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Why Educating Startup Employees About Equity Is As Important As Giving It

This is the final article in a three-part series on the benefits of giving all startup employees equity. See the first piece here and the second one here. A year after I moved to Chicago, I attended a women’s networking event, where an employee of a recently-acquired startup entered the room. Folks were excited to see her, congratulating…

The post Why Educating Startup Employees About Equity Is As Important As Giving It appeared first on HPA.

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This is the final article in a three-part series on the benefits of giving all startup employees equity. See the first piece here and the second one here.

A year after I moved to Chicago, I attended a women’s networking event, where an employee of a recently-acquired startup entered the room. Folks were excited to see her, congratulating her on the exciting news and asking questions about what life was like post-acquisition.

Among other changes, she talked about how they were preparing to double their team to 50 people, leading me to believe that she was a rather early employee. I had never met her but was impressed by and happy to celebrate this 20-something woman who had helped drive a startup to a successful exit.

When she and I introduced ourselves, I congratulated her and said I hoped she did well in the acquisition. To my surprise, her response was to brush off my comment and say, “Oh, we’re not a publicly-traded company.”

I stood there, slowly realizing that not only did this woman not benefit from the acquisition that she certainly helped manifest as an early employee; she didn’t know that she could have benefitted from it.

As I mentioned in my first article in this series on startup equity, employees’ lack of understanding about equity is a common justification I hear for why Chicago startups don’t give it to them. And this is a vicious circle that we must disrupt.

If we never give employees equity, they will never have the opportunity to understand its effects and value. Giving and teaching employees about equity is not only the right thing to do for the people working daily to help founders and investors build a valuable company; I argue that it’s critical to helping foster an ecosystem that retains its best and most experienced talent.

Let’s consider the woman I mention above. She had no understanding of how startup equity worked or that she could be living a very different life today—at least one with less financial burden. Her perception of what it means for a startup to be acquired—which could have been a lucrative experience for her—is one of the most painful parts of an acquisition: merging two different companies’ cultures, adapting to more bureaucratic corporate policies and processes, and then experiencing the pain of layoffs. In fact, just over a year after the acquisition, I learned that she was part of the merged companies’ subsequent downsizing.

When we look at this woman’s experience through the lens of attracting and retaining experienced startup talent, why would she—someone who helped steward a company to a successful exit—ever join a startup again? She could instead go to a more established and stable company, earn a comparable (if not higher) salary, get better healthcare benefits, and not endure such emotional and operational volatility.

It’s true that people will have a difficult time fully grasping the opportunity that equity poses if they haven’t experienced or witnessed close-hand the effects of a liquidity event. However, the nebulous nature of equity and employees’ lack of understanding of it shouldn’t be a reason to not grant it. Rather, it’s on companies to help their teams understand and value the opportunity that equity poses.

In my experience, I’ve seen companies of different sizes handle this differently. When I was at Uber, new employees went through a multi-day on-boarding program at headquarters called Uberversity, where an entire session was dedicated to teaching new hires about what equity means and what it looks like for a company to exit.

It was led by a financial executive who did not, of course, provide tax advice but gave the equivalent of a lecture on what the different terms mean. In smaller startups that I’ve been a part of, we held equity tech talks and guest panels that included both investors and lawyers who could help employees understand the nuances of it.

Why go through all of this trouble? There are a number of reasons. Having a team that feels personally and collectively invested in building a valuable company can be very advantageous to the company’s day-to-day operations and long-term growth. It helps inspire accountability and collaboration during the smooth parts of the company’s journey, not to mention camaraderie and resiliency during the twisting and bumpy roads that the startup will inevitably navigate.

The value of explaining equity to employees extends beyond inspiring collaboration, though. It also shows that you value your employees enough to give them a piece of the upside of an exit. This commitment to your team members is reinforced when you show them that it’s worth taking time out of the daily startup grind to help employees understand what you’ve offered them.

A mentor of mine says, “If you want to know what someone values, look at where they spend their time.” Investing time in your employees’ career growth and financial literacy will help ensure that employees continue to invest their time in your company.

The more that companies do this here in Chicago, the more experienced talent we’ll see stay. And the more experienced talent that stays and benefits from successful company exits, the more companies they will launch here. And if we get those two pieces right, Chicago’s ecosystem will grow as more and more outside talent sees the Windy City as a place where they can flourish.

