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Option Pools and VC Negotiations

Rob Go

In my last post about raising seed vs. jumping straight to A, I received a good comment from Chris Woods that my analysis neglected to include the impact of option pools that are created at each financing round. There have been others in the past that have detailed the math behind option pools and their impact on venture deals.

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Cliff Notes S-1: Kayak ? AGILEVC

Agile VC

2010 Net Income: $8 million. Obviously most of these employees are working hard primarily for equity upside compensation, but Kayak’s personnel costs are roughly $200K/head so the company is highly productive on a per employee basis. Gross Margin: 94% –> i.e. for every $1 of revenue Kayak only spends $0.06

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The Equity Equation

venturehacks.com

The Equity Equation. As this nuclear winter of venture hacks continues, I thought you might enjoy our thoughts on Paul Graham’s The Equity Equation. ” Read the rest of The Equity Equation first; it is great. You have to pay market rates regardless of the equity equation. Venture Hacks Good advice for startups.

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Startup Equity For Employees

www.payne.org

Startup Equity For Employees. 5 Stock vs Options. 7 Salary vs Equity. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. Salary vs Equity. From Payne.org Wiki. 3 Dilution.

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The Future of Startup Funding

www.paulgraham.com

Angels In the big angel rounds that increasingly compete with series Arounds, the investors wont take as much equity as VCs do now. AndVCs who try to compete with angels by doing more, smaller dealswill probably find they have to take less equity to do it. 13 ]Im not saying option pools themselves will go away.

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VCs eating our own dog food: Using technology and analytics to make better investments

David Teten

Private equity and venture capital investors are copying our sisters in the hedge fund world: we’re trying to automate more of our job. . In the private equity universe, most Partners have primary training as deal-makers, not as managers. (To see the video above, please click the image, and then click on the Play button.).

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How to Fund a Startup

www.paulgraham.com

Such deals may be a net winfor founders, because you get multiple VCs interested in yoursuccess, and you can ask each for advice about the other. It costs you a little more equity, but being able to play the two firms off each other (as well as ask one if the other is being out of line) is invaluable.