Finding mom+pop businesses with growth potential can be difficult. If there is no growth you might not be able to squeeze any money out of the business at all. I recently did due diligence on the highest rated bakery in our area owned by a couple that did just about all the work but wanted to retire. Unfortunately all the profits became their salary. Replacing them meant their replacements' salaries would eat all the profits too. Their weekly sales were the same regardless of how many days they were open because new customers were rare and existing customers either squeezed into or spread out to whatever hours they were open. 40 other local bakeries meant competition was stiff. Everything was cash so an accurate audit was essentially impossible.
Perhaps Teamshares is good at identifying acquisitions with sufficient margins to permanently afford Teamshares services, but if I was an employee at a company being bought I'd be concerned that after the owners retired with their cut and after Teamshares kept extracting their fees, I'd be left holding the bag, ie, a non-growing company slowly dying.
Makes sense. At https://www.teamshares.com/brokers , if you click on "Download buyer's profile", it says a few things that suggest they've taken that into account:
> Due to our specific needs, we are often forced to pass on good businesses.
And they want companies with:
> at least two managers or supervisors supporting the owner in bookkeeping, dispatch, sales, or project management
And:
> Our structure requires the inclusion of certain expense items (like presidents, finance leads, and/or general managers) that other buyers may not have to factor in. This means sometimes our price comes in lower than an individual buyer who benefits from that salary.
Somewhat related, I feel like probably every city in the U.S. has a family or two that have seemingly sewn up the new-car dealership businesses in their respective communities.
> Unfortunately all the profits became their salary.
Genuinely, why is this unfortunate? It sounds like the workers in the business are getting to keep the value they create, and were more likely to be committed to the business as a result.
It means the business can't practically be sold - if you buy it and have to spend all the profits on someone to manage it, you make nothing for what you've spent. You could buy it and manage it yourself, but then you're effectively paying a significant amount of money for a very difficult job - might as well just go get a job for someone else.
That ultimately means that the business itself isn't worth anything, so when the owners decide they don't want to manage it anymore, it'll likely just have to fold.
If the business can't be sold, all of those people lose their jobs.
Also, the owners presumably took a significant financial risk in starting the business, which hasn't paid off. It really baffles me when people think that employees, who aren't taking out personally-guaranteed SBA loans and risking losing it all in order to start a business, deserve all of the profit from the business. They deserve to be paid a fair wage, but people who actually take the risk to create something deserve to capture the upside.
It's unfortunate for the potential purchaser of the business.
"Unfortunately, my friend ate his entire birthday cake." It's not unfortunate that my friend ate the cake (though it probably actually is, that's not why it's used there). It's unfortunate that I don't get to have any of his cake.
For some people, building up the business is both a job and an investment. When they get old, they want the business to have enough value that they can sell it and pay for their living expenses during retirement. Or they want to be able to pass the business on to their kids so their kids are set up to make a good living.
If the business's only value is that it can provide full-time employment to someone, then it has worked out as a job but not as an investment.
There's no one right way to do it. You could instead pay yourself a salary, invest the money in other stuff (maybe through IRAs or individual 401k), and just shut down the business when you retire. And for your kids, send them to college and let them find their own careers.
It really depends on why you got into business in the first place. Maybe you just like working that way better. Or maybe you're good enough at it that you think you can get better returns by investing in your own business than you can by buying a stock market index fund.
If mom & pop doing the labor wanted to retire by selling the business, they can't. What might have been an asset isn't. So they either keep working even though they are of retirement age, or they close up shop with a smaller nest-egg.
I feel like that's simple reading comprehension. The "unfortunately" isn't like in the context of whether that fact is good or bad in general, but specifically in the context of whether or not it was a good business to buy.
What OP probably means that business was able to pay a living wage for owners and nothing more. So there was no additional cash for hiring manager, not even thinking about something for "new owner".
If you are happy to walk away and hand the "business they work at" for free to someone, flame on. Thing is, unless that is family, who would you give it to and why?
>Of course it can be sold. To someone else who wants to run a mom-and-pop operation.
It's a small market of people who are just rich enough to buy that business, don't have another job already and don't mind working that business. And that market is already filled pretty well by franchises. It's not impossible to sell the business obviously but if they were only making eg. 100k a year there is really no market for buyers for that because if you need to take out a big loan to buy it you might make nothing and if you can afford it you have better options. It's more common in these cases from my anecdotal experience, especially for something like a restaurant, that whoever buys it will restart the business completely with a new sign, menu, ect. after the last one shuts down. This is especially true in big cities where the owners usually lease the shop. What do they really have? Why would I buy a sign and menu from them for x hundred thousand dollars if I have another option?
