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hg82788.com (Dry cargo sharing) What are the pitfalls of the equity distribution and exit of the entrepreneurial team?

(Dry cargo sharing) What are the pitfalls of the equity distribution and exit of the entrepreneurial team?

Source of information: Time: 2020-02-21 02:39:37

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How to design a company's equity structure, especially the equity structure of a venture partner, has always been a problem that most puzzles entrepreneurs. Of course, there are not only many pits, but also deep ones.
In the process of serving startups, we have seen various versions of the story of partners' equity wars, and also helped entrepreneurial friends deal with various types of equity war accidents. We found that the frequent outbreak of equity wars or farce between partners is because they do not have a mechanism for entering the equity of partners or a mechanism for exiting the equity of partners. It's like, the couple got married unknownly. After marriage, I found that the two parties are completely two species. When I wanted to divorce, I found out that I didn't know how to divorce, and even the marriage could not be separated.
I. Entry mechanism of partner equity
The entry mechanism of partner equity, that is, the marriage mechanism.
To do a good job of entering the equity of partners, we must first understand what is a partner? We believe that the partners are founders and co-founders who have both entrepreneurial ability and entrepreneurial mentality, and have full-time investment expectations of 3-5 years.
Partners are the company's largest contributors, and they are also the ones mainly involved in the distribution of equity. A partnership is a [deep] binding of a [long-term] [strong relationship] that is close to a marriage relationship. After the partnership, the big and small things of the company must be discussed between the partners, and major events, even the partners' consent. Every penny earned by the company, regardless of whether it is directly related to the partners, is distributed according to the agreed equity ratio in advance.
(A). Pit into which partners' equity has entered
Ask God to send God easily.
The following personnel may be the company's collaborators, but it is recommended that entrepreneurs carefully treat the following personnel as partners and issue a large amount of equity in accordance with the standards of the partners.
(1) Short-term resource committers
Some entrepreneurial friends mentioned earlier that when he first started a business, a friend suggested that he could connect upstream and downstream resources for his entrepreneurship. In return, a friend asked the company to give 20% equity in return.
After the entrepreneur gave up the equity to a friend, the resources promised by the friend were not in place.
This is certainly not the case.
Many entrepreneurs may need to use a lot of resources to start the company's development in the early stage of entrepreneurship. At this time, it is easiest to promise too much equity to the early short-term resource promisers and turn the resource promisers into company partners. The value of a startup company requires the entire startup team to invest long-term time and energy to achieve it. Therefore, for those who only commit short-term resources, but do not participate in full-time entrepreneurship, it is recommended to give priority to project commissions and discuss benefits and cooperation, rather than through equity Long-term deep binding.
(2) Angel investor
Some entrepreneurial friends mentioned earlier that when the company started in the early days, the three partners made up 490,000 yuan, and friends who worked on real estate development gave them 510,000 yuan, which together made up 1 million yuan of startup capital. Everyone simply and efficiently divided the shares according to their respective investment proportions, that is, the partner team accounted for 49% of the total shares, and external investors accounted for 51%.
In the third year of the company's development, the partner team found that on the one hand, the original equity distribution was extremely unreasonable; on the other hand, the company wanted to introduce external financial investors. After completing the initial due diligence, a number of investors said that they were afraid to invest in their equity structure.
The logic of venture capital investment is: (i) Investors invest large sums of money, taking small shares, and use real money to buy equity; (ii) Venture partners invest little money, take up large shares, and earn equity through long-term full-time service companies. In short, investors only contribute money and do not contribute. The founder both contributes (a small amount of money) and contributes. Therefore, angel investors should purchase stocks at a higher price than partners, and should not obtain equity at a low price in accordance with partner standards.
(3) Part-time staff
Previously mentioned by a startup friend, he introduced a part-time technical partner at BAT through a friend's introduction. In return, the company gave the part-time technology partner a 15% stake.
At first, the part-time technical partner also intermittently participated in the project. Later, there was little involvement. After half a year, participation ceased. Entrepreneurs feel that it costs a lot of money to do a trivial matter, but it pays off.
For part-time employees who are technically NB but do not participate in full-time entrepreneurship, we recommend issuing a small amount of equity (the equity comes from the option pool) according to the company's external consultant standard, rather than a large number of equity based on the partner's standard.
