An Illawarra business is offering its employees an opportunity to part-own the business they work for in an effort to attract and retain the best talent around the globe.
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Wollongong-based software development start-up Easy Agile will grant each of its employees part-ownership of the company in an employee stock ownership plan (ESOP).
Founder and co-CEO Nick Muldoon said after six years, the time was right to go down this path.
"We wanted to reward people that have been on the journey with us for a number of years," he said. "And we also want to use it as a method to attract and retain people to join us on the journey for the next 10 years."
In the fast-paced world of technology start ups, it is not uncommon for businesses to offer employees part-ownership of a company, to compensate for a lower wage than what an employee would earn at a more established business.
If the start-up is successful and bought out by a larger company or listed on a stock exchange, early employees can have a handsome pay day.
The rules around these employee stock option schemes were recently updated in the 2022 federal budget.
To bring Australia in line with other jurisdictions, red tape and tax rules were altered, as well as the cap on the value of shares workers can purchase from their employers.
Mr Muldoon welcomed the changes, but said that the idea at Easy Agile had been underway for some time.
"Certainly, if we want to be competitive with attracting talent from overseas, having something that's more in line with what is possible in other markets is really important," he said.
"If we wanted to relocate someone from America, for instance, there are some limitations."
Not only is Easy Agile competing with employers overseas, but tech businesses located in Sydney and Melbourne.
What sets the scheme at Easy Agile apart from most other businesses that offer employee stock options is that Easy Agile is profitable on its own.
A typical venture capital-backed tech start-up, which burns through large amounts of cash, only provides a return to early investors either by going public - via a listing on the stock exchange - or when bought out by a larger company.
Easy Agile does not have venture capital backing and funds its growth through sales to customers, what is known as "bootstrapped" in start-up parlance. In addition, Mr Muldoon says he and co-founder Dave Elkan have no desire to sell the business or list Easy Agile on the stock exchange.
This is part of what makes the Easy Agile employee share scheme unique, and more attractive for current and future employees.
"Every time a venture backed company raises more money, [the employee share value] is being diluted, you have to hope the value of the company is increasing to offset that," Mr Muldoon said.
Ultimately, what the introduction of the employee share scheme means is that Easy Agile can be competitive with tech businesses around the world when it comes to hiring the best talent, all while being based in Wollongong.
"ESOP coupled with remote friendly will open us up to new team members that we wouldn't have been able to consider in the past," Mr Muldoon said.
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