The individuals founding the bakery took a risk in firm formation (incorporation, initial lease collateral, equipment loans which may have been cosigned by the owners as individuals, etc.). The rewards received were purely salary based -- exactly what a worker receives. The net result is that while the owners of the business received a return (a good salary), this return is not a capital return based upon the risk absorbed as founding which may have been greater.
Do you think the margins were low because they just used higher quality ingredients and did not doing any food management? If so the next owner can optimize these inefficiencies and extract value from the brand value.
Usually it’s more structural than that. Too much competition, too few customers, too little scale to afford the type of talent that can optimize inefficiencies. There is a reason these small localized businesses tend not to produce outsized profits.
Serious question - If all the profits go to the workers' salaries and nothing is left to pass through to the owner, who would have an incentive to guarantee the workers' salaries if revenue falls short? Who would be willing to risk capital to get the company through unexpected hard times? Should the workers chip in to keep it going?
I mean, the owner is a worker. These are not mutually exclusive roles.
If times are tough, then the owners probably take a smaller salary for their labor, or the workers can decide how to cut costs together through salaries, benefits, reducing costs of manufacturing, or whatever.
The owner is a worker AND an investor. If they're actively working in the business, they deserve to be paid for that labor. Regardless of whether they're actively working in the business, they deserve to be rewarded for taking the extremely risky step of creating a small business, which in turn created all the jobs for those workers.
This is not a fintech company, it’s a holding company. Selling their financial products they said is a secondary new revenue stream - their primary revenue stream is from the companies they acquire, which for some reason decreases over time as they sell back stock to employees.
Maybe they’ve identified that employees in small business will overpay for stock in the company they work at. Then this is just a financial move to own that stock and sell it overvalued to employees?
Well, it sounds like the long term strategy is to develop business software solutions that work perfectly for their various arms, that they can then take external and pitch to other small businesses.
it sounds like it square bought food truck businesses that weren't using square pos and basically installed square pos and resold the business with contract stating they couldn't switch pos providers....I mean it's a way to guarantee vendor lockin but it's also risky. I do hope they follow through with the 80 percent ESO plan later on, as I'd love to see that the norm not the exception in the next generation.
It’s generally a bad idea to buy stock in the business where where you work. It’s the opposite of diversification. If it’s equity compensation OK, but you should diversify that into other investments as soon as you can.
> Certainly, it’s among the more unique fintech models this reporter can recall.
Its not a fintech business model.
This is more like a McDonalds franchise model where they are extracting value by forcing stores to buy amounts all mannner of services from Food to Ordering Automation along with paying a percentage of gross sales back to Corporate.
Except in this case TeamShares won't even provide for good marketing support or branding to drive traffic.
McDonalds always had the implicit promise that you'll work hard, make us very rich but you'll also be "small town rich" too. TeamShares doesn't even pretend to deliver on the last part.
There’s a whole world of folks who do this, with acquisitions and sophistication ranging from really small businesses[0] to ones in the range the article discusses[1]. It does seem like a numbers game where it makes sense to pool the risk.
Doesn't make any sense to do that without a financial upside as well, as the businesses are unlikely to spend more their entire valuation on fintech products (and 84 mom and pop shops owned by the VC signing up isn't much of an illusion of growth to boost the fintech companies' valuation either)
The financial upside is that they also own 85% of the company shares, so get 85% of the profits, reducing to 20% over 20 years by selling shares back to the employees. Selling here implies they'll also make profit from that too.
Employees who'll likely withstand lower than market rate wages and/or poor conditions because of sunk-cost fallacy. Sucking up profits from both the captive businesses using software licensing, revenue, and employees (as they buy shares from the startup) is well-thought-out evil genius, OR a path towards fully automated luxury worker-led communism, but I'm guessing it's the former in the guise of the latter.
That’s how it looks on the books but it has to be part of compensation - it’s booked that way in the GL with the company paying for the shares as incentive out of earnings. Employees in these kinds of business just aren’t going to be buying stock in the company they work for.
Right, but as the small company is on the hook to buy the shares from the parent company, before passing them to the employees as comp, the parent company gets cash for their stake.
"force" sounds so dark. Small businesses use all kinds of solutions to run themselves. They want to end up with a product that they can pitch to external businesses, it's more like they are using these acquired businesses as market research and testing.