(4) Early ordinary employees
Some entrepreneurial friends mentioned earlier that they wanted to motivate employees because of cost considerations. When the total number of employees was only 7 in the first 3 months, 16% of the options were issued to 4 ordinary employees other than partners. . After completing the incentive equity, they discovered that these employees are most concerned about raising wages, and do not value equity. Early employee mobility was also high and equity management costs were high.
For partners who have both entrepreneurial ability and entrepreneurial mentality, after initial running-in, they can arrange equity as soon as possible. However, premature equity issuance to early ordinary employees, on the one hand, the company's equity incentive costs are high. On the other hand, the incentive effect is very limited.
In the early days of the company, giving a 5% equity to a single employee may not have an incentive effect on employees, or even a negative incentive. Employees are likely to think that the company does not want to pay them wages, flicker them through equity, and draw them big cakes. However, if the company issues incentive stocks to employees in the middle and late stages, it is likely that 5% equity can solve the problem of 500 people's incentives, and the incentive effect is particularly good. At this stage, employees no longer pay attention to the percentage of equity they take, but directly calculate how much the stock is based on investor valuation or company performance.
(B) the experience of partner equity entry
Many people know that Xiaomi has a team of luxury partners who mix and match the turtles and turtles. Many entrepreneurial friends have asked how the equity of Xiaomi partners is allocated for design.
Regarding this issue, first of all, Xiaomi's current commercial achievements are due to various reasons, and the partner's equity structure must be only one of them. Second, every company has irreproducibility, but the ideas and ideas behind doing things are common Sex can be borrowed. We will not discuss the specific details of the customer project, but we can discuss the idea and ideas of Xiaomi's partner jigsaw puzzle based on our public disclosure of the information according to the media. The following is an information map made by our colleague Du Guodong based on public media reports.
From this infographic and other media reports, we can see that the characteristics of Xiaomi's partner team are: they are all partners found by the founders themselves, or partners and partners recommended by the running-in partners Both have experienced a break-in period; they are all distributed around Xiaomi ’s triathlon core business “software, hardware, and Internet services”; they participated in entrepreneurship very early in Xiaomi and did not receive low or low wages; Stocks, 56 early employees within the team invested more than 11 million US dollars.
Xiaomi's luxury partner team cannot be copied. However, Xiaomi's experience of finding partners is worth learning from: how to set up a team behind the distribution of equity. Find the right partner first, and then the equity allocation. Entrepreneurs have to think, where are the core nodes of the company's business development? Are all these business nodes responsible? Do these people have an interest?
(1) Partners must run through on specific matters, first fall in love, and then get married;
(2) Issue equity to partners who have both entrepreneurial ability and entrepreneurial mentality.
(3) Recommending friends in the circle through reliable people in the circle is a shortcut to find partners. For example, if the company wants to find a product manager, go directly to the product manager of the well-known business NB; if it fails, let him help recommend the product manager in his circle. I believe the eyes and tastes of people in the industry.
2. Withdrawal mechanism of partner equity
Divorce mechanism.
Some entrepreneurial friends mentioned earlier that the four of them started a partnership. One and a half years after the venture started, some partners did not agree with other partners, and he had another better opportunity. He therefore proposed to leave. However, how to deal with the 30% equity of the company held by the partner is dumbfounded.
The retiring partner said, I have been involved in entrepreneurship from the beginning, both merit and hard work; the company law also does not require shareholders to resign from the company after leaving the company; the articles of association do not stipulate; the partners have not signed other agreements, Shareholders withdraw from the company must withdraw from the shares; partners have left the company from the beginning to the end and have not done any communication. Therefore, he refused to withdraw.
Other left-behind partners said they had to raise the company for five years, or even 10 years, like raising a child. You run away with a soy sauce, and don't hand over the equity, which is unfair to other partners who continue to participate in the venture.
Both sides toss each other and torture each other.
This is certainly not the case.
How can a startup company do a good job of exiting its partners' equity?
(I) Managing the expectations of partners
When issuing equity to partners, do in-depth communication and manage everyone's expectations:
The partners' equity is based on everyone's long-term optimism about the company's development prospects and willingness to participate in entrepreneurship together for a long time; the small amount of funds that the partners put together early is not the true price of the large amount of equity held by the partners. The main price of equity is that all partners have long-term binding with the company (for example, 4 years) and earn equity through long-term service companies; if no exit mechanism is set up, partners who exit midway are allowed to take away the equity, and exit the partnership. Human fairness is the biggest injustice to other partners who have long been involved in entrepreneurship, and they have no sense of security for other partners.
