If raising angel investment is a founder’s dream, the process of raising it is definitely their nightmare.
In this guide, our CEO Ankit Pansari breaks down the steps that led to OSlash's seed round.
Learn how to reach out to top angels and structure your round successfully.
In November 2021, OSlash announced a $2.5 million pre-seed round led by Accel. This was followed by our post-seed round to the tune of $5 million in March 2022.
The rounds saw participation from more than 50 angel investors and operators — the who’s who of business and technology — including Dylan Field (Figma), Akshay Kothari (Notion), Girish Mathrubootham (Freshworks), Olivier Pomel (Datadog), Nicolas Dessaigne (Algolia), Christian Oestlien (YouTube), Kunal Shah (CRED), and Cristina Cordova (First Round), among others.
I put this guide together to answer exactly that question and to make the process of raising an angel round more transparent and easier to understand. I know what a struggle it can be to navigate obscure logistical and legal processes involved in fundraising. The lack of actionable resources for first-time founders only compounds the problem. This is a small attempt from me to solve it for you.
Unlike institutional investors such as Venture Capital (VCs), angels are individuals who take an interest in the startup at a very early stage, when the risks are still high and the fate of the startup is largely undecided. They can be the most crucial source of not just funding, but also provide an ecosystem of social and informational capital that helps a startup thrive.
If you are an early-stage founder looking to leverage the strengths of angels for your venture, this guide can prove extremely useful to you.
It comes with lessons from my personal, hands-on experience. Having conducted multiple private and group sessions for founders and VCs on how to structure a successful angel round prompted me to pen it all down for easy reference.
Let’s dive in!
Think of this guide as the ultimate playbook for raising money from angel investors. It will help you understand:
Fundraising is a double-edged sword for a startup founder.
On the one hand, it is everything you detest — tedious processes, heaps of paperwork, red tape, and bureaucracy. It eats up time you could be investing more fruitfully in building products, conducting market research, talking to your users, and scaling your business.
On the other hand, it is indispensable if you want to grow. The angel investors you get on your cap table will not just provide finances, but also lend a helping hand as you build your business from the ground up. I wrote this guide to clear the many misconceptions founders have when they think about raising an angel round.
Ever wondered why they are called angels and not simply investors? It is because they bring in so much more than cash. They bring in kindness. They are ready to believe in your dream when few others do. And they are ready to put their money where their mouths are. They are your staunch supporters who want your business to succeed as much as you want it.
And how can they help? Well, most angels are themselves successful entrepreneurs, business leaders, innovators, and visionaries who want to help make the world a better place and give back to the community that supported and mentored them in need. They do this by:
There are different kinds of angel investors you can have on board, in order to maximize the utility and benefits you derive out of your angel round.
They include:
1. Fellow founders:
2. Super angels:
3. Domain experts:
4. Operator angels:
For a successful angel round, I will break down the process of fundraising into four steps:
If you already have a lead investor and are planning to raise money from a number of small investors, I recommend keeping at least 10 to 15% allocated to angel investors. While negotiating with your lead investor, please mention at the outset that at least 10 to 15 % would be allocated to angels.
In OSlash, we kept a 20% allocation for angels, and our lead VC firm, Accel, was completely on board with the idea. They even introduced us to some angels.
Angel Investing can happen in two ways — where angels themselves are leading the round (also called Party Round) or you have a VC firm leading the round and angels participating in that round. If you already have a name VC firm leading you around, you would like to get a few angels to participate.
i. At the outreach stage, you should create a long list of potential angels who could participate in your angel round.
ii. Your list should have a combination of:
- successful founders in your category
- leading operators who can help you build the engineering, product, or marketing functions
- super angels who can open more doors for future fundraising
iii. I recommend putting together a list of 100 to 150 angels.
You have to lay the groundwork for your potential angels and present them with all the necessary information they need to make a sound investment decision.
After all, an angel is an individual, not an institution. They will be investing their hard-earned money and their trust into your business for a high-risk high-return proposition. Raising money is an exercise in trust-building.
Getting their support will be far easier if you do the following religiously, provide full disclosure in the investment documents, and cover all your bases properly.
You have to work on four major preparation collaterals:
i. Elevator or email pitch
ii. Investment memo
iii. Deck
iv. Product demo
Write a short blurb about the business. Introduce the company, the problem, and the value proposition or solution you propose with its potential benefits.
Keep it concise (so much so that you can explain it in 30 seconds to one minute).
Here is ours, for example: At OSlash, we are building an all-in-one enterprise URL manager that lets you name, structure, access, and organize long workplace links by converting them into human-readable shortcuts. This simplifies and speeds up information-sharing, productivity, and collaboration for you and your team.
Expand on the blurb by writing a comprehensive investment memo.
This will be the main document that outlines the key components of the business and presents the case and rationale for investors to put their money into it. Express all the crucial information about the business but also keep it simple.
Try to explain the business and why the timing is right for the venture. It’s extremely important to draft a good business memo. The memo is your source of truth for all follow on investment materials that you are going to create in the company.
