taking on a significant role may warrant a larger equity share than one who will be involved part-time or in a lesser capacity.

It’s also important to consider the risks each co-founder is taking. For instance, a co-founder leaving a secure job to join the startup is taking a substantial risk and may deserve a larger equity share.

3. Vesting Schedule

A vesting schedule is a common mechanism used when splitting equity. It protects the startup and the co-founders by ensuring that the co-founders earn their equity over time, typically four years. If a co-founder leaves early, they only get the portion of equity that has vested.

The vesting schedule aligns the co-founders’ incentives with the long-term success of the startup. It encourages co-founders to stay and contribute to the startup’s growth, ensuring that they earn their equity.

4. Handling Changes and Disputes

Even with a well-thought-out equity split, changes and disputes can arise. A co-founder may leave, roles may change, or disagreements may occur about the equity distribution.

To handle such situations, it’s crucial to have a clear, legally binding agreement that outlines the equity split and how changes will be addressed. This agreement, often called a founders’ agreement, should be drafted with the help of a legal professional.

5. Seeking Legal and Financial Advice

Splitting equity involves complex legal and financial considerations. Therefore, it’s advisable to seek professional advice.

A legal professional can help draft the founders’ agreement and ensure it complies with relevant laws. They can also advise on the implications of the equity split, such as control over the company and financial rights.

A financial advisor, on the other hand, can help assess the value of each co-founder’s contribution and advise on a fair equity split. They can also explain the financial implications of the equity split, such as tax liabilities. Startups often turn to back office management services to handle complex tasks such as equity distribution, ensuring a fair and legally sound process

FAQs

Q: What happens to the equity if a co-founder leaves the startup?

A: Generally, if a co-founder leaves, their equity is subject to the terms in the founders’ agreement. If a vesting schedule is in place, the departing co-founder would only receive the equity that has vested to date. The remaining equity would typically be returned to the company’s equity pool.

Q: Can the equity split be changed after it’s been agreed upon?

A: Yes, the equity split can be changed, but it requires the agreement of all co-founders and potentially the board of directors if one exists. Changes to the equity split should be clearly documented in a revised founders’ agreement.

Q: How can we determine the value of each co-founder’s contributions when splitting equity?

A: Valuing each co-founder’s contributions can be challenging, as it’s not just about financial input but also time, effort, business connections, industry expertise, and more. Some startups use a points system, assigning points for various contributions, then dividing equity based on the proportion of points each founder has. A financial advisor can provide guidance on this process.

Q: What’s the difference between vested and unvested equity?

A: Vested equity is the portion of the equity that the co-founder has earned and has the right to keep, even if they leave the company. Unvested equity is the portion of equity that the co-founder is set to earn in the future, based on the vesting schedule. If a co-founder leaves before their equity fully vests, they forfeit the unvested portion.

Q: How does equity distribution among co-founders affect future investment?

A: Equity distribution can affect future investment in several ways. Investors may look for a fair equity split that reflects each co-founder’s contribution to the startup. They may also be wary of investing if a single co-founder holds a significant majority of the equity, as this can create decision-making bottlenecks.

Additionally, startups need to reserve equity for future investors and employee stock options, so a high initial equity distribution among co-founders can limit the startup’s ability to attract future investment and talent.

Conclusion

Splitting equity among co-founders is a critical decision that can shape the startup’s future. It requires a careful assessment of each co-founder’s contribution, future commitment, and role.

Implementing a vesting schedule and having a legally binding founders’ agreement can protect the startup and co-founders. Seeking legal and financial advice can also help navigate this complex process.

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