Less bad if you add some nuance. Some dental procedures are “you might not need this right now” or cosmetic. There are bad incentives that can be at play for sure - but procedures aren’t a clear line of “necessary”/“not necessary”.
Thanks for sharing that. Good read. Everyone who reads it should know upfront though, that the article was published in 1997. I didn't notice until the end.
So multiply all of those prices by >2.5x to account for the inflation of costs.
Safe Harbor I think buys marinas as owners age out of them. A marina tends to start out small and grow over time under a single owner, until they are successful yet unattractive for any one other individual to plunk down $x million. So they get bought up by the big org and it gets harder to find reasonably priced mom and pop marinas.
Seems like sorta a middle ground between a bs PE buyout, a roll-up, and a holding company. I think they're hoping the fintech fairy dust is going to give them tech multiples.
It being a negative depends on which end of the table you sit. I agree it's telling on the kind of leadership they expect, given the reputation of the environments and people who work at those organizations.
It just assumes that only people that work for companies like Amazon and Tesla have the pedigree to manage a company.
I look at it like how every politician either elected or appointed seems to have gone to one of 10 well known universities -you know Harvard, Yale, Stanford..etc. It's not about what they know or what they want to do as much as the fact that they are all in the same club. I've always said that being a CEO is just a game of playing follow the leader -one CEO cuts their 401K, they all cut their 401K, one CEO switches to "unlimited vacation" they all switch to "unlimited vacation". It's not a surprise that these companies all act the same, all the leaders all went to the same schools with professions that went to the same schools. They've all bee taught to think alike, they aren't disruptive-it's just group think.
When was the last time you heard of a CEO that went to community college and some shitty state school -even if they founded the company they are quickly replaced by a person more suited to be the CEO- someone for a Ivy school/FAANG once they IPO.
Aging business owners should look at Employee Owned Trusts. They exist in the US and UK with slightly different structures. Canada will have some legislation around EOTs sometime soon.
It's like amway or other MLMs but instead of locking them in with proprietary products to sell, they're locked into proprietary ways of doing business.
It's difficult to develop products without understanding customer needs, and it's difficult to understand customer needs without a variety of customers. That's the problem their business model is it solving.
This sounds like they're going to be collecting a large amount of data from a huge variety of small businesses that all operate in different ways and have very different clientele.
I wonder how practically useful all of this data collection is going to be, and whether doing it will be accurate and result in insight.
Learning about small niches where modest profit can be made (which is where many small businesses tend to fit, IMO) is not the typical/theoretical "scale to the heavens" startup plan, but if just getting ideas is the goal... good luck?
The people doing real estate forecasts want actual numbers to crunch and would enumerate the fleas on your dog and rank sort its name on the date of sale if you let them. They think confounding variables are for quitters.
Protip: If someone says they are trying to be like Berkshire Hathaway, and their business plan doesn’t include a strategy for cornering some segment of the insurance market, they do not understand and will not become like Berkshire Hathaway.
I would even go so far as to say that if someone says they are trying to be like Boeing, but their business does not involve manufacturing jumbo jets, they do not understand and will not become like Boeing.
This idea is potentially so terrible I almost feel bad for the founders -- if it also wasn't scummy. The crux of their problem is that these businesses have a very finite lifetime regardless of the succession plan. The succession plan is completely secondary, the bigger question is the viability of the business plan, which for many small businesses, is not robust. TeamShares is merely acquiring customers until they abandon after the business plan is replaced and changes the quality or price of service.
Of course business owners who are selling to them are happy because they can buy their business back for less when TeamShares goes tits up. TeamShares is probably going to find this scheme will only work if the businesses being acquired are very homogeneous. Trying to scale something which inherently cannot or should not scale is kinda silly.
This sounds a lot like the Search Fund model except at scale. Typically in a search fund an entrepreneur raises a small pool of capital for operations and search for a traditional low tech company to acquire where they can optimize operations typically leaning on their MBA education. When a target is found, they make a capital call to the investors and buy out the company.
This basically seems like a search fund run at scale. Its actually a cool concept that I suspect is quite profitable. From the article though I don't really know if there is a tech component. It's more like a pure-play private equity company, e.g. finance. That said, there are a lot of interesting opportunities here and probably limited competition.
Private equity rolling up small businesses is extremely common for decades. There is even a major plot in the 2000s HBO show “Six Feet Under” of the evil PE guys buying up all the mom and pop funeral homes to corporatize it. Nothing new or innovative about this.
