CASE STUDY

X0PA.AI

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about X0PA.AI

Singapore-based X0PA.AI is a SaaS talent hiring and recruitment platform that uses AI and data science to match applicants to roles, as well as predict issues such as attrition, loyalty and performance.

CEO Nina Suri has scaled the team over three years to twenty-five employees, located across Singapore, India, and the UK, with plans to start in the UAE.

X0PA recently implemented an employee share option plan (ESOP) and Nina shared her experience.

why implement an ESOP

“Having had over twenty years of entrepreneurship, I knew I wanted to build a culture of ownership and inclusivity, and ensure that our team felt involved and satisfied”, says Nina.

 “An ESOP is one way that our employees can feel like they’re a part of growing something – that our success is their success”, says Nina.

putting the ESOP in place

The company originally drafted some ESOP paperwork when they first incorporated, but as they grew, X0PA’s company secretary recommended that it be replaced with something more robust and market standard.

“We learned that the ESOP needed major amendments in order to be more in line with what is typically seen in the market in Singapore, and reflect what investors are likely to expect”, said Nina.

Nina reached out Kindrik Partners after the firm was recommended to them by their company secretary. XOPA worked with Sarah Yen in Kindrik Partners’s Singapore office, who was able to create the right framework for the startup.

“We were looking for a firm who advised a lot of startups in Southeast Asia. Sarah took the time to explain and really make sure that we understood the mechanics of how the ESOP operated. This made it easier for us to communicate that to our employees.”

“It’s important when putting together an ESOP to consider several different factors”, says Sarah. “What works for the company, what is standard in the market to attract quality talent, and what your investors and most importantly a future potential buyer might expect to see.” 

about the ESOP

A X0PA employee is invited to participate in the ESOP once they have been with the team for twelve months, and if they’re considered a ‘high performer’.

“At the moment we have a rockstar team, and 100% of the people who we have hired have been invited to join”, says Nina.

“In my previous venture I also felt strongly about letting my employees be directly involved – but I gave them straight equity. It was a more traditional business with a partnership model.”

“This time, an ESOP seemed more appropriate – it was a more scalable model and more appropriate for the type of company we wanted to build.”

X0PA’s management team put aside 10% of the company’s equity towards the ESOP, with the expectation that this allocation would last at least five years. They set the exercise price by the valuation of the company at the time of allocation.

Allocations were not standardised per employee but were allocated according to the contribution and importance’ of the employee’s role in the organisation, according to Nina.

The X0PA team also included an acceleration clause in the ESOP – if the company exits before the vesting period, their employee’s options fully vest.

advice for other founders

“We weren’t familiar with the nitty gritty of putting in place an ESOP – it was a new experience for us”, says Nina.

“My advice would be to go with a lawyer who is experienced with startups and ESOPs, so you don’t have to go through the complications that we went through as we started to scale”, she says.

Nina also stressed that it was important to familiarise yourself with the mechanics of your startup’s ESOP so that management could communicate with staff effectively about how it worked.

Nina also had some tips about how to communicate with a team when implementing an ESOP.

“We kept it very simple for our staff. We broke down into the main points – what is the ESOP, what does it mean for them, what do they get, how much do they get.  We didn’t want to get them worked up about the legal language.”

Nina also made sure that she sent each team member an individual email after the scheme was introduced to the company, confirming what the ESOP meant, how that individual’s options vested, and what would happen to their options in different scenarios.

“You need to make sure your team understands what the ESOP is. If you’re giving them something, and they don’t appreciate it, and then what’s the point? It’s best to spell it out and make sure that everyone understands – then you’re all working towards a common purpose.”

what’s next for X0PA?

“We’re starting to move from startup to scale up now. We’re experiencing massive acceleration and growth, with several Government departments, enterprises, polytechnics and universities as clients”, says Nina.

“Our product is ready, and strong, and we’re ready to grow and help our clients with their digital transformation. We are focused on growth both from increasing market share in the markets we operate in as well as market expansion point of view.”

[Note: The firm’s name was changed to Kindrik Partners in July 2020 and references to the firm’s previous name have been updated.]

Explore our other case studies here, or access our full library of ESOP guides and templates via our resources section.

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