Has the start of the year been relatively quiet? Do you feel like this might be the calm before the storm?
Well, chances are you are right. Saddle up!
Studies show that Aussie companies and businesses of many kinds often have a slow start to business during January. And then in February, it’s pretty much go time.
So we’ve got till February, you say? Hold up now. This doesn’t mean it’s time to kick back, and it also doesn’t mean you should quadruple your ad spend to try and make up for standard fluctuations.
Below, we have summarised a few small (equity) things that you can easily smash out during the downtime. These easy tasks will put you in a seriously good position to power ahead when things get hectic.
1. Plan your next capital raise
If you are considering raising capital this year, it is is worth setting out the key details early on. By setting your intention now, your vision will become a lot clearer of the entire business.
- How much capital do you want to raise? How much equity do you want to give away?
- What is the value of your company now? What factors might change it this year?
- How many shareholders do you have currently? How many more would you be prepared to add to your cap table?
- Does your Shareholders Agreement need updating? And do you really understand the terms? The way you understand the terms of a deal, and the way you can discuss and negotiate them, can really improve the confidence of an investor (more confidence means more money). If you need help with this, just let us know and we will introduce you to our fixed fee partner.
- Is your ESOP set up, and factored into your fully diluted cap table? Is the pool big enough for future staff to be included?
It is worth checking out our Raise Checklist for any other steps you should be taking. Avoid looking unprepared and disorganised when the investor taps you on the shoulder.
2. Set up or update your ESOP
If you haven’t set up your ESOP, now is a good time to get it done.
Even if you’re not ready to make the offers, you can set up the Pool, and the Plan Rules, and have it ready to go. This can be done on Cake in a matter of minutes.
This way, when that dream developer comes along, there will be no delay in getting them the sweat equity offer they are expecting. Similarly, when the raise investors come knocking, you can immediately show them the fully diluted cap table, with the ESOP accounted for.
If you already have your ESOP set up, it is worth checking it is all up to date. On Cake, you can check this in your ESOP dashboard.
It is also worth thinking about how you’ll incentivise your key staff this year – is it worth offering ‘top-ups’ to any staff? Should you add a couple of additional milestones, based on the way their role has progressed?
And finally, to get the most out of your existing ESOP, why not give your staff an update on the potential value of their options.
For example, how much would their options be worth if they were to be sold at the value of the next planned capital raise? How much does the company want them to be worth in a couple of years?
You can quickly update option holders through the Cake ‘Investor Updates’ feature.
3. Automate and delegate
Founders hate admin – shock horror.
And unfortunately, managing your company’s equity can involve a lot of admin if not set up correctly. Worse, it can become costly where you get hit with ASIC late fees, or need to pay professionals to fix your mistakes.
Cake has the ability to automate and delegate 90% of the admin involved.
For example, you can
- allocate your registered agent to update ASIC through the platform (if you don’t have a registered agent, you engage one through Cake)
- automate your ESOP vesting and management, and
- engage fixed fee lawyers and accountants to handle certain transactions where mistakes are not worth the risk.
Feel free to book an additional session with our Success Team to make sure you are getting the most out of your account.
Peace of mind feels good. Real good.
As a founder, you’re busy working on building your dream. So naturally, most of the above will fall into the “I’ll do this later tonight” basket throughout the year.
While we have no doubts in your ability to throw down that 4th espresso and churn it out to the early hours, we are advocates of peace of mind.
A founder is most empowered when they have peace of mind.
- Peace of mind that everything is working in the background.
- Peace of mind that everything is done correctly.
- And peace of mind that they have been proactive, and not reactive.
Getting the above done will give you that peace of mind. And it is a bloody nice feeling once you get it!
If you liked this article, check out How many investors should I have on my cap table? or Employee Share Option Plans – What happens when an employee leaves?
This blog is designed and intended to provide general information in summary form on general topics. The material may not apply to all jurisdictions. The contents do not constitute legal, financial or tax advice. The contents is not intended to be a substitute for such advice and should not be relied upon as such. If you would like to chat with a lawyer, please get in touch and we can introduce you to one of our very friendly legal partners.