The Fairshare Model: A Performance-Based Capital Structure for Venture-Stage Initial Public Offerings – Reimagining Capitalism at the DNA Level
The Fairshare Model is an idea for a performance-based capital structure that redefines capitalism at the DNA level, where ownership interests are set. When used to raise venture capital via an initial public offering (IPO), it balances and aligns the interests of investors and employees – capital and labour.
Author Karl Sjogren utilises highly approachable language, humour, and analogies, along with insights about capital markets. The result is an eclectic, yet inviting discussion that might occur in a graduate-level symposium on economics, finance and philosophy.
This groundbreaking book focuses on startup valuations – microeconomics. But it also considers the macroeconomic implications of the Fairshare Model for economic growth, income inequality, and shared stakeholding, as well as game theory and financing of blockchain projects.
The Fairshare Model has two classes of stock – both vote but only one is tradable.
- Investors get the tradable stock. Employees get it too, for actual performance.
- For future performance, employees get the non-tradable stock; it converts to the tradable stock based on milestones.
With this structure, public investors are more likely to profit when they invest in a company with high failure risk – because they have less valuation risk.
By offering a better form of capitalism, The Fairshare Model is a movement book for our times.