Method / Engagement
When Sprout engages with a venture where the alignment of incentives benefits from shared ownership, we take equity alongside or instead of some cash. The legal structures vary (convertible notes, SAFEs, common equity, revenue share), the regulatory considerations are real (OJK implications for fintech, Indonesian tax treatment, reporting obligations), and the discipline is to document the structure in writing before we start. Used in Sprout Ventures co-build, technical-cofounder, and select Wright Partners alliance engagements. Never as a marketing claim, always as a legal artifact.
Services firms taking equity is a structural decision, not a sales negotiation. It aligns incentives when the venture's success materially affects the services firm's outcome, which is exactly what happens in co-build engagements, technical cofounder roles, and long-running venture partnerships. But equity creates legal, regulatory, and tax obligations that most services firms don't handle well. We handle them: documented structures, OJK compliance where fintech is in scope, tax treatment planned with the venture's counsel, reporting to both the venture's board and Sprout's own governance. Equity engagements get more scrutiny from us than cash ones, because they deserve it.
Signature Visual
A two-axis map pairing the four equity structures (SAFE, convertible note, common equity, revenue share) against venture stage (seed through growth) with legal complexity, Indonesian tax treatment, regulatory trigger, and reporting cadence annotated per cell. A timeline overlay shows Sprout's typical holding period and economic realization path. Legal-memo aesthetic. Coming soon.
Four principles that keep equity engagements from becoming legal liabilities.
Equity structure is decided and papered before the engagement begins. Terms are not renegotiated mid-engagement. Amendments require explicit written consent from both parties.
If the venture is fintech (OJK-supervised), the services firm taking equity may need to consider OJK fintech-principal registration. We factor this into structure selection up front. Ventures outside OJK's fintech scope have more structural flexibility.
Indonesian capital gains tax is ~30% final on realized gains; dividend withholding is 10–15%; revenue-share economics are taxed differently. We plan tax treatment with the venture's counsel at structure-selection time, not after exit.
Equity engagements involve governance obligations: board observer rights, information rights, reporting cadence, decision-consent triggers. These are documented, not implied. A reasonable external counsel should be able to read our agreement and understand what Sprout is entitled to and what we're not.
Matched per engagement, picked for the venture's stage and regulatory surface.
Seed / pre-Series A default for most co-build engagements. Sprout contributes services against a SAFE that converts at the next priced round. Low legal complexity, deferred valuation.
Similar to SAFE but with debt characteristics. Used where Indonesian legal norms favor convertible-note structure or the venture prefers debt for tax reasons.
Direct share issuance. Used in post-Series A engagements where valuation is set and Sprout takes ongoing roles with shareholder rights. Requires shareholder-agreement work.
Sprout takes a percentage of revenue over a defined period in lieu of equity. Used where equity is legally complex (fintech) or cap-table simplicity is prioritized.
Equity is typically confidential. The market signals here are about the model, not specific deals.
Venture studios globally (Atomic, Human Ventures, Pioneer Fund, BCG Digital Ventures) typically take 30–50% equity in co-built ventures, reflecting the capital + team + risk bundle. Services-firm equity in less-intensive engagements (technical-cofounder, ongoing partnership) is typically lower, single-digit to low-teens percent.
If a services firm holds equity in an OJK-supervised fintech venture, the firm may trigger OJK fintech-principal registration or related regulatory obligations. This shapes structure selection, often favoring revenue-share or SAFE structures over direct common equity for fintech-adjacent ventures.
Indonesia applies ~30% final capital gains tax on realized gains; 10–15% dividend withholding; and distinct treatment for revenue-share economics. Structure selection at engagement start determines realized economics at exit. Most services firms that take equity without planning tax early find their realized returns materially lower than gross.
The practical differences between SAFE and convertible-note structures in Indonesian legal context. When each is the right default, and the drafting patterns that work for both.
A practical guide for services firms navigating OJK supervision when their clients are OJK-regulated fintechs. Registration triggers, structural alternatives, and the combinations that avoid unnecessary supervisory exposure.
Why Indonesian capital gains, dividend withholding, and revenue treatment differences mean equity structure can't be decided independent of tax planning. What to model at engagement start.
Tell us the venture and the proposed engagement. We'll assess fit, propose a structure (SAFE / convertible / common equity / revenue share) with OJK and tax considerations factored in, and paper the terms before work begins. Sprout's equity engagements are rare relative to cash engagements, and intentionally so. We use them where alignment benefits, not as a cash substitute.
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