As startups in Southeast Asia become more advanced, they need more tools to ensure structures and processes are tracked properly and transparently. This means abandoning spreadsheets where individuals had to manually enter data cell by cell. When it comes to generating cap tables or employee stock option plans (ESOPs), Sprout has developed a platform for startups that once used manual processes to record this information. The company has also applied this know-how to build Folium, a similar platform for web3 companies.
KrASIA recently spoke with Andy Lee, Sprout’s CEO and co-founder, to find out more about how the company is offering a tool that is increasingly being adopted as the Southeast Asian tech ecosystem matures.
The following interview has been edited and consolidated for brevity and clarity.
KrASIA (Kr): Up until recently, Sprout has been in stealth mode. What was the process of transitioning to a more public presence? What was going on behind the scenes?
Andy Lee (AL): It’s been a long and interesting journey. For the 17 months after my co-founder and I formed Sprout, we were bootstrapping and building the company. I was effectively the product manager, and he was leading our small engineering team. It was a labor of love.
We joined a few startup programs that were available in Hong Kong, and that was a nice little ecosystem to work within. Our most recent fundraise was the culmination of this journey. As a SaaS provider, we are helping our customers understand the virtuous cycle, where they grow and hit milestones, then raise funds, hire more staff, incentivize, retain, and hit more milestones. Sprout sits at the heart of this cycle.
Kr: What sort of developments were you able to commit to when you hired more people?
AL: We had more resources to design and launch and manage ESOPs on a digital platform. Sprout’s software is part of the movement where companies transform by becoming more digital and moving away from Excel. We are also living up to what we teach a lot of founders [during educational webinars and events]: how to properly manage a cap table, which glues everything together for a startup.
Along the way, we brought on some investors who said they had portfolio companies that needed help with managing their tokens, so we looked at the web3 space. There were opportunities for us to support the equity side and token side, and now there’s a natural extension: a new notion of a crypto cap table and a treasury that holds tokens that belong to the company and its shareholders. When web3 companies look for investors, they raise cash as well as sell tokens. Many smart investors are getting into both, so there is a need to manage both sides.
Kr: What was it like for Sprout to build Folium, your token management tool for web3 clients?
AL: During web1—the advent of the internet—I was in Silicon Valley working as a junior banker. Many of the patterns I saw back then are repeating in web3. There’s a lot of excitement, with new projects that have a lot of hype, like a modern-era gold rush.
There’s a need beyond accounting software that tracks the movement of cash and bank account balances. In web3, there are many wallets and transactions, but there wasn’t a good system to add context or transparency by linking all the related parties. It’s easy to lose track of who owns what. There’s also a need to do KYC [know your customer] and AML [anti-money launder] activities. We saw an opportunity to use our existing knowledge and apply it to this brave new world. We believe our services will be helpful as companies and organizations continue to mature and this sector becomes more mainstream.
Kr: Do you see strong demand across Asia for your token management tool? Or is demand spread across the globe?
AL: We are located in Hong Kong and Singapore, and these places are our focus. But the problem we are solving is a global one.
Kr: Getting back to Sprout’s stakeholder management platform, what’s the demand like in Southeast Asia?
AL: Many companies in this part of the world are incorporated in Hong Kong or Singapore, regardless of where they operate. That allows us to focus on two key markets. We’re seeing increasing interest to sort out employee share options and demystify equity management.
We’re also seeing a move away from “boss culture.” People need to feel valued and have a sense of ownership by having skin in the game, so they can build a business alongside their co-workers. There’s an increasing number of companies hitting milestones and growing, so there’s the need to compensate people properly, and not just in cash.
Kr: Has the process of introducing Sprout’s platforms been smooth?
AL: There’s still a knowledge gap in the marketplace. Employees want to get options, but they don’t know how this all works.
We believe that in the future, compensation will not be limited to equity and cash; tokens sit between those two forms. Equity could have a higher upside in the long run—we’ve all heard the stories of Google’s chef and Facebook’s mural artist. But the new generation understands crypto and tokens. There are even some companies that only pay in tokens. We are in a good position to support both types of wealth distribution.
Kr: Why do you think many people in Southeast Asia still aren’t familiar with the concept of ESOPs?
AL: There’s a lack of knowledge among founders. In general, people might have heard of companies having IPOs, but they don’t understand what it means to own shares. Investors don’t necessarily teach people about this, so there’s a vicious cycle of “not knowing.”
Kr: How do you raise awareness about this? How do you describe what Sprout offers?
AL: I think Sprout’s platforms are important tools for mature startups. They can align interests, and retain and engage stakeholders, not just employees. This is an evolution of the tech space in the Asia Pacific.
Kr: What are your general plans for the near future?
AL: Our latest funding round will help us hire people for critical roles and take our business to the next stage. My co-founder and I are aggressively building out teams to address new opportunities and expand into new markets. We’re also scaling through partnerships and remain a thought leader in this space. We’re helping more companies and working alongside investors and their portfolio companies.