What can Sprout do for my company?

Sprout is a comprehensive platform tailored to help companies manage their related stakeholder information. Our current version includes:

  • Equity management: a seamless digital solution to create, track and transact private company securities and stock options -- what was formerly an opaque, and legal-driven process
  • Scenario modelling: analyze investor term sheets with easy to use professional tools and analyze the impact of shareholder
    dilution and payouts
  • Board management: digitally govern all your board meetings and matters with off-the-shelf templates to create meeting notes and consents. Schedule meetings, share documents and resolutions and track approval progress
  • Digital registrar: Speed up and outpace your lawyers and company secretaries with an always on digital record of your stock certificates and stock options grants and vesting, including an entire history of all transactions and shareholder changes
  • Data Room management: Not only securely store confidential documents, but also partition different stakeholder views and
    tracks their access

Can I use Sprout if my company formed in the Caymans or the British Virgin Islands?

Yes! Sprout is designed to help all companies create a universal cap table digitally and manage and track its changes for any company. However, some countries are in the process of modernizing their shareholder regulations which may not accept electronic certificates, documents and signatures. Team Sprout is working hard to add on additional features that comply with local jurisdictions so in the meantime, we recommend you speak to your legal advisor.

Can US or UK companies join Sprout?

Yes, but at this current stage, Sprout does not support US or UK tax and securities regulations. Our founders are always happy to learn more about your needs so do let us know if you would like to connect as we work hard on expanding our platform to accommodate European and US companies.

Do I need to comply with US regulations?

Currently Sprout team is looking into helping companies with their US taxpaying stakeholders, but you should consult your tax advisor as you may have to comply with US regulations only if your company has a presence in the US or are employing US employees, even if they are based overseas. For example, Section 409A of the US Internal Revenue Code generally provides that "non-qualified deferred compensation" (ie employee stock options) must comply with various rules regarding the timing of deferrals and distributions. Sec. 409A is not limited to plans maintained in the United States, nor is it necessarily limited to deferred compensation earned for service performed in the United States. Therefore, Sec. 409A can come into play in the case of deferred compensation agreements for either inbound or outbound employees as long as the employee is a U.S. tax resident or a citizen.

Do I need a law firm or a company secretary to help me?

Sprout is designed for anyone authorized to onboard and manage your company’s stakeholder information so you do not need a lawyer to provide your stakeholder information, but as we recommend you consult both a legal advisor and a company secretary to ensure your company remains compliant in your home jurisdiction. Sprout can recommend some great partners should you require. Just ask us!

What type of users do you support and does everyone see everything?

We currently offer four different types of users and we have done all the hard work to let you set user permissions to customize who sees and handles what.

Super Administrator Super Administrators can view all details and edit all functions under the Company account. They can invite other legal admins to Sprout and issue, modify or transfer securities.
Company Editor Company Editors can view all pages, edit pages under the company section and invite company editors and viewers. Editors can also draft securities but can NOT issue, modify or transfer securities.
Company Viewer Company Viewers can view all pages under the account, except for Settings and Access under Company and Expense Accounting under Compliance. Viewers can also download all reports.
Share Class Admin Share Class Admin can have access to Financing History, Cap Table, draft shares under Securities, and have a limited Data Room access.
ESOP Admin ESOP Admin can draft options, create vesting schedule, access ESOP info under Cap Table and Securities modules, and have a limited Data Room access.

What do I need for onboarding?

You will need the following information and documentation for onboarding and a thorough creation of your company account:

  • Contact emails:
    • 2 master admins to also act as system signatories: we recommend two for approving stock certificates (for governance). Over time we will add additional functions to split this out.
    • Shareholders and investors - they will receive invitations to create accounts and have limited views of their own holdings. We will be adding more permissions on what additionally they can see. You may want to give them a heads up but in our invitation emails we will explain what Sprout does and the benefits. Over time we will let admins custom edit the content. Can discuss further if you have any concerns.
  • Company formation documents
    • Certificates of Incorporation
    • Business registration
    • Originals and any amended filings
  • Current cap table with shareholder information
  • Equity awards (Stock option) plan documents, if available. For example:
    • Stock option template agreement (called a "Form of Option Agreement")
    • Option grant template document (called a "Form of Grant")
    • Exercise notice template (called a "Form of Exercise notice")
    • History of Option pool total number with changes, along with board approval dates
    • Signed option agreements and exercise notices
  • Convertible notes and SAFEs (not including those already converted)
    • Signed convertible notes
    • Blank convertible note templates
  • Preferred stock
    • Executed final agreements

You and your master administrator should try to upload scanned final copies, but templated versions can also be used.

Do I need a lawyer to onboard my company onto Sprout?

You and your legal team are more knowledgeable about your company’s cap table history, the terms of your documents, and other nuances about your company’s equity. Keep in mind also that your legal team will be responsible for helping you maintain your account over time, and ultimately, they must sign off on the accuracy of the data in Sprout. Based on our experience, we have learned that getting your legal team involved with Sprout reduces the introduction of incorrect data and reduces your legal costs in the long run.

I was issued shares before joining Sprout. What will happen to my shares, how can I transfer them to Sprout?

When the company's Sprout account is activated, electronic certificates will be issued to each stockholder via the Sprout platform. These electronic certificates will serve as your stockholders' ownership records and will be securely accessible via their respective Sprout log-ins. Upon acceptance, such electronic certificates could supersede any existing stock certificates or notices of issuance as evidence of ownership in the company, but we recommend that you check with your legal advisor if you need to also create paper certificates with wet signatures for your jurisdiction.

I haven’t issued any equity yet - what do I do?

Not a problem! Sprout can help you create and issue digital stock certificates and start you on your way with creating a digital record. You can either issue stock certificates at the end of the onboarding process or any time thereafter. We do recommend you check with your legal advisor if you will also need to issue paper certificates to be in compliance with your home jurisdiction. If you need more information, feel free to reach out to us.

I have already issued securities - what do I do?

Sprout can help you record your issued shares into a digital registrar during the onboarding process. This will create a living online record of your securities. During onboarding, you will be asked if you need to issue stock certificates and you can select the option to not issue. We recommend that after onboarding you upload scans of all the stock certificates so you can attach the scan to the stakeholder. These electronic certificates will serve as your stockholders' ownership records and will be securely accessible via their respective Sprout log-ins. We do recommend you check with your legal advisor if you will also need to issue paper certificates to be in compliance with your home jurisdiction. If you need more information, feel free to reach out to us.

Are electronic securities valid and what do I need to do with my paper certificates?

Depending on where your company is domiciled, you may need to maintain your paper certificates along with your digital stock certificates. The best way to know is to check with your legal advisor. At Sprout we may be able to recommend some great and affordable ones to you. Once you have an idea, Sprout will offer you the option to document your stock certificates electronically. There are two ways to represent stock on Sprout: certificated and uncertificated. These just refer to how a company chooses to evidence ownership of stock.

"Certificated" shares are represented with a certificate (paper and/or electronic), and "uncertificated" shares are simply entries recorded on an official ledger (like debits and credits to a bank account or an accounting ledger). Certificated shares are shares evidenced with a paper stock certificate (traditionally this is just a piece of paper with important details about the shares). Whoever holds the "certificate" has physical evidence of ownership.

Uncertificated shares are shares tracked on the books of the company. These shares are issued without a certificate to evidence ownership. Uncertificated shares might also be thought of as "book-entry" shares. The company, the company’s transfer agent, or a broker-dealer provides evidence of ownership to the owner via an account statement and regular updates.