Here are a couple of good investment memos which are public:
Create a full presentation based on your investment memo.
Your deck is a visual and succinct representation of your memo. Keep the number of slides limited and focus only on meaningful data without being too detailed.
Tailor your deck according to the audience; do a little research before you pitch and get to know the people you’ll be pitching to better.
One of the best guides we have found online on how to pitch decks is by Reid Hoffman - LinkedIn Deck pitch to Greylock Partners
We are now moving to the final stages of collecting the cheque and closing the round.
This is where things usually get complicated. I have seen founders spending a lot of time here and experiencing frustration.
Although having a lot of angels is extremely beneficial for your company, managing all of them is cumbersome:
Fortunately, there is an easy way out of all this. Our friends at AngelList have come up with a brilliant solution - the AngelList Roll-up Vehicle.
Now that you know how to raise a successful angel investment round for your startup, it may be worthwhile to point out that fundraising is often an ongoing battle and not a one-time affair.
As a founder, your goal should be to close the round as fast as possible so that you can go back to doing what you know and do best - building your company.
I hope that this guide can help you get one step closer to doing that with more awareness, simplicity, and ease of mind.
If you have any questions, you can always reach out to me at ankit@oslash.com and I’d be more than happy to help.
Happy fundraising!
With companies adding stock options to compensation packages, it’s important for both founders and employees to understand how ESOPs work. This guide by our CEO, Ankit Pansari, will help dispel the ambiguity around equity compensation in early-stage tech companies.
If you are an employee or a founder of a tech company, it’s imperative that you know about Employee Stock Ownership Plans (ESOPs).
While setting up an ESOP policy for OSlash, we realized one thing. Though the term is prevalent in the industry, both tech founders and employees actually understand very little about ESOPs. This can cause a lot of confusion and misunderstanding about their rights and obligations with respect to ESOPs.
To dispel the myths and bring transparency to how ESOPs work, we decided to pen this guide and share our learnings — sourced from founders of reputed tech companies such as Notion and Figma and also from our experience at OSlash.
Think of this guide as the ultimate playbook for understanding Employee Stock Ownership Plans (ESOPs) — for both employees as well as founders
This guide covers
Because ESOPs form an important part of employee compensation at modern tech companies, let’s first understand how compensation is structured typically at an early-stage tech startup.
Compensation in tech companies is typically a combination of the following components
As mentioned, equity refers to shares in a company’s ownership.
A company is a legal entity formed by a group of individuals to conduct a business. It has its own separate identity, distinct from the owners, such that the assets and liabilities of the company are not equal to the personal assets and liabilities of the owners.
Equity (and equity compensation) is affected by the ownership structure of a company.
There are two types of companies – private and public. Equity in a private company is restricted to its management, investors, founders, and employees. A public company, on the other hand, raises money by offering its shares to the general public via an IPO. Shares issued via an IPO are publicly traded in the stock markets and anyone can invest in them. By purchasing these shares, such shareholders get equity in the company.
In both these types, equity compensation simply means that employees are compensated by giving them a stake in the company. In other words, employees become shareholders in the company.
The origin of equity compensation in tech companies (and the origin of Silicon Valley itself) can be traced back to 1957 when theFairchild Semiconductor Corporation came into existence.
Founded by five scientists and three engineers, it was backed with a funding of $1.38 million by Sherman Fairchild, the largest shareholder in IBM. Each of the eight founders got to own 100 shares each, with another 300 shares reserved for managerial hires. The remaining 225 shares were taken by the two investment advisors who structured the deal.
The deal came with a condition: The investor, Fairchild, would have an option to buy shares from the founders and other shareholders at $3 million collectively if things went well. Things did go well and as a result, Fairchild could purchase all the shares from the founding team who became millionaires — receiving a quarter-million dollars each upon sale of their stakes.
In his accredited 2017 book — America, Inc: The 400-Year History of American Capitalism — venture-backed entrepreneur, Bhu Srinivasan, notes about the Fairchild Corporation deal: “While the eight men made substantial windfalls, the investment structure lacked the unlimited upside element now intrinsic to the idea of the Silicon Valley start-up.”
To drive the point home, consider the compensation structure of Frank Slootman, the CEO of cloud computing giant, Snowflake Inc. Slootman led the company to what became the largest software IPO in history, raising $3.4 billion. Care to guess how much his ESOPs are worth?
Take a look:
His stock options: 13,921,409 shares with a strike price of $8.8, which equates to 5% of the company.
Snowflake’s share price (Mar 2022)= $200 (approx.) making the shares worth ~$3 bn, which is an upside of 2172%.
This, among other reasons, is why equity compensation is so attractive.
There are broadly two ways equity can be granted:
Insider tip:
At OSlash, we prefer options over direct award of equity because we don't want our employees to pay taxes on the day of their receipt. If we provide them $10,000 worth of equity in a year, for example, tax authorities will count them as income and employees will be taxed in the current financial year. But if we give stock options (remember it's a contract), they don't have to pay taxes till it is actually exercised.
