RocketClub Lets Early Adopters Earn A Financial Stake In Startups

When a startup manages a successful exit, its earliest adopters usually don’t get much in return except for bragging rights. RocketClub wants to change that.

The platform helps young tech companies recruit users who are willing to complete tasks — including market research, product testing, or social media referrals—in addition for points. 100,000 points can be exchanged for stock appreciation rights (SARs) that are equivalent to a one percent stake in the startup.

RocketClub was launched last year by Erik Chan and Paul Chen, who both previously founded financial startups. Chan says they created RocketClub to solve problems they had encountered at their other companies.

“As founders, we’re heavily incentivized by money, mission, or fame to push our companies uphill. We wanted a solution to distribute those incentives to better engage early supporters,” he says.

“Later on, we realized the idea was bigger. RocketClub is about giving people who use these products a stake for adopting them. We realized user adoption is what makes Internet platforms valuable, and acting as the lifeblood of a product, users deserve to have a stake.”

So far, more than 200 companies have applied to use RocketClub and 23 have been listed on the platform.

Chan says Spottly, a travel planning app, is an example of a startup that has successfully used RocketClub to achieve its growth goals. Spottly’s team is based in Hong Kong, but needed more North American attractions listed. After recruiting 1,800 users on RocketClub, Spottly managed to increase the locations bookmarked on its app by eightfold. It has since raised investment from 500 Startup and Gobi Ventures.

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RocketClub monetizes by charging companies a $245 listing fee, a 15 percent commission for equity offered, and a 30 percent management fee that includes tax and bookkeeping services.

The company is also listed on its own platform. Chan says that more than 2,800 users have signed up to complete RocketClub’s tasks so far and it recently made changes to its platform based on their feedback.

For example, it got rid of campaign deadlines and goal requirements, so companies can continue to list different tasks as they grow. RocketClub also added another reward program that lets users earn other perks like discounts, in-app badges, and the right to name new features.

The main incentive for users, however, remains each company’s stock appreciation rights (also called phantom stock), which gives them the right to a cash payment equal to the share value when a startup is acquired or goes public.

Chan explains stock appreciation rights are commonly used by corporations to avoid the hassle of legal and tax paperwork. RocketClub’s rewards system sets it apart from platforms that startups use to boost growth and or collect feedback, such as Kickstarter, AngelList, Amazon Mechanical Turk, and Product Hunt.

Each startup on RocketClub decides how many stock appreciation rights they are willing to offer to users. So what happens when there are no more points to earn? Chan says that users who only want to help a company complete tasks for points usually don’t stick around. On the other hand, he adds, “we’ve found that SARs have been a great incentive for members who do care about the companies and want to go beyond just using the product.”