So is the idea that they acquire the company for debt they place in the company and then they offer a complete suite of fintech products (including servicing that debt) to each of the companies they acquire? They aren’t too worried about giving away much of the company because with the debt inside the company the valuation is near zero? But if the employees can successfully grow the company it represents a decent return since they’ll be able to share 80% equity.
That sounds like a cherry on top to me. I mean, considering the cost of the business that they paid for, fintech expenses shiuld be negligible. Otherwise it sounds like a great business - buy successful businesses without successors, shape them up, motivate employees and reap the benefits, long term. Win-win-win for everyone involved and society too.
It's like any acquisition, you don't let the acquired shop keep running workday if the main company is running base camp. It makes sense to consolidate.
Do you think so? Their profits are their mothership's profits, so any expenses are, too. It's like putting from one wallet to another and harming the businesses (assuming their fintech solution is not optimal) along the way. I don't get it, but from the article I don't think this is what is happening anyway. It wouldn't make sense either.
> It's like putting from one wallet to another and harming the businesses
Sort of, but they'll be pulling money from a joint wallet that's 80% owned by other people. I expect even if the workers gain majority ownership, they will have no control - so the fintech service contracts will likely outlive the businesses.
> small businesses represent 99.7% of U.S. employer firms and 64% of private-sector jobs
Is this accurate? Those percentages just -feel- way too high at first glance. Is it counting every gig worker and etsy seller as an independent small business or some other trickery, or were my assumptions just that far off?
I would bet every individual corp is counted as an employer, so under this very few Wendy’s staff count as working for Wendy’s and rather for the franchise business.
> Those percentages just -feel- way too high at first glance
Not really, no. Large corporations have lots of employees per corporation, but there just aren't that many of them, so the total number of jobs they represent is still a minority of all jobs, and the fraction of firms they represent will indeed be tiny.
Seems my issue was with the definition of small business. Found this link helpful in explaining what all qualifies in this number, and it's quite more than I expected...
Sounds like these are businesses with aging owners with no succession plans that can also be modernized. They are sustainable and healthy but will run out of steam at some point so they buy them, modernize them, and ultimately sell them back t the employees who will own 80% of the stock after 20 years. Not that uncommon of a business model except the stock ownership part. Typically you see business flippers do this and sell them after 3-5 years, but much like an incubator they leverage the businesses they buy so they also use each others services and lift them all up while keeping the employees employed.
If they're diluting themselves to 20% in order to incentive worker-owners, do they lose control? If so, they have no leverage to force the business to buy their fintech products. Theyll have to compete for those customers with other fintech firms. On the other hand if they keep control, then it's just extracting the earnings to the holding company with extra steps.
This reads very much like a franchising arrangement, except instead of goods you pay for back office services. Even if the acquirer's products would succeed on the open market, a captive audience of guaranteed business seems like it might align the incentives of the parent company to _not_ bleed their acquisition dry.
I think with proper terms this would be a good launchpad for tested and tried businesses to transition into worker owned cooperatives, which I think would be a noble endeavor.
As it's set up currently it reads more or less like a tribute system, which is pretty trashy - it draws a line in the sand where they're effectively minimizing risk to themselves and slowly foisting responsibility onto others in exchange for a quasipermanent deal. I'm curious as to how the "ownership" works, as well, I'm sure there are caveats written in that secure the stake of Teamshares.
> The plan instead is to generate revenue from a growing array of fintech products that it sells to the businesses it buys.
If these products were any good, couldn't they make money with them on the open market? The only thing that owning gives you is the ability to force them to buy from the company store, so to speak.
This isn't tech. This is pure capitalist financial engineering: extracting money from people who actually do real work for real paying customers.
This is pretty strange. The real business model could probably be described in just a few blunt sentences, but without that happening we're left to speculate.
Why would you think that? There was no succession plan for these businesses, there was a high potential for them to shutter and the jobs would dry up with them.
Honestly, this feels like one of the better/more practical uses of venture capital that I've seen in a while.
Because the businesses are now owned by a profit-maximizing anonymous fintech company. If you can't imagine any of the thousand ways that ends up sucking for everybody and draining life out of the world it's not likely that anything I say could convince you.
Looks like PE and venture-backed tech have a bad rep these days given how cynical the comment section is...
It seems the core problem at hand attempting to be solved is baby boomer small business owners retiring and having no one to buy their business (or pass down to who actually wants to run it)...
That seems like a worthy problem to tackle. Definitely will keep an eye on this company over the years to see if the model pans out or not.
Instead of saving on labor costs by pretending your employees are contractors like Uber and friends, they go in the opposite direction. You're not a contractor, or even an employee, but an owner.