Both stock options and stock grants themselves come in many forms, giving birth to the different types of equity structures prevalent in companies today.
Incentive stock options (ISOs) allow employees to buy shares of the company stock at a discounted price and come with tax benefits. They are not taxed until the stock is sold. To earn a tax break, they need to be held for one year after exercising (buying the shares), and two years after they were granted. On sale, they are taxed at lower rates than the ordinary income tax rate.
ISOs are only valid for US citizens.
As opposed to ISOs, non-statutory stock options (NSOs) are taxed at the ordinary income tax rate when exercised, irrespective of whether the shares are held or sold immediately after being bought.
While ISOs can only be granted to US employees, NSOs can be granted to foreign employees consultants, advisors, or business partners.
Restricted Stock Units (RSUs) are a form of stock grants. They represent the company’s promise to give you the shares or an equivalent value in cash after you spend a stipulated time in the organization.
While RSUs don't require employees to actually buy any shares, they are considered part of ordinary income and are taxed when they vest. This means employees at companies that haven’t gone public suffer a disadvantage — they may have to pay tax on shares that they cannot yet sell. Hence, RSUs are usually offered to senior executives in startups who can pay taxes on receiving the shares.
Stock appreciation rights (SARs) are a type of equity compensation different from both stock grants and stock options. They are linked to the company's stock price during a fixed period. So, employees make a profit when the stock price increases. Unlike ESOPs however, they do not have to buy any shares themselves. They are given the amount of price rise in stock or cash.
Equity is a powerful incentive for both employees and founders.
Now that we know how (and why) equity compensation works, let’s dive into everything founders and employees need to know about ESOPs.
Let’s assume you join a company which offers you ESOPs in addition to your salary and cash/non-cash benefits.
This is what it may look like:
You are offered 1000 shares of stock at $1 exercise price each with a 4-year vesting period and a 1-year cliff.
This means you have the option to buy 1000 units of stock in the company at $1 provided you meet a few predefined terms and conditions, as below.
The exercise price (also called strike price) is the price at which you can buy the shares in the future irrespective of their actual (or market) price at that time. Your shares in the company may have a value of $10 each in 2030. Even then, you will only pay $1 to buy a share.
Do you see why ESOPs are so lucrative?
At OSlash, employees are offered a share at a strike price as low as $0.08 per share.
Exercising the options means buying the shares guaranteed to you. Your options are essentially shares that you own in the form of a share certificate. You can exercise your options as you attain the legal rights to them — which happens periodically rather than in one go.
Insider tip:
You want to exercise the stock when you have the opportunity to sell it for a higher price than you are buying it.
Example:
In the above scenario, assume the stock price rises to $100. You still would be able to exercise your 1000 options by paying $1 per share i.e. $1000. This way you get to hold stock worth $100,000 at current value (a $99,000 profit).
You will be able to exercise the option within a predefined time period. This is the exercise period or the exercise window. After the exercise period, your options will expire.
The exercise window is usually:
At OSlash, employees can exercise the option up to eight years after leaving OSlash, provided they spend two years in the company.
Vesting is the process of getting full legal rights to the shares. Rather than giving them all in one go when someone joins, companies treat ESOPs like compensation. They give it out in small chunks over time.
Companies will usually not allow stock options or grants to vest to new hires immediately upon their joining. Instead, employees receive parts of their equity compensation over a set period of time known as a vesting schedule.
A four-year vesting schedule is a common practice across tech companies, including here at OSlash. We follow a four-year vesting schedule with a one-year cliff, followed by monthly vesting.
This means an employee at OSlash would receive their stock options as follows:
0% will vest in the first 12 months
25% will vest on completion of the twelfth month
The rest will vest every month
Cliff is the minimum period of time before you qualify to receive the first part of your options.
For the above example, the one-year cliff means that you need to be working with OSlash for at least one year before the first (one-fourth) chunk of your ESOPs vest. If you were to leave before the year, you would not receive any ESOPs.
Understandably, companies use ESOPs to increase employee retention rates and to motivate them to stay longer.
Insider tip:
Not all companies follow the same vesting schedule, however.
Three notably famous cases in point? Lyft, Stripe, and Coinbase. All three giants have switched to a one-year vesting schedule. Their compensation packages have been changed so that employees’ entire stock awards vest in one year, instead of the traditional four years.
The reasons for accelerated vesting?
The market for high tech talent is intensely competitive. Companies are trying to make their compensation more lucrative. Moreover, faster vesting schedules often go hand-in-hand with smaller equity grants each year. They result in cost-savings for fast growing companies whose valuations are rapidly rising.
Coinbase justifies this decision as being more employee-centric. “We don’t want employees to feel locked in at Coinbase based on grants awarded 3 or 4 years prior. We want to earn our employees’ commitment every year and, likewise, expect them to earn their seat at Coinbase.
