Huddle makes equity payments easy through its own agreement called the CAFÈ (Creator Agreement for Future Equity.) The CAFÉ is an adaptation of the FAST Agreement (Founder/Advisor Standard Template) created by Founder’s Institute.
Fractional work is becoming the common way startups launch, build, and grow. We’re steadfast believers in the independent workforce and believe both startup founders and startup contributors are better served through fractional agreements. This includes equity, which to date, has been challenging to understand, account for, issue, and receive. In fact, there has been no standard way startups issue equity to fractional, independent workers. We are not talking about advisors that receive equity for information, advice, and relationships. We are only concerned with boots-on-the-ground builders that get their hands dirty by doing real work on a startup.
We decided to open source the CAFÉ because independent workers, builders, designers, freelancers, and creators of all kinds would benefit from a standard way to exchange equity. So would startups looking to utilize fractional workers.
<aside> 📈 Download the CAFÉ from Google Drive
The CAFÉ takes a dollar amount of work, which would typically be performed in exchange for cash, and translates dollars into future common stock. The amount of equity (common stock) exchanged is based based on a startup’s stage and progress.
Future common stock can be restricted stock or options — including RSAs (restricted stock awards), ISOs (qualified incentive stock option) and NSOs (non-qualified stock options).
Below are some best practices for using the CAFÉ based on how we do it at Huddle.
We’ve been facilitating equity payments at Huddle since 2020. Before Huddle, we experimented with “sweat equity” startup investments since 2014. We’ve learned a thing of two, and we hope our standard agreement makes investing with your passion and time easier. We also hope it helps startups attract better workers with aligned incentives, decreasing a startups need for expensive preferred shareholders and angel investors who may not be valuable beyond cash.