LFP222 – Share Schemes & Equity Management: Opportunities & Pitfalls for Founders and Employees w/Ifty Nasir CEO Vestd

There is a real art to how a founder manages his companies equity. If he gives it, or its derivative, share options, away too fast for too little value – whether funding or staff – he will be giving away his creation on the cheap and losing control fast. Vice versa hoarding it to himself […]

There is a real art to how a founder manages his companies equity. If he gives it, or its derivative, share options, away too fast for too little value – whether funding or staff – he will be giving away his creation on the cheap and losing control fast. Vice versa hoarding it to himself will produce inadequate funding and not top-notch senior staff. If this is the spectrum then there is in addition a whole dimension of the terms and conditions over equity schemes. There are plenty of hidden elephant traps for the unwary even for “Day1 co-founders” (eg a simple 50:50 split yet one co-founder puts most of the work in…). Furthermore we have what was “pre-tech” an administrative nightmare of managing hordes of shareholders and regulations/laws thereto. Vestd who formed in 2014 and have thousands of companies on their platform offer a “guided SAAS” product where the platform is closely allied to tons of experience in re.

Founder and CEO Ifty Nasir formed the company in 2014 after a lifetime’s international career with BP and considerable experience on the internal corporate finance side of deals and equity including at one point hiring Lord Sumption on a challenging deal. He joins us today to discuss the whole “how hard can it be” (as always “harder” and in this case “quite nuanced”).

Topics discussed include:

the first Yorkshireman on the show?
Lord Sumption’s office
Ifty’s worldwide career in BP
founding Vestd
experiences with estimating funding costs and how much equity it takes to Angel and to get a business off the ground
seeing how many times sweat equity went wrong… 
“so many errors are people don’t think about it”
problems even on day1 of NewCo – case study of a new business and some basic pitfalls
“Putting together shareholder agreements is the difficult thing”
agile partnerships as a template
conditionality as key
Case Study of the first company I worked for
the fluidity of equity, salary and time in contributing to the growth of the NewCo
“there are a lot of really great tools around this – eg Mike Moore’s ‘Slicing Pie’ “
challenges eve with equity-low,
cash-rich NewCos in the consultancy space
the experience of many founders in managing the Cap Table that its no big deal, a spreadsheet for a few years and then suddenly a great panic/problem – dynamics that come from not fully understanding a topic and the risks being run and then those risks crystallising
the different standards of retaining or not retaining equity when one leaves a company
definition of Cap Table
does it include Share Options as well as issued capital?
fully-diluted Cap Tables
clearing up the cap tables and how the importance of this has changed the raise dynamics with the advent of firms like Vestd
the role of technology in changing these whole dynamics
share option schemes and when one joins the company leading to very variable rewards and management challenges – my experience
tiers of management sitting around not trying hard any longer as an outcome of a poorly designed lock-in/vesting scheme
good leaver/bad leaver terms
the UK’s EMI incentives scheme and the tax incentives/benefits thereof
70% of such schemes are “exit only”
discussion of the challenges of overly-locking in staff and waiting for exits which in difficult markets may be far far away
tailoring schemes per employee and how much easier that is with platforms
“guided SAAS” product/service and the regulatory restrictions thereon
where and when to use accountants, lawyers and Vestd
Vestd’s plans for the future

And much much more

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