We are also eliminating the one-year cliff from our new hire grants. We expect new hires to add value on their first day, so it only makes sense for them to start vesting rewards for their contributions.”
The value of ESOPs depends mainly on
Any venture-funded company like OSlash goes through different stages of fundraising, which impacts ownerships in the company.
OSlash is currently in the Seed stage. To understand how the company's valuation is determined, we need to understand the different types of shares in OSlash.
There are two types of shares in OSlash — common shares and preferred shares.
Preferred shares are more expensive than common shares as they are entitled
The cost of preferred shares determines the valuation of the company.
Remember that when we talk about ESOPs, we are referring to common equity shares.
Because of the above differences, the strike price of ESOPs cannot be the same as the price of preferred stock.
Insider tip:
The option’s exercise price is usually at a 70 to 80% discount to the preferred share price established in the prior round of fundraising. As an example, if we sold preferred stock at $1, the exercise price for the common stock value at that time would be somewhere between 20 and 30 cents per share.
Moreover, the lower the strike price for common shares, the higher the number of shares that can be issued as ESOPs.
Getting to the exercise price is a challenging task. We need valuation consultants to come up with the right price. Companies like OSlash need to produce a valuation report called the 409a report.
We engaged a valuation consultant to come up with the report. The valuation is suitable for a whole year or until we raise more money.
According to the 409a report, the exercise price of OSlash common share is $0.08, whereas the price of a preferred share is $0.8. Preferred Shares are ten times more expensive than common shares.
As a result, OSlash employees get a discount of 90% as part of the ESOPs.
The option pool (also called equity pool or ESOP pool) is a block of company shares that employers create, add to the existing number of shares, and set aside for future employees.
For example, if a company currently has 100,000 shares (100% of the company) and we create an option pool of 11,500 shares, there are now 1,11,500 shares of company stock on a fully diluted basis.
Note:
Fully diluted shares are the total number of common shares of a company that will be outstanding and available to trade on the open market after all possible sources of conversion, such as convertible bonds and employee stock options, are exercised.
(Source - Investopedia)
The ESOP pool is created by founders who dilute a certain percentage of their ownership to allocate to the pool (when the company is in its early-stage). If the ESOP pool is exhausted while there are still unmet hiring needs, further dilution may be done by founders (or even investors) to replenish the pool.
As a result, an ESOP pool affects existing ownerships in the company, impacts the share price, and thus the effective valuation of the company.
Example:
When OSlash raises money from investors, we create new shares to sell to those investors. Now, the existing shareholders (say management, employees, early-stage investors etc.) will own the same number of shares as before. But, there will be a greater number of total OSlash shares available so that they will now own a smaller percentage of the company. This is what dilution is.
From the above example, if owners held 10,000 out of 100,000 shares earlier i.e. 10% of the company, after creating the pool, they will hold 10,000/111,500 shares now or 8.97% of the company.
In an ideal scenario, as the company acquires new funding, grows, and scales, its valuation keeps increasing. As a result, the value of each share held by each employee/owner/investor also rises. This means that despite dilution, they end up getting more (and not less) in each successive round of valuation — a small share but one of a larger pie.
Insider tip:
A larger option pool is attractive for hiring new employees and investors. But as we have seen, the bigger the option pool gets, the more diluted the ownerships become. The key is to set the right balance, keeping your fundraising and hiring needs in mind.
After the vesting period is over, the employee can usually exercise the ESOPs and sell the shares. Of course, it makes sense to sell the shares when the option is in the money i.e. the strike price (purchase price) is lower than the market price.
There are generally three occasions when an ESOP sale (also called Exit) is possible. You can sell your ESOPs
Private companies can also stipulate a lock-in period to make sure that employees do not sell the shares in the open market, as soon as they get them.
Since stock options have a shelf life (exercise window), if the company doesn’t go public, obtains the next round of funding, or gets acquired, within that time frame, your purchased options will expire.
As you can tell by now, there are various clauses in an ESOP.
Before agreeing to receive ESOPs, understanding what you are signing up for is important.
Insider tip:
Don’t hesitate to ask questions from your employer about your ESOPs. Most employers will answer them happily.
The tax treatment of ESOPs will depend upon the country of incorporation of the company as well as the nationality of the employees.
The tax treatment for ESOPs given by foreign entities (such as a startup incorporated in the US) to Indian employees is as follows:
The company has to deduct TDS from the salary of the employees in the month in which allotment/transfer of shares is made.
Note:
In 2020, the Indian Government announced that payment of income tax on startup ESOPs can be deferred from the time of exercise of ESOPs. Now, the tax liability arises within 14 days from any of the following events, whichever is the earliest:
Liability for deducting tax at source (TDS) on the startup also stands deferred.
*These benefits are available only for eligible startups.
The tax treatment here will depend on the type of ESOPs, namely ISOs or NSOs.
Stocks held less than one year after purchase or less than two years after grant date are subject to (higher) ordinary income tax treatment.
