How did we create a unicorn?
Step 1: Incorporate a company with 1,000,000,000 shares outstanding and a nominal amount of paid up capital. In our case we had $4 of paid up capital with 250,000,000 shares outstanding. Implying a price per share of $0.000000016
Step 2: Register and file all required constitutive documents - i.e. Articles of Association, Constitution, etc.
Step 3: Find someone to purchase 1 share at a nominal amount such that the fully diluted valuation of the company (Shares outstanding x price per last share) is $1,000,000,000. In our case we spoke to some our friends who wanted in on the fun to purchase 1 share each at $4 price per share. So our fully diluted shares outstanding is 250,000,003 with the latest price per share at $4. Our on-paper valuation is now $1,000,000,012.
Step 4: File updated share purchase agreements and constitutive documents to lodge the updated cap table.
Et Voila! You now have a unicorn!
The only things that matter in early stage VC rounds are a) Cash In, b) Dilution, and c) Runway.
For us, we raised $12, with 0.0000012% dilution. Given that we have annual filing & registration costs, we have <12 months of runway. (It's worth noting this is common practice because much of VC investment is oriented around the idea of what the team will create in terms of future value via technological development.)
Does being a unicorn really mean anything here? :)
A quick walkthrough on how you can Do The Math on your own with our dashboard.
Questions every startup employee should ask before saying yes to their stock options:
"As someone with an academic background in law & accounting and an operational background that spans multiple IPOs; I've been fortunate enough to experience what 'good' ESOP plans look like. The region's startup ecosystem is currently in the midst of a truly compelling inflection period and it's key to make sure that best practices are being followed by all participants to ensure that gains are appropriately distributed."
"The Southeast Asian tech ecosystem has hit an inflection point in the last few years. The outlook is wildly bright. In order to achieve the vision for the ecosystem we all share, we felt there was a need for a deeper discussion of the risks and rewards associated with ESOPs. When used well, they can be a powerful tool, but in our ecosystem its not fully valued yet. Our goal is to help people understand it a bit better. Hopefully, in a way that can start with a tongue-in-cheek laugh."
"Trust and transparency are some of the most important qualities in a relationship. In order to build trust and transparency among new startup operators, employees, and investors in Southeast Asia, both best and worst practices need to be called out for everyone to be aware of. Startup valuations and Employee Stock Option Plans (ESOPs) are tricky to understand if you haven't been previously exposed to the mechanics of early stage investing. We hope that this open information platform helps build more trust and transparency between everyone involved in the startup process."
"Attracting great talent into this ecosystem means building an ecosystem that can reward junior and senior talent for taking the risk into the startup ecosystem. As important as success is to empower the next generation of founders and operators, setbacks are equally necessary to provide a strong gut check to those willing to take the leap. Allowing operators to take the right educated risk/reward ratio will be crucial for the next generation of startups."