A quick story to illustrate how Xenapto models the sometimes complex relationships between organizations.

A private investor called SmartAngel takes a minority stake in a disruptive financial services startup called HotBank. SmartAngel’s stake doesn’t get them a board seat but their shares do have voting rights and they are entitled to attend and vote at HotBank’s Annual General Meeting.

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What are their votes worth at this meeting? HotBank has several classes of share, some of them with voting rights and some with no voting rights. Even the shares with voting rights are in several classes; some with 1 vote per share and some management shares with 10 votes per share. SmartAngel’s shares carry one vote per share.

At the meeting, SmartAngel sends a representative to vote on several important resolutions. But SmartAngel is not one person; there are several of SmartAngel’s staff who might attend HotBank’s AGM. As a minority investor, SmartAngel’s staff might not all be known personally to HotBank’s company secretary. How does she know that the person attending the meeting is a legitimate representative of SmartAngel?

If HotBank’s AGM is a meatspace event then the SmartAngel representative might bring a signed proxy form with him, or HotBank might already have a letter from SmartAngel identifying its authorized representatives. The SmartAngel person needs only to identify himself as one of these people using a passport or other photo ID to satisfy HotBank that he is entitled to attend and vote on behalf of SmartAngel.

But let’s have a look at what happens if HotBank holds their AGM on Xenapto instead.

Firstly, the AGM becomes an asynchronous event. There might be a video or audio conference where HotBank’s management presents material to real-time participants but the business of the AGM can extend both before and after this presentation. Discussion of the AGM material can begin as soon as it is uploaded, with anonymity and confidentiality duly respected. Voting on resolutions can extend as long as required to ensure that all stakeholders have a chance to register their choice. Proxy voting can be managed with no delay waiting for forms to be posted.

But the way the relationship between HotBank and SmartAngel is modelled is the key to how Xenapto can deal with this complex event.

HotBank’s cap table is already stored in their Xenapto account along with option pools and convertible notes to give HotBank’s management an up-to-date view of their investors and a what-if tool to calculate liquidation values. But this cap table can also help manage the AGM easily. Alongside each share class is an indication of its voting rights, stored simply as a number of votes per share.

If the shareholders are also Xenapto users then the cap table also identifies their Xenapto account. So SmartAngel’s stake is an entry in HotBank’s cap table that links the two companies in Xenapto.

In SmartAngel’s account the other half of this relationship is exposed. SmartAngel users can see HotBank as a portfolio company alongside their other investments. Individual SmartAngel users can be flagged as people who are entitled to represent SmartAngel at HotBank’s general meetings.

When HotBank creates their AGM workspace on Xenapto, accredited SmartAngel users can sign in and begin interacting with the AGM materials and other AGM participants. When it comes to voting on the AGM resolutions, any of the accredited users can can cast SmartAngel’s votes on a given resolution.

Does that sound simple? I hope it does, because we’ve done a lot of heavy lifting under the covers to make this easy for Xenapto users. I don’t believe there is another tool that even has this on their roadmap.

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