As stated, to offer ESOPs, founders have to dilute a part of their own equity and create an ESOP pool. Employees are granted ESOPs from this pool. Further dilution may be necessary to replenish the pool in successive fundraising rounds.
Thus, the ESOP pool size is inversely proportional to the company’s growth stage – as the company scales, the size of the ESOP pool decreases.
Early-stage employees should get a higher reward (in terms of a higher share of ESOPs). They are taking higher risk by joining an unproven business venture and must be compensated adequately via ESOPs. Moreover, an early-stage company is quite illiquid. Attracting key executives in the absence of huge cash compensation is a problem that can be solved by giving more ESOPs as part of compensation.
In the growth stage, the focus is on retention of key talent which drives growth. As the size of the ESOP pool reduces, it becomes prudent to reserve ESOPs for key personnel and award performance-based ESOPs. Moreover, as the company matures, and cash flows begin to improve, it is easier to award higher cash compensation to new employees who join than it is to dilute equity further.
Insider tip:
It is considered a best practice to award ESOPs to all employees in an early-stage startup, irrespective of their role and seniority. This kindles the ownership among all and gives impetus towards company’s growth.
The goal of the policy should first and foremost be to set your team up for success
At OSlash, we have tried to ensure that we all get equitable treatment in the hiring process with respect to equity compensation.
Founders such as Girish Mathrubootham (Freshworks) instituted RSUs for every employee as they grew, a practice lauded by Karthik, who believes this is the best way to do right by the employees.
The very first employee at Flipkart, Ambur Iyyappa, also received shares in the company which fetched him millions upon sale.
It is advantageous to offer stock options over direct equity. For example, $10000 worth of direct equity will be counted as income and will be taxed in the current financial year at ordinary income tax rates. But, since an option is a contract to buy shares, employees don't have to pay taxes till they exercise it.
Good employers will always try to draft an ESOP policy that makes sure their employees come out winning. This can take many forms including front-loaded or accelerated vesting (where the majority of shares vest within a short period of joining), no cliff period, monthly vesting after cliff instead of quarterly vesting, longer exercise periods for employees leaving the organization, and lower strike prices so employees can comfortably shell out the money required to buy the shares etc.
Insider Tip:
Use OSlash to create a shortcut to your ESOP policy such that o/esop-policy can be accessed company-wide by everyone, every time.
Lastly, here are some actionable insights you may want to keep in mind before rolling out ESOPs at your startup:
To conclude, we’d encourage founders to look at ESOPs through the lens of an employee. Or as Sudharshan Karthik says, “Use ESOPs to make the pie larger for everyone rather than have them act as golden handcuffs.”
For most startups, funding is a scarce resource and the goal is to put every dollar to work. One area where startups can save money is their SaaS stack. In this guide, our CEO, Ankit Pansari, shares our SaaS stack & describes how we got almost all of these tools for free.
Bonus: Get a list of startup programs that offer great deals on various tools!
For a newbie startup, the market is like a vast desert and funds are like water — they’re essential commodities which must not be used until you get to the next oasis. Everything you do to conserve your funds increases your chances of getting to the next stop, while not optimizing them can lead to an early end.
This is more relevant now than ever before. With the US Central Bank — The Federal Reserve — hiking interest rates to curb inflation, the era of inexpensive liquidity and funding is set to come to an end.
Tech and growth stocks have already been hit hard, with some trading below their pre-pandemic price levels. Renowned companies such as Klarna, PayPal, Bolt, and ClickUp, among others have resorted to mass layoff to curb costs.
This is not surprising. For most startups, the goal is to put every dollar to work. Startup spending should be budgeted, controlled, and, if possible, reduced as much as possible, often by being creative.
One such area where startups can save well is their SaaS stack. You will be surprised how many software tools you can get for free, especially in the early days of your company.
We are a company of twenty people and we use more than fifty different SaaS tools.
Here’s our story on how we got almost all of our SaaS tools for free. And some insider tips on how you can too!
In order to choose the perfect SaaS stack that would give us the most value for money, we started by making a list of all the software tools we were using and would be using in the future.
Here are the factors to look for while choosing the best SaaS stack.
Cost is the most important criterion especially when you are stretched thin with the budgets.
Ask: Does the tool offer credits as part of a plan? If yes, can we get any deals or discounts?
Putting together a simple yet efficient SaaS stack that requires a lower learning curve is better than going for a top-of-the-line but complex stack.
This directly affects the productivity of your team.
How easy is it to begin using the tool? How much time does it take for us to get up and running?
Today there are many low/no-code tools that can cut deployment time by a huge margin and be used right from the get go.
Quick and easy setup is important so that you can focus on actually building your product, rather than spending time on instrumentation.
We love monthly billing with a discount offered for an annual commitment.
You need to choose a vendor/tool that can give you a solid foundation and business continuity for the future without forcing you into a worrisome lock-in.
The tools you add to your SaaS stack should work well with the other tools in your stack.
