Equity Team Tool

Solving entrepreneur team roles and equity structures to enable faster growth – with the Equity Team Tool

The greatest source of startup failure is not the bad idea – it is the bad team – with the wrong incentives.

So how do you build an entrepreneur team optimised to achieve great things – where the roles and rewards are understood and aligned?

“Teams which can balance the talent of the founders, inventors and commercial or business people are 6.2x more likely to grow quickly”. Startup Genome Report, 2011

Frankly, this is not easy. Firstly, assessing entrepreneur attributes is hardly a science – or at least wasn’t until very recently.

Secondly, how do you map entrepreneur attributes and differing levels of commitment to an equity share structure?

And what do you do if someone does not keep up the agreed levels of commitment, goes AWOL or just decides to leave half way through?

How do you handle this, whilst growing your business?

The solution lies in how you set up your business – and the equity structure – in the first place – or if still very young, how you realign your business for success.

Sadly, too many businesses end in failure not because the idea or plan isn’t good, but because the team structure or underlying reward structure lets it down.

The good news is that this can be resolved – here’s how the Equity Team Tool can help…

Firstly, we assess all the team members - and peripheral team members (non-execs, designers, developers or marketers contributing bits of work) using the eTeamTool – as developed for us by Manchester Business School.

This allows us to see the entrepreneurial strengths and weaknesses, the overlaps and the gaps.

From this understanding, we can see each person’s relative contribution and also where we need to make space (ie. keep some equity) for the roles that are as yet unfilled.

Secondly, we identify if someone is contributing an important or critical entrepreneurial attribute; or perhaps they are contributing an important or critical skill.

Thirdly, we can assess the value of the idea – as it is contributed at the outset of the business and ensure that this is valued in a way that rewards both those contributing the idea (regardless of the stage; from concept upwards) and those working, developing and iterating the idea.

Each of these deserves a different level of equity – and the right level of equity (not too much – not too little) will support the motivation and focus on each person.

The Equity Team Tool can value these different entrepreneur abilities, key skill contributions plus commitment to the project – whether currently paid or unpaid – and turn that into an intelligent and fair distribution of equity.

Finally, we can establish two key agreements that allow teams to resolve issues quickly – and without rancour – when the commitment level falls or the business pivots and a critical skill is no longer required. This happens frequently, so an ability to resolve it quickly and amicable is important for the health and well being of the individuals and also the business.

Samples

Does it work? Good question – here are some examples

We start with an eTeamTool assessment – which might look like this…

From this assessment and a review of the business we can sort and value the contributions using the Equity Team Tool…

From this information, and depending on other commitments – to accelerators or investors; and, also allowing for an equity holding for the original idea, then the final equity analysis could look like this….

Please note, in this example, it is quite possible for a single entrepreneur to provide all the critical entrepreneur attributes, the CEO role and contribute the original idea. In such case, this example team will indicate that the entrepreneur would hold up to 60%.

The outcome is that you have a clear path for both rewarding the people already on the team whilst identifying the skills or attributes that you will require in the near to medium future.

This logical and systematic approach has the benefit of not only appearing to be fair but also being supportable by careful analysis and consideration.

The Equity Team Tool is the best way to empower your team and reduce the distraction and destruction of equity share disputes.

What people are saying…

“Both the eTeamTool and Equity Team Tool have been essential in providing a clear and logical path for constructing a powerful and motivated team. The ability to align incentives and resolve future equity issues is critical, in my opinion, and has been a key reason why we are able to grow so fast.”
Mike Potts, MeWeUs

“I really didn’t know how to bring new skills into our business. Look, we knew we needed them, but didn’t have any experience of how to value or assess them. The combination of the eTeamTool with the Equity tool has solved this thorny issue for us – so now we can concentrate on growth.”
Barkery Jammeh, Adtelligence

“The eTeamTool is an excellent way for us to move our teams forward and a critical support to enable those teams to unlock potential growth.

“I highly recommend the eTeamTool to any fast growth or startup business.”
Jon Bradford, Managing Director, Springboard Cambridge, July 2011

Contact us to discuss how we can help your team achieve more – faster – and resolve the right team, talent and equity balance…

Contact us today

Please fill out the contact form, or contact us below:

Address:

Minshull House, 47 Chorlton Street, Manchester, M1 3YF

Email:

info(at)mediamodo.co.uk

Phone:

0161 408 2044