How One Startup Is Leveraging AI to Protect Founder Wealth

In the high-risk world of startups, founders often find themselves walking a financial tightrope. With dreams as big as their risks, founders pour their hearts, souls, and bank accounts into ventures that could go either way. But it doesn’t always have to be like that – there is a way to keep the thrill of the startup rollercoaster while adding a financial safety net.

Equity pooling is a concept made just for that, and AI is playing a crucial role in its implementation and evolution. The concept allows startup founders to get access to the type of economic exposure that VCs have. Instead of being exposed to what is usually a very high percent of their net wealth to one company – the company that they work for or founded – they can trade part of that for exposure to a ‘basket’ of similarly promising startups. This approach helps de-risk some of the equity that founders have built and protect their own wealth and their family’s wealth.

What exactly is the AI factor in this innovative financial instrument? And what does the future hold for equity pooling in the startup ecosystem?

To dive deep into these questions, we sat down with Alon Zieve, Founder and CEO of Aption, a company that provides equity pooling for founders, senior executives and employees. Zieve offers us an exclusive look into how Aption is using AI to transform wealth management in the startup world, reshaping the financial landscape for entrepreneurs and employees alike.

You mentioned an interesting data point about startup founders and their equity holdings. You stated that the average time to liquidity for startups is around 16 years. What are your thoughts on this, and how does equity pooling address this challenge?

The extended time to liquidity is a significant challenge for founders. Startups nowadays take a very long time to play out and either die or exit. If you’re a founder four, six, eight, 10 years into your journey, you could have built significant value in the company and yet you don’t really have access to that. You’ve certainly taken over your journey below market terms in your personal compensation.

Equity pooling allows you to de-risk some of that equity that you’ve built and protect your own wealth and your family’s wealth. Instead of being exposed in what is usually a very, very high percent of their net wealth to one company – the company that they founded or work for – they can trade part of that for exposure to a basket of similarly promising startups.

How does Aption utilize AI to create and manage equity pools, and what sets your platform apart from traditional financial instruments?

We’re developing AI tools that can handle the complex tasks involved in creating and managing these pools at scale. This includes automating many processes that are currently manual and developing systems that can exercise judgment efficiently across numerous transactions daily.

When we create these pools, we need to get a handle on three vectors: capital, traction, and scale. We collect various data points, including public information on capital raised and valuations, as well as non-public data on revenue growth, efficiency metrics, and company scale.

AI has been instrumental in building heuristics that take these different data sets and create inferences. If we know certain data points, we can infer information about a company’s efficiency or scale. AI has been tremendously helpful in building out these metrics more intelligently and accurately than we could do manually.

We also use AI to process other data such as customer reviews, employee numbers, and hiring trends. This comprehensive approach, powered by AI, allows us to create more balanced and insightful equity pools compared to traditional financial instruments.

How does the use of AI enhance the fairness and balance of the pools, and what impact does this have on investors’ confidence?

By processing vast amounts of data and creating intelligent inferences, we can more accurately assess and compare companies across different sectors and stages.

This data-driven approach leads to more balanced pools, which can increase investor confidence. It’s important to note that we’re not trying to outperform the market, but rather to create a basket of similarly promising companies that safeguards equity. The AI-driven process helps ensure that the companies in each pool are truly comparable, which is crucial for maintaining fairness and balance.

Looking ahead, what are your future plans for the platform? How do you envision the role of equity pooling evolving in the startup ecosystem?

Our vision is for equity pooling and more sophisticated financial venture instruments to become ubiquitous in the startup world. We see it evolving into a standard employee benefit, much like a 401k or healthcare benefits.

Currently, when employees join startups, they often receive equity that may not be worth much, especially in early-stage companies. With equity pooling, we can offer a more sophisticated and nuanced financial asset that provides real, risk-balanced value.

Ultimately, we envision equity pooling as a benefit that extends across the entire venture world, providing employees and founders with a way to lock in value and bank on wealth more reliably than with individual stock options or RSUs. This could fundamentally change how people in the startup ecosystem approach their financial futures.