A prime example of this for OSlash is the integration among our analytics and emailing tools. We use Segment and Mixpanel to collect customer data and insights which are then fed into our email client, Customer.io, almost effortlessly.
In line with our vision of building a culture of absolute transparency at every workplace, we want to share the entire OSlash SaaS stack (as of June 2022) with you.
We were lucky to procure some of the tools listed below at great discounts (and even for free in some cases).
Here is the complete list of our SaaS tools, split into different functions.
Or: Find the TL;DR version here
Disclaimer: This article does not prescribe or recommend the tools listed below for use by you and your team. Please make sure you do your own research and select tools that best fit the needs of your company. We only intend to provide you with the list of tools we are using and share why we decided to use them.
Figma: We chose Figma for all things design because it is one of the easiest design tools to pick up and offers live collaboration. We use it for everything from wireframing, UI creation, and illustrating, to prototyping, and shipping to the dev team. Even the free version comes with unlimited personal files and unlimited collaborators — a huge asset to any startup.
Storybook: Storybook is open source and forever free. We prefer Storybook at OSlash for UI development because it lets us build UI components in isolation without setting up any development stack and without needing any data or API.
Algolia: Algolia is a search and discovery platform. We use it to build a consistent and personalized search experience for OSlash users. Eligible startups can claim $10,000 in credits via their startup program.
Github Enterprise Cloud: We chose Github as our all-in-one tool for code management, version control, code review, documentation, team collaboration, and project management. We were able to secure 40 seats of Github Enterprise cloud worth $24000 for free via the Microsoft Startup Program.
Visual Studio: It offers an open source IDE (Integrated Development Environment) with hundreds of programming languages and a free code editor. We got a Visual Studio license worth $5400 for free via the Microsoft Startup Program.
There are a number of cost-saving Visual Studio subscriptions available today. They come with added benefits such as access to GitHub Enterprise, Power BI Pro, Azure DevOps, Dev/test software, monthly Azure credits, and professional training and support from providers including LinkedIn Learning.
Sentry: Sentry is a crash reporting application we use to streamline error-reporting and fix performance issues in both the frontend and backend of our software. It works across iOS, Android, and Web. Its USP is real time insights and context for faster resolution. It is free for tracking up to 5,000 events per month. For standardized error and performance monitoring, you can opt for their Business plan which costs $80 per month.
Rainforest: It is a combined platform for both manual and automated QA or software testing. Since it is a no-code platform, it allows even the non-technical product folks on our team to contribute easily to better quality software. Their Professional plan starts at $0/month and offers you free no-code test automation (worth 5 hours every month) plus on-demand manual testing (free trial for 14 days).
LambdaTest: This tool lets you perform automated and live testing across Windows and Mac operating systems, along with all legacy and latest browsers.You can simultaneously use it for testing your website or web app on mobile browsers for both Android and iOS operating systems. They have a 60 min/month Freemium Plan while unlimited testing starts at $15/month.
For infrastructure tools, we suggest you space out your activation of accounts. It will give you enough room to experiment with every infrastructure provider out there.
Amazon Web Services (AWS): AWS is perhaps the most well-known cloud platform worldwide. It boasts over 200 on-demand cloud services such as computing power, database storage, content delivery, etc. for organizations.
Eligible startups get up to $100,000 in AWS credits by signing up for AWS Activate. In addition, there are hundreds of free-tier offers — trial, 12 months free, and always free — for everything from computing to analytics, IoT, machine learning and more. You can also get volume based discounts and realize important savings for selected services as your usage increases.
We received AWS credits worth $105,000 via SaaSBOOMi, the largest network of SaaS Companies in India, and $5000 via YC Startup School.
Microsoft Azure Services: Azure’s cloud platform also comes with over 200 services and attractive pricing options for companies of all sizes. Microsoft also claims that AWS is 5 times more expensive than Azure for Windows Server and SQL Server. It offers over 25 services for free, forever and comes with a $200 credit on each new account where you can try popular services for free for the first 12 months.
SaaSBOOMi helped us get Azure credits worth $150,000 while starting out.
Heroku: The main advantage of Heroku over other cloud platforms is its simplicity and ease of deployment. Heroku offers you a ready-to-use environment which is more beginner-friendly and can be easier for startups with small teams as compared to AWS. The YC Startup School helped us get $20,000 in credits for the tool.
Google Cloud Platform (GCP): Google offers anyone wishing to explore its cloud platform $300 in credits and over 20 free services. We use GCP extensively for our AI and ML needs as well, in addition to infrastructure hosting. A direct application to GCP for Startups also helped us secure $20,000 in credits.
Digital Ocean: This tool is known for simplifying the process of deploying servers to the cloud. Their USP is clean and simple UI, API, and Docs as opposed to GCP and AWS which can be quite overwhelming for small teams. We got credits worth $10,000 for Digital Ocean via the YC Startup School.
