6/2/19: Weekly Update
Hey all!
Can startup employees get 10x more equity exposure? I’m trying to find out and will open-source all the learnings!
Background
I was an early employee at multiple rapidly growing startups. I calculated my hypothetical equity upside if I had:
Secured an allocation (the right to invest) in every future funding round as part of my offer from each company
Invested in all the future rounds at each company by
Creating a syndicate (special purpose vehicle)
Fundraising for the syndicate from my network
Investing the syndicate’s capital into each company’s round
Charging 20% carry (share of profits after initial capital returned to investors) in a realized exit scenario.
The combined carry on investing at least $1mil/round/company was many multiples of my combined options value. Many friends with similar backgrounds have projected similar scenarios.
Is there a scalable way to do this for lots of startup employees?
Asks
I’m speaking to startup employees to validate if they are willing to ask for allocation.
Please forward this to someone you enormously respect who currently works at a Series A or younger startup that has raised at least a seed round with the following text:
“Should I connect you?”
I would greatly appreciate it!
Last Week’s Progress
Weekly update subscribers: 51
Tracking mailing list subscribers mostly captures everyone I speak with via async methods in addition to scheduled meetings.
I spoke with many top tier startup employees, founders, and VCs/angels.
Vast majority said they had never heard of anything like this
Some heard rumors of candidates investing in their employers shortly after joining
Employees thought founders wouldn’t go for it, founders thought employees wouldn’t attempt it, etc. but nobody has yet found a fundamental flaw. Please reach out if you do!
Next Week
Engage counsel to determine if there are any potential compliance/legal concerns
Meet at least 10 Series A or younger startup employees
Choose another key metric to define progress in addition to update subscribers
Analyze potential business models
Fund manager that fills allocations for employees and shares carry
Either GP-LP structure, SPV, or a mix of both
P2P investing platform
Talent manager for employees (maybe structured as RIA) that helps with compensation negotiation, wealth management, and filling allocation
Open to other ideas!
Interested in learning more? See the next update.
Thanks to Vaibhav Mallya, Steven Miller, Soroush Pour and others for reviewing and editing.
Disclaimer
I'm not a professional CPA, lawyer, CFP, RIA, B/D, ERA, etc. or anything else. All content is informational only and is not intended as professional advice/counsel or an offering of any kind.