Originally featured in Chicago Inno.

Source: https://hydeparkangels.com/educating-on-equity/#utm_source=rss&utm_medium=rss&utm_campaign=educating-on-equity

Private Equity

20VC: Sequoia’s Roelof Botha on His Biggest Lessons Working Alongside Don Valentine, Mike Moritz and Doug Leone, Leading Sequoia’s US Business and What Sequoia Do To Retain Their Edge at the Top & The Crucible Moments That Define Startup Success

Roleof Botha is a Partner @ Sequoia Capital, one of the world’s leading venture firms with a portfolio including the likes of Airbnb, Instacart, Stripe, UiPath, Zoom, the list goes on. As for Roelof, at Sequoia he has led rounds into the likes of YouTube, Instagram, Eventbrite, Square, MongoDB, 23andMe and Unity Technologies to name a few. Before joining the

The post 20VC: Sequoia’s Roelof Botha on His Biggest Lessons Working Alongside Don Valentine, Mike Moritz and Doug Leone, Leading Sequoia’s US Business and What Sequoia Do To Retain Their Edge at the Top & The Crucible Moments That Define Startup Success appeared first on The Twenty Minute VC.

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Roleof Botha is a Partner @ Sequoia Capital, one of the world’s leading venture firms with a portfolio including the likes of Airbnb, Instacart, Stripe, UiPath, Zoom, the list goes on. As for Roelof, at Sequoia he has led rounds into the likes of YouTube, Instagram, Eventbrite, Square, MongoDB, 23andMe and Unity Technologies to name a few. Before joining the world of venture, Roelof was the CFO @ Paypal playing a key role in their hyper-growth from 2000-2003.

CLICK TO LISTEN ON ITUNES

In Today’s Episode You Will Learn:

1.) How did Roelof go from actuary in South Africa to CFO @ Paypal? What were his biggest lessons from seeing Paypal burn $10M per month? How did Paypal lead to his joining Sequoia as a Partner?

2.) Market Evaluation: Does Roelof agree that the market is crazy today? How does today compare to prior vintages? How does Roelof assess the compression of fundraising timelines? With compressed timelines, how does he build relationships of trust with founders?

3.) Founder Evaluation: What were Roelof’s lessons on founder assessment from Don Valentine? What matrix did Don teach Roelof to assess founders on? How does Roelof feel about the rise of competitive rounds? When should founders take them vs remain heads down on execution?

4.) Investment Mentality: How did Roelof prevent becoming too confident when early investments went well? How does Roelof prevent relying on past failures as a reason for turning down opportunities today? What can investors do to retain a very flexible mind? Why does Roelof believe you are only as good as your next investment?

5.) Sequoia’s Edge: How does Roloef think about what it takes for Sequoia to retain it’s edge at the top? How does Roloef measure the success of the Sequoia scout program? How did they structure it? How has the structure changed? What do they plan to do moving forward?

6.) Board Membership: How would Roloef evaluate his current style of board membership? How has that style changed over time? What elements did he find challenging? What advice would Roelof give to new board members adopting their first board seats?

Items Mentioned In Today’s Show:

Roelof’s Favourite Book: Man’s Search For Meaning

Roelof’s Most Recent Investment: mmhmm

As always you can follow Harry and The Twenty Minute VC on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.

Source: https://thetwentyminutevc.com/roelofbotha/

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Private Equity

Private equity investor Centerbridge Partners backs Syncapay’s acquisition of Wirecard North America

From: FinTech Global Syncapay has announced that it has bought Wirecard North America, marking another page in the story of the collapse of the scandal-ridden former FinTech giant. Wirecard imploded this summer after a suspected multi-billion dollar fraud was unearthed. Since then the company, which was once hailed as one of Germany’s biggest FinTech success […]

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From: FinTech Global
Syncapay has announced that it has bought Wirecard North America, marking another page in the story

Source: https://www.altassets.net/private-equity-news/by-news-type/deal-news/private-equity-investor-centerbridge-partners-backs-syncapays-acquisition-of-wirecard-north-america.html

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Private Equity

Gulf Capital backs CWB as part of $60mln IP platform build

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The post Gulf Capital backs CWB as part of mln IP platform build first appeared on https://africacapitaldigest.com.

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