Linear: We moved from Jira to a swift developer ticketing tool Linear, which comes with a generous free version. The free version has no limit on the number of users (huge plus point for startup teams) even though you can track only up to 250 issues at a time. We like Linear because of its (extremely) fast speed and lean UI.
Notion: We use Notion extensively for roadmap planning and keep all our PRDs in it. It also doubles up as the company wiki for storing and sharing important information. You can easily get ‘Notion for Startups’ with $1000 of free credits if you are part of one of their partner accelerators or VC firms. If not, you can get the same offer by purchasing a Notion plan at Product Hunt Founder’s Club. ($1,000 worth of credit via Founder’s Club)
Webflow: We chose Webflow for developing the OSlash website because of its low/no-code platform which is intuitive and easy to learn. Its in-built SEO capabilities are also a great add-on. For as low as $16/month, you can get a custom domain to host your startup’s own fully-functional CMS powered website.
Google Analytics: Our go-to tool for website data analytics, the free version of Google Analytics offers everything a small business or startup needs. You can analyze all website data for a volume of up to 10 million hits per month (which is fairly decent) and integrate it with Search Console, AdSense, and Adwords too.
Ubersuggest: Ubersuggest is an all-in-one content management tool that helps us out with website audits, keyword research and ideas, backlinks data, content ideas, and more. One of the few SaaS tools on the list that comes with a lifetime pricing, it offers a steep 90% discount as compared to the likes of Ahrefs, Moz, and Semrush. We found a lifetime price of $120 for managing up to 3 websites too good to resist and recently added the tool to our SaaS stack.
Customer.io: At $150 a month, this email tool may be a little pricey for early-stage startups. However, it has simplified our marketing team’s lives by helping us automate and schedule transactional emails, workflows, as well as broadcast emails without hassle. And it integrates nicely with our marketing tech stack including Segment, which is a huge bonus.
Canva: If your team does not have a dedicated graphic designer, Canva can be a great design tool to churn out social media posts, blog graphics, email graphics, promotional website banners, and other web-assets without much hassle. It is completely no-code, is super easy to learn, offers thousands of templates & free design assets, and you can collaborate on designs in real-time. As you expand and wish to publish designs directly to social media or create approval workflows for designs, you can consider upgrading plans.
Airtable: We started out by managing all our customer interactions and CRM activities in Airtable’s powerful spreadsheets, having received $2,000 worth of credit via “The Secret”.
Freshsales: Freshsales is a CRM that offers all basic functionalities for free — you can use it for maintaining and managing the accounts of your customers, track lifecycle stages of contacts, and service them using built-in chat, email, and phone support. Ideal to get started when you have a low volume of contacts and accounts to manage.
Freshsales is a product from Freshworks, a business software behemoth that also boasts a popular startup program. As a part of the program, eligible startups can receive up to $10000 in credits on the Pro plans for various Freshworks’ software, along with access to their mentorship platform, FORGE.
HubSpot: For teams just beginning with their CRM efforts, HubSpot’s free CRM tool is also a great risk-free choice. Plus the tool lets you prospect, collect forms, create tickets, manage ads, and run automations on customer data from a single dashboard. As you build up your sales and marketing efforts, you can upgrade plans or switch to another CRM.
Intercom: We use Intercom for customer support at OSlash because of its ease of use. If you have a website and an app, Intercom will let you easily integrate them both and quickly respond to customer issues or bugs via emails or in-app messages. Its Early Stage Academy offers eligible early-stage startups advanced Intercom features at a 95% discount.
Typeform: We are fans of Typeform’s beautiful designs and intuitive UI. We use it extensively at OSlash to create and manage forms for customer surveys and user feedback etc. Their startup program will let you avail 50% discount for 6 months on any plan.
Freshteam: Our HR and TA cannot imagine working without the simplicity Freshteam has lent to our hiring and employee management verticals. Its LinkedIn integration lets us post new job openings on the go, and we can manage email applications in a shared inbox directly inside the tool. The free version is quite limited but may be a good starting point for early-stage companies.
Stripe: When it comes to processing subscription payments in USD, especially for clients located in the US and Europe, Stripe provides one of the simplest platforms in the industry. Chargebee is another great alternative to consider.
Quickbooks: Quickbooks pretty much boasts a monopoly in bookkeeping software. You can get started with basic bookkeeping for as low as $12.50 per month and even add their payroll software to the bundle for creating an all-in-one economical accounting package for your company. They offer a free trial for 30 days and 50% discount if you commit to using the tool for 3 months right away.
Razorpay Payroll: The biggest advantages of using RazorpayX Payroll for us have been automated compliances in matters of taxation and other statutory filings related to payroll at no extra costs. The portal is self-serve, which means your employees can also mark attendances, apply for leaves, claim reimbursements, and access their payslips — all from one software. You can do all this for less than $1.5/month in India. By being part of the Razorpay Rize platform, you can also avail 3 months free payroll.
