San Francisco, CA – September 11, 2023 – Common Trust, an employee ownership buyout platform that enables small business owners to access liquidity by exiting to their employees, today announced $2.6 million in seed funding. Crossbeam Venture Partners led the round with participation from Schmidt Futures and additional funding from leading investors in the space.
Common Trust is a financing platform that supports small business owners to exit to their employees. The company equips selling owners and management to design a customized employee ownership trust, access aligned capital to finance the buyout, and implement a successful transition.
Across every region and sector in America, there is a growing wave of business owners approaching retirement, with millions of small businesses on the verge of a sale over the next decade. However, many owners are becoming progressively skeptical of traditional exit options, like private equity and private buyers, as they often lead to a sale that neglects employees and long-established company culture and values. As a result, 75% of owners regret their sale within a year.
Employee ownership offers a compelling, legacy-aligned exit strategy for selling business owners, but the cost and complexity of more traditional options have often prevented businesses from pursuing it. Common Trust provides an alternative exit strategy to transition to employee ownership by presenting small- and mid-sized business owners with a simple, attractive, and affordable exit solution using employee ownership trusts, a novel approach for businesses to become employee owned.
“Employee ownership can be transformational for businesses, its workers and local communities,” said Zoe Schlag, Co-Founder and Managing Partner at Common Trust. “For many founders who are preparing to retire, exiting through employee ownership offers a pathway to get a fair value out while also ensuring that their people and community will continue to benefit from the company’s growth, even long after the sale.”
“With 40% of small business owners in the U.S. on the verge of retirement, three in five small businesses will seek a sale over the next decade, and only a small fraction of them are likely to be absorbed by buyers," said Ryan Morgan, Partner at Crossbeam. “Common Trust’s unique, employee-centric exit strategy is transforming the space and creating positive social impact by providing small business owners an inclusive and mission-driven exit solution.”
Founded in 2022, Common Trust was built on co-founders Zoe Schlag and Derek Razo’s work in the shared ownership space respectively at Schmidt Futures, an initiative founded by Eric and Wendy Schmidt, and at Purpose Foundation, a leading think tank supporting alternative ownership and financing structures to protect mission and build community wealth.