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Private Equity

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Let’s face it: Founders are a dime a dozen these days.

That’s not to say your idea, strategy, or pitch isn’t unique. But in a world where new startups pop up on the daily, it’s simply not enough to 

have a good idea. To stand out from the mountain of pitches VCs receive, you have to come prepared with more than just flash. What investors look for now is substance, planning, and quality.

 can help. They’ve worked with successful founders every step of the way to impress those who may invest. They’ve templatized the key tool founders need to show up ready to hit the ground running. You know the expression “Don’t put the horse before the cart”? Well, this is like a souped-up cart with everything you need (no horse required).

these tools are so important, we should first explain what they are. 

Tech Brew’s gone into extensive detail before

, but who doesn’t love a good refresher? One of the most important tools at your disposal is a cap table. The cap table is a handy breakdown of a company’s ownership structure. It keeps tabs on which founders, employees, shareholders, and so forth own what percentage of the company.

This is a living, breathing document that evolves with every move the company makes, from fundraising to hiring to issuing new grants and beyond. Knowing what goes into a cap table is just the start. It’s also very easy for things to slip because a proper cap table requires constant upkeep. If that information isn’t accurate or all in one place, it can be tricky for your business, and even worse—it can look sloppy to an investor. 

’ all-in-one equity management platform helps remove the stress of managing it all.

Now, you have full liberty not to use the tools at your disposal. That’s allowed, but actions have consequences. Especially when it comes to investor meetings. Take Darrell West, co-founder and CFO of DepositLink, for example.

“One of the first investors we spoke with when we were raising funds asked for our cap table,” West said. “I gave him a blank stare. After that, the discussions were short, and we didn’t go further. It was a recognition that if someone is going to give you money, they want to make sure you’re a professional organization with a degree of professionalism. Eventually, I found my way to 

—very happy. But that was the turning point for me.”

This was a valuable learning moment for West, as it pertained to how he prepared for investor meetings. Showing up empty-handed leaves room for these “blank stare” moments. You want to be firing on all cylinders, not firing blanks.

Think of cap table management as extra credit rather than an annoying task. No one wants to invest in the B+ student when there’s an A+ student there who did more to prep.

Taking the extra step to show up prepared does a lot more than just show initiative. It’s a way to assure investors that you’re serious about your business. Sure, you can show up with a barebones spreadsheet, and say you’re ready, but as your business evolves, it may outgrow such a simple tool. 

 wants you to show up presenting your best. It’s the same as your mom getting you dressed for school picture day. It can feel like a hassle, but it’s a lot better than forever being remembered as the kid who showed up in his pajamas (unless, of course, your company deals in pajamas, in which case that’s a total power move).

The long and short of it is that in order to prepare, you must overprepare. If you’re unwilling to do it at the start, what possible reason would investors have to think you’ll do it later on?

 can help make it easy to manage. With tools like cap table management, a data room, scenario modeling, and more, you’ll have everything you need to make a spectacular impression and turn potential investors into actual investors. So put your best foot forward with 

, and rehearse that pitch one more time—because it’s time to get serious.

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fidelity_private_shares_aug25_article

How to secure VC funding as a first-time founder

Don’t show up empty-handed to fundraising meetings. Outperform the rest when you overprepare.

Foolproofing the founder’s toolkit

The startup life isn’t for the faint of heart. We usually hear about founders turning their tiny garage companies into huge international successes. But what we don’t hear much about are the challenges they face in learning and managing crucial aspects of their business—like equity.

Even the most brilliant innovators find it challenging to manage equity while focusing on their ideas. It’s a tough balance to strike. That’s exactly why Fidelity Private Shares LLC can flutter in like a financial godmother to simplify things with just a wave of their magic equity-management platform.

But back to equity, which is often seen as a major perk in the startup world. What exactly is it? Let’s find out.

Of course you know what equity is. But for anyone who could use a refresher, here’s the short version: Equity is a portion of the company that shareholders own. Shareholders include founders, investors, employees, consultants, advisors—you name it.

Think about equity like owning vs. renting. An apartment you rent isn’t yours. Nothing that happens after you leave is your problem. Equity is like owning a singular room in the apartment, such as the kitchen. Once it’s yours, maybe it’s time to stop shoving all your leftovers down the disposal. You put more time into a kitchen you own, make it nice, and hope that one day, you can even sell that souped-up kitchen for more than you paid for it.

The same goes for a business. You own part of it, so you want to see it made real nice. Then one day, you can sell off that equity for a major profit if the company thrives.

Let’s break down the different types of equity:

This is a stock option available only to US employees. It allows them to purchase company stock at a predetermined price. It’s a popular way to reward employees, offer potential tax benefits, and align employee interests with the success of the business.

Companies can grant these to employees, contractors, or board members, who can buy them at a fixed strike price. They’re easier to give out but lack tax benefits.

RSAs grants an employee ownership of common stock but only on a certain vesting schedule. They’re typically for founders and early employees of private companies upon signing an employment agreement. They can be sold or transferred only after vesting over a certain period. With minimal up-front tax implications, these can incentivize early employees to stick around.

Let’s stop here to pat everyone on the back for becoming equity experts. Great work all around, gang. Now, how do you manage it?

Look! Youthspeak in a financial article to keep it fun and hip. How 

you do, fellow shareholders? With all these types of equity going around to all these different people, keeping a handle on who owns what is imperative. That’s why it’s critical for founders to create and manage a capitalization table.

The cap table is a handy breakdown of a company’s ownership structure. It keeps tabs on which founders, employees, shareholders, and so forth own what percentage of the company. Think of it as a living document that evolves with each fundraising round, employee stock grant, or equity transaction. It’s a critical decision-making tool, especially when planning for equity delusion or future fundraising tools.

Some basic elements of a cap table include:

It’s very easy to mess up a cap table. If the information is fragmented and inconsistent, that’s bad. If you don’t manage it every day and things slip through the cracks without documentation, that’s brutal. Failing to model how new fundraising rounds affect ownership percentages? Don’t get us started. That’s why having the right tool to manage your cap table is so important.

Again, Fidelity Private Shares LLC is really coming in clutch here. Their data room automatically organizes your files and alerts you if any documents are missing. Plus, it updates the cap table whenever you add new information, such as hiring a new employee.

The data room is another key component for fundraising. This centralized repository of all relevant company documents is ready to share with potential investors during the due diligence process. It’s a good way to show investors you’re transparent, prepared, and ready to roll.

With all those docs swirling around, it sure would be nice if someone went and automated it for you. You know where this is going—Fidelity Private Shares LLC 

automate it for you. Get the same handy data-room automation as your cap table when you work with Fidelity.

We get by with a little help from Fidelity

Simplifying equity management is no easy feat. Understanding it can feel just as overwhelming. There are so many components, documents, and people to keep track of. Doing it alone just sounds like a nightmare.

Fidelity Private Share’s experienced customer support team can help ward off the anxiety boogeyman. It comes included when you use Fidelity Private Shares LLC, along with all those automation features we already mentioned. They can help you steer clear of costly mistakes or just provide a little reassurance that you actually have everything you need.

So whether you’re still working out of the garage, a coworking space, or your first office (milestone much?), Fidelity Private Shares LLC provides cap-table management and other administrative services to private companies and their equity compensation plans.

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Private Equity

Foolproofing the founder’s toolkit

Chaos to clarity: How to streamline equity management for your startup

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