A key takeaway before building your data and analytics tech stack is: The lesser the data you process, the lesser the expenditure you incur. You should use these tools judiciously to process only the necessary and relevant product/user data in your data pipeline. This has the twin benefits of not violating privacy concerns and keeping your data processing costs low.
Mixpanel: We started using Mixpanel for gaining top-level product insights. Their free plan offers insights for upto 100,000 tracked users per month. Eligible startups can also get $50,000 in credits towards the Mixpanel Growth plan for one year.
Segment: We use Segment to collect events and feed product usage data into various other tools such as Mixpanel, BigQuery, and Customer.io to name a few. You can get 10 seats and track upto 1000 users a month for free. SaasBOOMi helped us obtain credits worth $50,000 for Segment. And they also have a startup program that offers eligible startups $25,000 in annual credit toward their monthly Team plan.
Power BI Pro: Microsoft’s Business Intelligence Platform, Power BI Pro lets you easily collaborate on and share data visualizations within and outside your company so that you can use these insights to take better decisions together. We applied to the Microsoft Startup Program and got a Power BI Pro License worth $2340 through the same.
Google Cloud Platform (GCP)/BigQuery: GCP helps us with our AI and ML efforts by allowing us to create data insights and APIs. You can get $100,000 in credits across GCP services via Google’s Startup Program. Within the GCP, BigQuery forms the basis for creating our data science models. BigQuery charges for data storage, streaming inserts, and querying data, but loading and exporting data are free of charge. It offers a pay-as-you-go model costing $5 per TB where the first terabyte (1 TB) per month is free.
Slack: Slack is fast becoming the default way to communicate and collaborate within and across teams. It has a free tier and the Pro plans are also quite affordable even for early stage companies. We wrote to Slack’s Sales team requesting free licenses as an early-stage startup and they were kind enough to offer them to us.
Loom: Since a good part of our team is remote, we need async communication tools to work better. Loom helps us share video messages complete with screen recordings and has become the default way of reporting bugs and customer issues within the team. We use the free plan as it meets our everyday needs with limits of up to 25 videos/person and up to 5 mins/video.
OSlash: OSlash uses OSlash so much that it has become our way of life, something we did not expect while dogfooding the product in the initial days. The team creates Workspace shortcuts extensively to keep everyone in loop about important updates. And we also like using Private shortcuts to manage all our personal links seamlessly. Oh, did we mention OSlash is free for small teams of up to 5 users?
Calendly: Scheduling one-on-one meetings without indulging in back and forth regarding availability — this is the primary reason we use Calendly at OSlash. We mostly use it in individual capacity (for free) as opposed to getting the entire team onto the tool.
Zoom: o/allhands and o/daily-standup are just two of the most-widely used Zoom shortcuts in our company. Zoom is terrific for virtual meetings with remote or distributed teams. The audio and video quality is great even on the free plan and the attendee limit of 100 users per meeting is what most early-stage startups can easily live with.
Google Workspace: Google's G Suite is incredibly affordable at $5/user/month for the basic plan. An office suite, an email client, file sharing, video meetings (Google Meet) and other collaboration features such as Drive and Chat are included.
Miro: Miro’s free whiteboarding tool offers our dev team the priceless ability to collaborate with potentially unlimited team members (even if the number of editable boards is limited to three). It also offers all important integrations such as with Zoom, Slack, Zapier, Google Drive, Figma and more for faster workflows.
Iubenda: Iubenda is an excellent service to make sure your website and app is compliant across multiple countries and legislations. For $129 a year, you can make your website’s privacy policy, cookie policy, and terms & conditions legally compliant across the globe. We obtained $600 in credits for Iubenda via the ‘Founders Club’.
1Password: We use 1Password for securing and sharing passwords within internal teams. If you purchase a plan for your team via the “Founders Club’, you can get $2000 in credits or six months free.
JAMF: Since we all use Macs at OSlash, we decided to adopt JAMF for device management and enforcing key security requirements such as password locks and hardware encryption. Basic plans start at $4/user and let you manage up to three devices for free as well.
Now that our SaaS stack is public, we would also like to share with you the list of startup programs that offer great deals and discounts on these (and many other) software tools.
We hope they will make it easier (and cheaper) for you to set up your own SaaS stack.
We were able to get the above tools for free by asking nicely and also using the self-hosted version, which is not advertised.
We got combined savings of $406,210 over two years with the ability to test and experiment as much as we need without the constraint of spending.
While no living document like this is ever perfect, this is the current collection of resources we have been using at OSlash. Please note that all these deals and discounts are updated as of June 2022.
If you have any suggestions, please email us and we will add them to the list.
Although it sounds unbelievable, a leaky credit card expense can cause a serious dent in your funds. So, watch your cash flow obsessively.
There is no one size-fits-all when it comes to building the perfect SaaS stack. With the wide array of options available, it can be tough for startups to make this decision. But remember that your SaaS stack does not have to be the fanciest to get the job done. So, don’t spend a lot of time and energy on figuring out the best tools right at the start. Focus on building the best product or service you can. The rest will follow.