Design firm Zypsy will do $100,000 worth of work for 1% equity for early-stage startups
Reading Time: 2 minutesZypsy, a design firm with a track record of helping early-stage startups, has launched a new and somewhat unique venture investment program.
This type of work-for-equity arrangement isn’t unheard of, particularly in the design world, but Zypsy has particular bona fides. It’s founding team hails from global design firms and tech companies, including IDEO, Fantasy, Meta, and Saatchi & Saatchi. The company is profitable, with an annual revenue run rate of $3.2 million and $250,000 in annual net cash flow, the company says.
Zypsy can help startups with brand strategy, logo, websites, product design, app interface and marketing content. The outfit believes that a fledgling startup can scale up and rise from obscurity by combining design expertise and investment support.
The startup plans to work with 10 startups for the upcoming design capital cohort, Tamai said, adding that it mainly works with early-stage startups via selective referrals from founders or venture capitalists. It focuses on industries such as computing infrastructure, machine learning, AI, data analytics, cyber security, and the creator economy.
‘Fundamentally, all startups are evaluated on four things: market, team, product, and traction; and founders are stretched thin, wearing many hats and seeking capital to drive those four elements,’ Tamai said.
Zypsy has already added five startups to the first cohort of the design capital program (alphabetical order):
- Copilot Travel: a Tennesse-based B2B2C travel cloud platform that connects travel companies and consumers through its travel infrastructure.
- CrystalDB: a Reid Hoffman-backed startup that offers a serverless cloud-based database service.
- Formless: a Boston-based blockchain startup that helps creators with revenue sharing and managing their digital offerings. In December last year, it raised $2.2 million in pre-seed funding from investors, including a16z.
- Noxx: a San Francisco-based AI-powered platform for hiring remote engineers.
- Zylon: A generative AI startup with a chatbot for small and mid-sized businesses built on a popular open source model called PrivateGPT. Zylon raised a $3.2 million pre-seed funding round in February.
Pilot projects with over 25 startups for three years
Before launching its official Design Capital Program, its previous clients via pilot tests included Cortex, a startup building an internal developer portal that helps engineering teams build better software at scale; Captions, an AI-powered video editing startup; and Robust Intelligence, an AI startup that helps businesses protect their AI models from security and operational risks and Anyplace, a hospitality startup.
Zypsy does not own stakes of the clients via pilot projects, Tamai noted. ‘They are ‘cash-based clients, not an ‘equity-based portfolios’ like five companies we mentioned in the first design capital program,’ he said.
In 2023, Zypsy raised $3 million to establish Design Capital. Investors included 1kx, Lattice, founders from Japanese e-commerce company Mercari and Web3 company Cega, angel investors like CDO at Rakuten, and the head of investment at SoftBank Vision Fund.
Reference: https://techcrunch.com/2024/04/16/design-zypsy-ideo-work-equity-startups/
Ref: techcrunch
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