(B) the rules of the game
Within a certain period (for example, within one year), it is agreed that the founding shareholders will hold the shares on behalf of them;
It is agreed that the partner's equity is linked to the service period, and the equity is mature in stages (for example, 4 years);
The shareholder quits halfway, and the company or other partners have the right to repurchase the immature or even mature equity of the departing partner with an equity premium;
Regarding the behavior of leaving and not surrendering equity, in order to avoid the uncertainty of judicial execution, it is agreed to leave the company without refunding a high penalty.
Three. Other issues
We have taken four main questions asked by entrepreneurial friends.
1. Can partners' maturity in installments and the exit mechanism for repurchase share options be written into the company's articles of association?
The Bureau of Industry and Commerce usually requires companies to use the articles of association template specified by them, and these exit mechanisms of equity are difficult to write directly into the company's articles of association. However, the partners may sign another agreement to stipulate the withdrawal mechanism of the equity; the articles of association of the company shall not conflict with the shareholders agreement as much as possible; it is agreed in the shareholders agreement that if the articles of association and the shareholders agreement conflict, the shareholders agreement shall prevail.
2. How do I determine the exit price when a partner exits?
Stock repurchase is actually a "buyout", and he suggested that the company's founders consider "one principle, one method". "One principle" is that they usually recommend that the founders of the company, for the partners who withdraw, on the one hand, can recover all or part of the equity; on the other hand, they must recognize the partners' historical contributions and repurchase the equity at a certain premium / or discount. .
This basic principle is not only related to the withdrawal of partners, but also to the major and long-term cultural construction of the enterprise. It is very important. "One method", that is, how to determine the specific exit price, they suggest that the company founders consider two factors, one is the exit price base, and the other is the premium / or discount multiple.
For example, you can consider repurchasing at a certain premium based on the purchase price of the partner ’s purchase price, or withdrawing the partner from a certain premium that can participate in the distribution of the company's net assets or net profits in accordance with its shareholding ratio. Buyback at a discounted valuation. As for which exit price base to choose, companies with different business models will differ. For example, although JD.com was valued at approximately $ 30 billion when it went public, the company's balance sheet was not very good.
Many Internet new economy companies have a similar situation. Therefore, on the one hand, if the partner can participate in the distribution of a certain premium repurchase of the company's net profit when the partner exits, the partner is likely to run out of N years, but will be netted out when exiting; but on the other hand, if According to the company's latest round of financing repurchase price repurchase, the company will face great cash flow pressure. Therefore, for the determination of the specific repurchase price, the specific business model of the company needs to be analyzed, so that the exiting partners can share the company's growth benefits without allowing the company to have excessive cash flow pressure, and also reserve some adjustment space and flexibility.
3. What should be done if the partner divorces?
In recent years, the divorce rate has risen, and the divorce rate for entrepreneurs may be on the high side. Dealing with property after marriage, including equity, is a tricky issue. The divorce incident affects not only the family, but also the timing of enterprise development, such as Tudou.com. Marriage is also likely to cause the company's actual controller to change. In principle, the property during the marriage is the common property of both spouses, but the spouses can agree on the ownership of the property separately.
Therefore, spouses can sign a "potato clause" and agree that the spouse will waive any rights to the company's equity. However, due to recognition of the spouse's contribution during the marriage, and in order to obtain the recognition of the spouse, the relationship between husband and wife is not red because of the equity relationship. At 7 or 8 o'clock, they have their own modified potato clause. Non-interference affects the company's business decision management; on the other hand, it protects the economic rights of the divorced spouse.
4. After the equity issuance, I find that the equity obtained by the partners does not match their contribution. What should I do?
The company's equity is issued to the partners at one time, but the partners' contributions are in place in stages, and it is easy to cause mismatches in equity allocation and contribution. In order to hedge this kind of risk, you can consider: (1) After the break-in period between partners, they are responsible to both parties. Therefore, you can fall in love before you get married; (2) in the early days of the business, reserve a large option pool to reserve space for later equity adjustments; (3) the mechanism of equity stage maturity and repurchase itself can also hedge against this Certainty risk.
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