Addressing Compensation Transparency in Startups

Historically, discussions surrounding compensation have been a sensitive subject, often leaving individuals – particularly those employed by startups – uncertain about the rationale behind pay and equity decisions.

Recognizing this challenge, Miles Hobby and Geoffrey Tisserand, both software engineers, collaborated to develop a data-driven platform designed to assist companies in structuring and clearly communicating their compensation plans to prospective employees.

Figure Secures $7.5 Million in Seed Funding

Today marks a significant milestone for the startup behind this platform, Figure, as they announce the successful completion of a $7.5 million seed funding round.

The funding was spearheaded by CRV, with participation from Bling Capital, Better Tomorrow Ventures, and Garage Capital. Notable angel investors including Naval Ravikant, Jason Calacanis, Steve Huffman, and other Silicon Valley executives also contributed to the financing.

Figure has already established a growing client base, serving prominent startups such as Brex, NerdWallet, and Tempo.

The Core Mission: Improving Equity Understanding

Hobby and Tisserand’s primary objective is to enhance the clarity and fairness surrounding pay, with a particular focus on equity.

Both founders previously worked at Uber and Instacart, respectively, and experienced firsthand the frustration of leaving potential value unrealized due to a lack of clear explanation regarding their equity holdings and how valuations impacted them.

Their aim was to create a solution that demystifies equity stakes, providing a user-friendly understanding of tax implications, purchase requirements, and holding periods.

“We realized most people lack a clear understanding of how stock options work,” Tisserand explained to TechCrunch. “We saw an opportunity to help companies effectively communicate the value to candidates while also highlighting the risks associated with illiquid assets.”

Promoting Fairness and Reducing Bias

Beyond clarity, Figure strives to foster a more equitable and balanced compensation process, minimizing existing inequalities.

The platform aims to mitigate biases inherent in pay and equity decisions by introducing a systematized approach.

“We identified a gap in understanding surrounding equity and believed there was a better way for companies to structure, manage, and explain their compensation plans,” Hobby stated.

Figure is specifically designed to address instances of unconscious bias.

“Compensation should be determined by the quality of work, not by gender or ethnicity,” Tisserand emphasized. “We aim to provide context and eliminate biases, both by identifying existing inequities and preventing new ones from arising.”

A Comprehensive Compensation System

Figure also provides companies with the tools to thoroughly educate both candidates and employees about their total compensation package.

This includes details on equity, salary, benefits, and bonuses, presented in a clear and accessible manner. The platform can even generate interactive, customized offer letters detailing compensation components.

“Our vision is for Figure to serve as a complete operating system for compensation,” Hobby explained. “Companies can encode their compensation philosophy into our system, and we will assist them in defining job architecture, establishing compensation bands, and determining offer amounts, while continuously monitoring compensation health and suggesting adjustments as needed.”

Following the hiring process, Figure’s compensation management system ensures ongoing smooth operation.

CRV’s Investment and Future Plans

Anna Khan, general partner at CRV focusing on enterprise software, will be joining Figure’s board as part of this funding round.

Khan’s decision to invest was driven by a personal observation. “After eight years of investing in software, I was surprised by the lack of solutions addressing pay equity – understanding how we are paid, why, and how to build long-term equity,” she shared with TechCrunch.

“Discussions around compensation and equity often remain confidential, and the associated workflows are frequently outdated and prone to significant pay inequities.”

Figure intends to utilize the newly acquired capital to expand its product offerings and scale its operations.

Source: https://techcrunch.com/2019/12/20/negotiate-for-better-stock-in-equity-funded-acquisitions/