South African venture capital (VC) firm Newtown Partners, formed by Vinny Lingham and Llew Claasen to assist and invest in local startups, has launched a programme designed to make it easier for startups to offer their employees equity.
Newtown Partners said the programme had been in beta testing since the middle of last month, with South African startups invited to get in touch with the company in order to take part.
The aim of the Newtown Employee Share Trust is to manage Employee Share Ownership Programmes (ESOPs) on behalf of startups in South Africa, allowing any small business to confidently and cost-effectively incentivise its employees.
“ESOPs are a hugely effective way of ensuring that startup employees enjoy more than just a salary in return for the value that they create,” Newtown Partners said.
The company said ESOPs were beneficial in that they enable startup companies to allocate equity to early personnel hires without complications and costs associated with working out how employees earn out shares that they have not paid for upfront, when and how employees are allowed to sell the shares they earn, how employees participate as shareholders, and what happens to the shares if an employee leaves the company.
Newtown Partners’ monthly plan starts from ZAR171 (US$13) per month for startups with up to five employees participating in the ESOP.
“Included in all of our plans are also free annual employee benefit updates and no extra fees for receiving and handling disbursements for the benefit of scheme beneficiaries. ESOP setup on our platform is simple and tailored to the specific needs of your startup,” the firm said.
