The Fairshare Model: Raise Venture Capital Via An IPO

The Fairshare Model is for a venture stage company that wants to raise capital via a public offering. In it, there are two classes of stock. Both have voting rights; one trades, and one does not. Investors get the tradable stock.

Employees get the tradable stock as well for value generated as of the IPO date. But for future performance for most of the enterprise, the employees get a voting stock that does not trade. It converts into a tradable stock based on performance criteria described in their prospectus. So the basic idea is, instead of developing a valuation upfront before the investors come in, the valuation unfolds based on performance.

Video Length: 00:43:15

Karl Sjogren is author of "The Fairshare Model: A Performance-Based Capital Structure for Venture-Stage Initial Public Offerings."  Its name describes its purpose: to balance and align ...

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