A real conversation between two CEOs about equity management

Last updated: 27 June 2024. 

There’s a lot to consider when you’re trusting a company to handle the shares and equity of your business.It’s a big deal and no one wants to be in the position, years down the line, regretting the decision they made and having to explain mistakes to disgruntled investors, employees and the board.

With the advent of software, there’s more than one way to handle things now. So how do you decide? You can ask the supplier of a service all the usual questions, however, you can’t help but feel they’ve got a vested interest in you choosing them.

You’re always reading between the lines trying to ascertain the ‘truth’. And it’s not always clear what are the right questions to ask.

If only you could hear it from a peer. Someone just like you with no vested interest in your decision either way. And if only you could hear the questions other business owners are asking so you know you are not missing anything.

That’s why when Ritam, a customer of Vestd told me about an email exchange he had had with another CEO considering their options, I asked if I could share it publicly.

I asked so others could benefit from hearing a genuine, frank and honest conversation about the concerns business owners (rightly) have when they are deciding between using a software tool to handle their company’s share and equity needs or sticking with the traditional paper-based route.

The concerns are ones everyone likely has so it's nice to be able to step to one side and let a real customer tell it from their perspective. I hope the transparency is helpful to others!

Note: Ritam's answers are italicised.

Two CEOs discuss equity management software

Hi Ritam,

Thanks very much for getting back over LI.

We’ve just closed our seed round and are looking to set up our options plan and came across Vestd as a potential way of getting it done ourselves.

A few questions I have:

How has the support from Vestd been so far?

Amazing. That’s probably been one of their biggest strengths in that I’ve had super fast responses.

Once set up, what has been the value in paying for the service monthly as opposed to paying a larger fixed price upfront amount and not worrying about it?

The biggest benefit for us from a commercial perspective is that it’s really helped with cash flow not to pay a big upfront fee and it’s easier to plan financially for the ongoing monthly subscription.

The reality is that there will be ongoing questions/changes, so paying once and worrying about it hasn’t worked well for me in the past.

What type of options plan did you set up?

EMI and regular options. I also have shares/options in other startups granted to me through the Vestd platform, so I can manage all of it in one place.

How much time (on average) do you spend managing the platform? 

Practically zero. Only time I have spent since we set up the plan is when we have to submit our annual return or when options need to be executed.

Why did you not get this done via a lawyer?

Upfront cost, and inefficiencies associated with the traditional approach. Easier from an ongoing administration perspective to go with Vestd.

Did you have to renegotiate the exercise price with HMRC for subsequent hires? Did you do it solely through the platform?

HMRC authorises your valuation for a specific time period, so if you hire someone new outside of this period, you need to apply for a new valuation (Vestd have added this to their list of offerings as well, so I am using their platform to apply for my revised valuation as well).

Who manages the platform from your company?

I manage it myself because it’s so easy.

What would you say is missing from the platform that you would’ve loved? 

This is an interesting one. I sort of like their focus, because they do a great job at what they do rather than do too many things badly. So, in short, I like the way the platform works and can’t think of a major change I would make.

My main concerns are that I mess it up as it’s my first time, that it takes up too much time to manage monthly, and what happens if Vestd folds for some reason?

I asked them the same question regarding them folding before I set up and as they explained that they are regulated by the FCA, hence, they have to maintain a certain deposit/bank balance.

In terms of how much time it takes, I’m genuinely not aware of a more efficient way to issue/manage your options pool.

I probably spend zero time on it each month, unless I am issuing new options (which takes literally a few minutes) or we are processing our annual return once a year.

I hope I didn’t overwhelm you with my questions.

Not at all. I thought of similar questions before deciding to use them, so I completely understand.

Thanks very much in advance and have a good weekend!

You’re welcome and you too, hope you had a great weekend.

Cheers, A.

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