Just imagine how big your milkshake will be once you all own 80% of the business! Admittedly, a business where this company has slurped out most of the value and saddled you with various software license fees or whatever in perpetuity. But a business nonetheless.
And now when the business goes belly up and these owners are destitute, the HN logic applies-- hey man, most businesses fail. So why not just learn some python and code up some nice fintech that extracts value from other rubes?
Replying to my own comment because I just can't get over how ingenious this is.
On HN we're used to FOSS devs acting quickly when, say, a proposed or implemented license change turns project X into project X'. Upon reading the diff, they'll fork from X and continue on with a new org, and X' dies on the vine. We've seen it recently on HN.
Employees of a mom and pops have specialized skills either in the frontend or backend of the business but typically only a basic idea of the fundamental business model. If they were to become owners in X it would take them at least a year and probably longer to learn the ins and out. E.g., how a change to even a few vendors can have a large effect on the bottom line. If they think they are getting X but instead get X', they won't know for awhile. In fact, if were talking about succession then the owner may be gone and they'll never know.
Perhaps I'm being cynical and fintech really is here to help the little guy. But something tells me that's unlikely.
I still can't tell whether you're being cynical or not. These businesses are mostly going to just shutter if PE doesn't take over. The ones left to a family member aren't necessarily going to do well for that succession either: that bequest can be an act of love more than business smarts. Furthermore, just because there may be important subtleties about which vendors to use, branding, and service processes that are vital to how things work, it does not mean that the prior owners were at all savvy about the nuts and bolts of modern financial products, and could have really been held back by traditional banks preying on that ignorance and ensnaring them in less than ideal solutions.
The important cog in this wheel is the one you haven't touched on, namely, that president Teamshares installs - wish they'd explain more about that. Teamshares' investors aren't stupid. They know very well the risk on their money if the company comes in like a bull in a china shop, quickly destroying the businesses it buys. There aren't going to be consolidation options and economies of scale like you see with medical practices - each of these mom 'n pop shops are somewhat special snowflakes.
Being an owner in a business is a typical way to route around labor laws completely.
If you're a restaurant or retailer that needs your staff to work 14 hour days 7 days a week, giving ownership is a fairly common scheme to CYA against future lawsuits. The ownership shares are usually miserly and forced-transferrable upon leaving.
Not saying that's what's happening here, but it could be.
They never get classified as employees. They start as owners to begin with. This is what cults like Twelve Tribes do with the Yellow Deli in Boulder, CO. The whole place operates on unpaid labor because they're all "owners".
Them setting terms for insurance and likely de-facto cotrolling all the firms' financial capabilities through their mandated fintech services surely helps hedging the risk, too.
The brilliance depends on whether it’s a scaled version of a Berkshire Hathaway like business, or some sort of reverse franchise. It sounds to me like the latter - a scheme to create captive customers for preferred source vendors who are close to the beneficial owners. This also sounds like medical consolidators like Schweiger dermatology who soak up independent dermatology practices. Similar models exist for dentists and attorneys as well.
I’m cynical because Buffet’s goal was very clear - he needs to generate cash flow forever to make more money. A venture capital entity has a different vision of success, which I can’t see being aligned with the “owners” of these companies.
That's my feeling, too. It reminds me of a scene in "The Founder", the movie about McDonalds: "You're not in the burger business. You're in the real estate business."
> the HN logic applies-- hey man, most businesses fail. So why not just learn some python and code up some nice fintech that extracts value from other rubes?
I haven't really seen this here. Is there any need to perpetuate such silly stereotypes?
It was a big thing ten years ago - why not learn to code if your job has gone overseas? At the point Mayor Bloomberg tweeted something about learning to code, it seems Jeff Atwood felt it was time to weigh in[0].
> saddled you with various software license fees or whatever in perpetuity
Are they necessarily forced into it for perpetuity? Once they transition to 80% employee ownership (or 51%), don't the employee-owners decide whether to continue? Unless there's some kind of non-voting ownership stake or contract that never expires or something.
Plus, 20 years is the timeline to transition to employee ownership. So for the first 10 years, if the acquired business pays software license fees, the parent company is mostly paying itself, which isn't revenue. More importantly, that means whatever tech stuff they supply to the acquired companies needs to actually pull its weight.
