Equity management with WE.VESTR

Another month, another xCollective. This time we’re going to discuss the topic of equity management with Floris van Hoogenhuyze, co-founder and CEO of WE.VESTR. They’re aiming to simplify equity management through its all-in one platform for start- and scale-ups.

Simplifying equity management

Floris is - as we would call it - a serial entrepreneur. After setting up multiple businesses, a number of things kept on bothering him in the process from idea to exit: managing his shareholders and the inflexibility in regard to equity.

“I was managing my shareholders in a lot of isolated and cumbersome solutions. For example, I had to request a cap table from my notary, this was sent to me by post, and we had to transform that into an Excel file. Not to speak of ESOPs. Every time, I was struggling with providing a clear overview, and showing employees how much they actually possessed.” Floris tells us. 

Many companies start with a challenge that the founder faces himself, in this case that’s no different. And precisely how WE.VESTR came to life, centralizing equity management from incorporation to exit all in one platform.

Unique investment approach

With Venturerock in the lead, they have an unordinary VC on board. As they describe themselves: An Impact Venture Builder and ecosystem of founders, backers & builders. Together, we have transformed the venture capital model into a venture building model. Advancing technology, science and innovation, we co-create and grow the next-gen of global tech companies that bring economic, social and environmental impact.

A VC that’s involved from the beginning, all the way from finding a problem solution fit and product market fit to generating first traction and showing a clear development in customer acquisition cost and lifetime value.

Their involvement from idea phase to actually scaling is exactly why Floris opt for this type of approach. “Immediately when I started WE.VESTR I was excited about the model, because it brings back a lot of focus to the entrepreneur. And on the other side, it reduces the risk for the investor and its LPs, as it helps filter good companies from great companies.” Floris explains.

Although this wasn’t a decision solely based on money. It’s quite a success already, with as icing on the cake a just announced funding of €2.2 million.

Building an end-to-end platform

Equity management is a collective name for a lot of things. From managing your shareholders to reporting your performance indicators, and everything in between. For WE.VESTR it all started with simplifying shareholder management for startups, but in a relatively short amount of time, they’ve been able to expand their horizon to five proposition. ‘The Big Five’ as Floris calls them.

For companies that are still in idea phase, WE.VESTR digitized the ‘slicing the pie’ methodology. A methodology that is being used by a lot of companies worldwide, and is seen as a one-size-fits all model that creates a perfectly fair equity split in an early-stage, bootstrapped startup company. For companies further in the life cycle, that reached the point of fundraising, there’s the live data room. Where potential investors can gate a single overview of equity and company performance. 

Once the funding is secured, or if you already have different shareholders onboard, it’s all about setting up an environment for day to day shareholder management. Where a company’s cap table is centralized, and where you can report on the performance indicators for your investors. To help founders save even more time, they’ve also created an environment to set up and run ESOP’s.

And as if that isn’t enough. Floris adds, “We’re also aiming to create a secondary market for venture stocks, where you can tokenize shares internally and can trade these shares conveniently through the platform.”

Educating the European market

Any way you slice it, WE.VESTR is changing the way founders manage their equity. But there’s still a lot to win. Whereas in the UK and US it’s a no-brainer to look into cap table and equity management solutions. In Europe, it’s not that common yet. “A lot of companies still use separate solutions for reporting, performance, cap table management etc. Where Excel sheets or Dropbox folders are more than sufficient, and reporting is still done via attachments in emails.” Floris tells us.

Although, Floris isn’t afraid to compete with the big names in the UK & US. “We consider ourselves a solution from idea phase to exit, which also makes us the platform for pre-investment startups. Carta is a great platform, but is pretty feature heavy. When you’re a startup, you don’t always need such a comprehensive solution.”

Floris goes on to make the analogy that if Carta is to Salesforce, WE.VESTR is to Hubspot/Pipedrive. WE.VESTR’s position is therefore to provide an equity management platform that's hyper-relevant to early-stage companies, and that is hyper-capable to support them all the way from incorporation to their exits. 

Final piece of advice

That it’s already a great journey we can’t deny, and with more features coming up there’s no stopping WE.VESTR. For those companies that are at the beginning of scaling their business and looking in to different ways to manage their equity, Floris has three valuable tips:

1. Don’t assume. Validate.

Building a new product, whether it’s a platform or software, takes time. Before you spend all your money and time launching the MVP, validate the solutions and even wire frames with potential customers and investors.

“Even though I had experience with setting up companies, in the process of building WE.VESTR we stepped into the pitfalls of making assumptions too early without validating it properly. It’s important to involve your potential customers and investors in the product development process.” Floris shares.

2. Start thinking about hiring from day one

You know that you’ll eventually need more developers and sales people after all, and especially in the current market it’s important to anticipate early. If you want your company to grow as fast as possible, you will want to build your first full team as soon as you responsibly can.

Floris adds, “See every hire as a sales process, and put your best efforts to attract the best talent. Remember that you’re always competing with the big names.”

3. Clear communication around ESOP’s

Something else Floris is passionate about is ESOPs, and there’s a lot of unclarity around ESOP. The number one tip Floris has for companies looking into ESOP’s is, communicate! “The lack of overview and communication is something that a lot of companies still struggle with. When you’re setting up ESOP’s you’re obviously registering this somewhere, still employees are often left in the dark. That’s a shame! Especially if you’re using ESOPs as a retention strategy, it’s important to give employees a good overview on how their ESOPs are progressing and how much they’re worth.

Many founders are trying to figure out what the best practice is and this may differ country by country. Therefore, WE.VESTR has partnered up with ArchipelTax Advisory and LXA to build a streamlined process for founders looking to set up ESOP’s. Keep an eye on this!

Want to learn more about WE.VESTR’s journey and equity management? Listen to the full story on Spotify.