Many scaleups falter during investment rounds: founders are squeezed by investors; employees are squeezed most of all. In the US, by the time the startup is 100 people strong, typically 20% of the startup is still in the hands of employees. In Europe, it is typically only 10%. Founders are better protected than employees. Both, however, find their company has a new, hard-edged focus on shareholder returns. As a result, even exciting startups struggle to recruit developers when growing from 10-250 people. As recruitment slows, so slows innovation and so slows down the economy. That’s good for no-one.
Without credible commitments to targets or to a purpose, private companies have lower engagement and higher costs. Individual directors cannot easily build a reputation for delivery
Many investors are unable to invest in smaller companies at early stages. When they do invest, they find it hard to sell. They find it hard even to estimate the value of their equity. This makes small company investments inefficient: they are illiquid and undervalued.
Too many companies focus on capturing zero-sum gains, then returning them to investors to reinvest elsewhere (or in yachts and private jets!). Fledgerr believes people in companies create value through collaboration, and that it should support that.
Our grandchildren will not be able to understand why we funded our lifestyles by destroying their future. We have to use investment for good. We have to know whether our investments are helping or hindering the future.