It seems more likely they just want to keep proven businesses going so they can tap into that established revenue year after year. Giving ownership to the employees probably helps with retention and continuity so that the company doesn't fail after being sold. The corner pizza shop's customers still see familiar faces, the plumbing company's customers still recommend them to neighbors, etc. People don't say, "It used to be good, but it's not the same since it was bought." The point of handing over 80% is keeping the goose healthy to keep laying golden eggs.
Yes, being a supplier to these companies you own 20% of is some nice gravy. But you also want the revenue (and expansion), so you really can't bleed them dry.
Unfortunately, most mom-and-pop businesses are around because they've built a clientele, hired good employees, and mastered the basic economics in their local economy, which is all they need. Sophisticated fintech for them is just a frippery, as is big-time professional management.
I would bet the weaknesses of most mom and pops, and where professional management excels, is in the efficiency and vendor relationships. Lots of small mom and pop places pay exorbitant amounts for things like credit card processing, cash management and banking, tech, inventory management, etc.
If team shares can be a good partner to complement the strengths of the small business owners, they can increase the profitability significantly. By leaving the community element in place, theoretically it could be the best of both worlds.
Also: "Lots of small mom and pop places pay exorbitant amounts for things like credit card processing, cash management and banking, tech, inventory management, etc." is totally unsubstantiated. Like they're too stupid to know what they're doing?
We'll have no trouble at all finding stories of old businesses that changed ownership to a soulless group of MBA's, the customers heard about it, complained that it wasn't the same anymore, and quit coming. I doubt you can find many stories going the other direction.
>Admittedly, a business where this company has slurped out most of the value and saddled you with various software license fees or whatever in perpetuity. But a business nonetheless.
didn't I see an episode of The Sopranos where this was the plot, albeit in mafia dress.
You need a bit more substance than association by guilt (and not even a strong association) to criticize an article or a headline. My reading of e.g. "quietly" is that either they're claiming a scoop, or they're critical of the acquisition, not of bad faith.
“Quietly” is a way to imply wrongdoing in something purporting to be a news article. Which is funny because you can use “openly” the same way, and it seems to me that every action can be characterized as either quiet or open.
That’s why it’s bad faith. It’s a cheap shot that purely injects a negative feeling without actually expressing an opinion.
“Teamshares buys mom and pops to lock them in as customers” or “Teamshares screws small businesses to make a buck” would be honest, good faith headlines. Innuendo is never good faith.
I did mean guilt by association. The comment's author assumes the articles uses cheap devices based on an association the word "quietly" with bad faith arguments.
The headline would feel less like clickbait if it omitted "this": "Venture-backed startup has...". The word "this" in a headline has become strongly associated with low-effort articles that try to draw you in by being simultaneously provocative and non-informative.
I agree. I've started avoiding almost any headline with the phrase "this X ..." where you've got to click to see what X is. Almost invariably, the headline could have easily specified what X was but then you might know you don't have any interest.
I understand the cynical takes and it's totally fair to be wary. We're all used to seeing startups where the only goal is to make money, and when they're venture backed, the goal is to make a _ton_ of money - externalities be damned. If that's the case here, then the cynical takes are logical.
But it is possible (just possible) that there's something else going on here.
It's possible that the founders genuinely are dedicated to increasing the prevalence of employee owned and governed businesses. And that they've found social impact investors aligned with that mission. In that world, they aren't looking for astronomical returns, just modest returns and enough revenue to keep going.
If you assume that's what is happening here then a lot of these decisions make sense and don't look so ominous.
Employee owned businesses often struggle to get financing and insurance from traditional banks and insurers. Because those companies don't know what to make of them. So creating financing and insurance products allows Teamshares to provide those services to businesses that would otherwise struggle to get them. (And if they're doing that - why not offer them to others as well?) The gradual increase in ownership is how employee buyouts often go. And retaining the 20% ownership stake also makes sense - it's a pay it forward thing, allowing Teamshares to continue to help businesses make the transition to employee owned.
If you assume it's on the level - that the founders and investors are genuinely interested in helping owners sell their small businesses to their employees when they retire - and that they're genuinely dedicated to increasing the prevalence of employee ownership - then this is _brilliant_ and _incredible_ and to be lauded.
It is also possible the whole thing is a scheme to screw the employees and extract a ton of wealth from them for venture capital. Only time will tell.
Personally, I'm going to choose to be optimistic and hopeful for the moment.
Perhaps Teamshares is good at identifying acquisitions with sufficient margins to permanently afford Teamshares services, but if I was an employee at a company being bought I'd be concerned that after the owners retired with their cut and after Teamshares kept extracting their fees, I'd be left holding the bag, ie, a non-growing company slowly dying.