Teamshares Raises $245 Million to Revolutionize Small Business Employee Ownership

Teamshares, the leading pioneer in small business employee ownership, has secured $245 million in equity funding. The investment comes from top venture capital firms, highlighted by a recent infusion of $124 million in Series D financing.

Leading this latest funding round is Frank Rotman of QED Investors, with substantial contributions from existing investors, including Inspired Capital, Khosla Ventures, Slow Ventures, Spark Capital, and Union Square Ventures.

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About Teamshares

Teamshares operates as an employee ownership platform for small businesses, underpinned by its proprietary software, educational resources, and a range of financial products.

The core mission of Teamshares is nothing short of ambitious: to generate $10 billion in new wealth for employees through stock ownership.

Their unique approach involves the acquisition of traditional small businesses from retiring owners, with the goal of transitioning these businesses into 80% employee ownership within two decades.

In addition to this transition, Teamshares provides these businesses with fresh leadership, comprehensive financial education, cutting-edge equity management software, and a suite of financial products.

Crucially, once acquired, these companies will be permanently owned by employee shareholders and Teamshares, ensuring they never need to be sold again.

“We founded Teamshares after a decade of hard-won experience running small businesses, delivering education at scale, and executing M&A transactions.

American small businesses rarely transition within a family anymore and face a 70% failure rate when trying to sell. Teamshares provides retiring owners with a financial exit and a legacy of employee ownership, while also preserving jobs and creating stock wealth for hard-working small business employees.” – Michael Sutherland Brown, Co-founder and CEO of Teamshares

“Teamshares is a unique company with a huge addressable market. It combines an unmatched customer value proposition and a compelling business model with an authentic social mission: employee ownership.

Transitioning stock ownership from a single business owner into the hands of employees matches the shifting preferences of society. Employee ownership aligns the interests of all stakeholders and makes companies and people better off financially.” – Frank Rotman, Co-founder and Chief Investment Officer of QED Investors

The Problem

Small businesses are often described as the backbone of America, employing approximately half of the nation’s workforce and contributing significantly to 44% of the economy.

Nevertheless, when small business owners retire, a staggering 70% of them struggle to locate a buyer for their enterprises, frequently resulting in the unfortunate closure of their establishments.

In this scenario, the retiring owner not only faces the loss of their retirement savings and the erasure of their business legacy, but the company’s dedicated employees also find themselves unemployed, and the local community experiences the loss of a valuable and cherished business.

The Solution

Teamshares specializes in the acquisition of small businesses from retiring owners. Their unique approach involves granting employees a 10% ownership stake in the business’s stock immediately after the acquisition, with a gradual progression towards achieving an 80% level of employee ownership within a span of 20 years.

This strategic initiative is rooted in the belief that employee ownership represents a mutually beneficial arrangement, yielding improved financial outcomes for both the employees who become owners and the overall health of the business.

The ultimate result of this approach is the formation of a network comprised of financially resilient companies that have no need for future sales.

This benefits not only retiring owners and employee owners but also extends its positive impact to the businesses themselves and the local economies in which they operate.

The Teamshare Journey

Teamshares’ journey is nothing short of remarkable, with its growth trajectory exemplifying its impact. From a starting point of just four companies with $10 million in revenue in January 2021, the company has surged ahead to encompass 84 companies with a consolidated revenue exceeding $400 million as of July 2023.

This growth has created 2,100 new employee owners across 29 states and 42 different industries. The widespread adoption of Teamshares as a succession plan is exemplified by its diverse clientele, with an average age of just 30 years.

Some notable additions to the Teamshares family include:

• Brad’s Service Center, an auto service business in Western Massachusetts
• Boxes4U, a packing material distributor in Plano, Texas
• Central Texas Plumbing, based in Waco, Texas
• Don & Millie’s, a fast-food restaurant chain in Nebraska
• Horn Photo, a specialty retailer in Fresno, California
• Julia’s Homestyle Bakery, located in Murfreesboro, Tennessee
• Maggie’s Organics, a sock and apparel company in Ann Arbor, Michigan
• Runkle’s, a notary, tag, and title retail chain in Central Pennsylvania
• PlanForce, an architecture and design firm in Minneapolis, Minnesota
• Select Sand & Gravel, an aggregates distributor in Texas
• Thielen Meats, a renowned butcher shop with nationally famous bacon, based in Pierz, Minnesota
• Wright Way Cleaning & Restoration, serving the Seattle-Tacoma, Washington area