"Because our share program is rooted in Germany, we focus on phantom shares, but as we hire more in other markets, such as the UK, we will be able to create new share plans with different share types very easily."
Born in Hamburg in 2016, Taxdoo automates financial compliance processes for digital and e-commerce businesses. Today, the company's 200-strong team supports a global customer base.
After raising a seed round in 2017, Taxdoo announced a $21 million Series A fundraising in December 2020, led by Accel. In December 2021, Taxdoo revealed a $64 million Series B led by Tiger Global.
Dr Christian Königsheim is Taxdoo's co-CEO and co-founder. Before starting Taxdoo, he completed a PhD in behavioral economics at the University of Hamburg, where he met the friends that would become Taxdoo's founding team.
Taxdoo's equity journey
“When my co-founders and I started Taxdoo, we only spent a few minutes considering equity. But when we began thinking about giving ownership stakes to our employees, we quickly realized that we had to bring more structure to what we were doing.”
From Taxdoo's earliest days, equity was part of the thinking for Christian and his co-founders. But dividing a brand new company up is relatively simple. As Christian says, "The three of us just split the equity into thirds and didn't think too much more about it!"
Taxdoo's early growth was supported by a government grant for early-stage companies. But equity became more relevant when Christian started speaking to external investors. "At that point, we knew we had to improve our understanding of principles like dilution and share classes."
During the seed round fundraising process, employee share ownership also became part of the conversation. Christian and HTGF, Taxdoo's seed investor, worked together to include a clause in the seed investment contract that mandated the creation of a virtual share option plan. "We knew it would be crucial to give Taxdoo's employees ownership in the business, and so we wanted to commit even as a seed-stage company."
Opening up Taxdoo's ownership with Ledgy
“Because our share program is rooted in Germany, we focus on phantom shares, but as we hire more in other markets, such as the UK, we will be able to create new share plans with different share types very easily.”
When the employee share option plan was still new, Taxdoo was selective in choosing which employees were granted share options in the company. However, after closing a larger Series A round in 2020, the company’s management decided to open up share ownership to all Taxdoo employees. "We knew that aligning our employees' interests with those of the founding team and investors was the right thing to do, commercially and ethically."
At the same time, Christian wanted to eradicate some of the problems with Taxdoo's early share option plans. "We suffered because even though we had granted shares to some employees, the whole process was quite opaque. Employees could not really access information on their share options, even down to basic elements like the valuation of their ownership stakes."
This led Christian to search for alternative solutions that could help Taxdoo's growth. "I researched a few different options, and sought advice and guidance from my peers on Slack workspaces. While many tools were highly tailored for one specific market, we liked Ledgy's ability to work across European jurisdictions."
Equity at Taxdoo: set for the future
“Ledgy saves me hours of administrative work every month. And the whole company now benefits from more transparency on equity, which has many additional positive effects.”
Today, Taxdoo operates a flexible plan that offers employees additional shares on milestones such as promotions. As the stakeholder with overall responsibility for Taxdoo's cap table, Christian deals with share option contracts and other documentation on a regular basis. "Without Ledgy, it would be very difficult to cope with the ongoing manual administrative work. Being able to sign documents digitally within the app, rather than relying on yet another piece of software, makes a big difference." Using Ledgy, he has been able to move to a monthly granting schedule, helping Taxdoo keep employees engaged with their share options.
Having all relevant ownership data in one place helps Taxdoo benefit from more sophisticated functionality. "Before Ledgy I found spreadsheets limiting in a number of ways, but we can now produce custom scenario models that take account of variables like dilution, employees leaving us, and different vesting schedules." This depth of analysis and understanding also helps Christian share information and foster productive working relationships with Taxdoo's investors.
Ledgy has helped Taxdoo move from a selective share option plan for employees to a broader program involving the whole company. With Ledgy supporting in the creation and administration of market-specific share plans, Christian and the wider team are set up to continue Taxdoo's exciting international growth.
Read more stories from Ledgy's customers here.