Altgate

AUGUST 25, 2012

—————– Dead equity — equity held by employees and founders no longer working at the company — is a large and growing problem. Choe opted to forgo a cash payment “in the thousands” for the equity equivalent at the time. Dead equity has always been a significant issue for startups.

Equity 28

Equity Vesting Cap Table Technical Review 28

VC Adventure

AUGUST 15, 2018

Most boards did some level of work to determine the FMV of a company’s stock but generally options were priced between 10% and 15% of a company’s then preferred price (because common equity sits behind preferred equity there is typically a discount applied to the FMV of common stock to account for this “overhang”).

Valuation 48

Valuation Common Stock Cap Table Software Review 48

David Teten

AUGUST 19, 2019

This structure offers some of the benefits of traditional equity VC, without some of the negatives of equity VC. I’ve been a traditional equity VC for 8 years, and I’m now researching new business models in venture capital. Repaid 12-36 months with ability to prepay at reduced cost. For RBI, return caps of 1.2x-1.8x

Revenue 60

Revenue Technical Review Software Review Equity 60

Eric Friedman

JUNE 27, 2016

Bigger/better advisors who get more equity have things like; excellent domain expertise to help you avoid pitfalls, deep connections within the industry to help with the intros, partnerships, and more. As a potential advisor looking to get involved with the company; MORE EQUITY! This leaves plenty of room for a final 4th advisor for

Equity 98

Equity Vesting Cap Table Common Stock 98

Berkonomics

AUGUST 3, 2023

When the need is high… For the rest of us, desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. Taking this kind of money has several pitfalls you should be aware of.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Both Sides of the Table

MAY 19, 2018

A detailed financial model that shows your anticipated revenue, costs and profits (Income Statement) as well as your balance sheet and cashflow statements. The buyer is shopping for equity in startups and the seller is looking for cash in exchange for equity and shared governing control of his or her company. No problem.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Hunter Walker

MAY 13, 2023

Sometimes you’d even get lucky and receive stock in the acquirer, which was how I gained pre-IPO equity in high growth stars like Pinterest and Facebook. Cash is at a premium so it’s not going to cap tables (preferred or common walk away from the deals with no dinero). of the time my answer is no f **g way].

Early Stage 117

Early Stage Cap Table Acquisition Sales 117

Austin Startup

AUGUST 20, 2017

They’re looking to be paid properly in the context of the overall salary structure, including cash, benefits, and equity, and to be paid commensurate with performance. Your Cap Table is something that deserves constant care and attention. Messy cap tables can come back to haunt you when you do a financing or sell the company.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

keen.io

FEBRUARY 5, 2013

For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. From there, I began googling things like “first employee startup equity” and “startup offer negotiation.” These were the best resources I found: Equity for Early Employees in Early Stage Startups. Let’s go home.”

Salary 50

Salary Equity Startup San Francisco 50

David Teten

NOVEMBER 14, 2019

I wrote recently about Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? Some firms provide tools to do this online, e.g., Capital ’s Cost of Equity estimator ; Lighter Capital’s Cost of Capital Calculator ; 645 Ventures’ cap table simulator.

SBIC 60

SBIC SBA Cap Table Database 60

Both Sides of the Table

JANUARY 21, 2010

You never got around to agreeing exact equity splits but you had many conversations about it. How to manage costs - One of the biggest frustrations that people have with lawyers are unexpected costs. I write about some of the lessons in my post on Startup Mistakes. In every firm there are A, B and C players.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

venturehacks.com

SEPTEMBER 22, 2011

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.

Equity 40

Equity Cap Table Valuation RSS 40

David Teten

AUGUST 21, 2019

Most founders who are raising capital look first to traditional equity VCs. Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? Lower processing cost.

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

David Teten

DECEMBER 3, 2019

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.).

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Berkonomics

JUNE 8, 2017

For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. Venture, private equity and more: Here we lump a large number investor classes into one.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

Haystack

AUGUST 18, 2019

You lose influence as larger investors come into the cap table and start throwing their weight around. On this dimension, most seed funds can’t even compete on network, brand, or the cost of capital. Back in 2017, Fred Wilson noted the strategic importance of the seed stage , writing: Seed is really hard.

Seed Stage 108

Seed Stage Cap Table Early Stage Malaysia 108

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 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. Buying your stock would cost $200,000! Salary vs Equity. 3 Dilution.

Equity 56

Equity Employee Vesting Preferred Stock 56

The Equity Kicker

MARCH 21, 2017

There is clearly dysfunction in chasing growth at all costs – inherently unprofitable companies grow to employ thousands of people before going bust, resulting in much personal anguish and not a little wasted capital. Companies that aren’t chasing unicorn status find it hard to raise money.

San Francisco 90

San Francisco Cap Table Angel Investor Valuation 90

Feld Thoughts

AUGUST 12, 2011

When we were last with Dick and Jane on Finance Fridays, our fearless entrepreneurs were figuring out how to split up their founders equity and account for an investment from Jane. Revenues and costs should both be based off of a robust set of assumptions. as a C-Corp in Delaware. Build a financial model that forecasts the P&L.

Balance Sheet 136

Balance Sheet Forecast Cap Table Early Stage 136

Up and Running

APRIL 25, 2014

How much is it going to cost to deliver your product or service? How much money do you need to make from each customer in order to just cover costs? What does the cap table look like as you bring on new investors and team members that have equity? Even the best ideas still need to make money at some point.

Silicon Valley 104

Silicon Valley Business Plan Entrepreneur Cap Table 104

The Next Web

OCTOBER 7, 2013

Layer on the opportunity cost of choosing not to pursue lucrative alternatives offered elsewhere, and it’s easy to see how, if not under the right terms, the engineer #1 position is less than appealing. Quite frankly, waiting provides more assurance around employment risk without the commensurate sacrifice in equity comp.

Engineer 129

Engineer Dilution Option Pool Vesting 129

David Teten

OCTOBER 1, 2015

Not surprisingly, the list above also is ranked from least to most equity stake in an investment for the investor, relative to the cash they invest. How would one set up such a startup to eventually raise capital from outside VCs, who will be wary of ‘dead equity’ (i.e., equity that belongs to departed cofounders)? The cliffs?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

Berkonomics

JANUARY 20, 2010

For the rest of us desiring to build large, valuable enterprises quickly, the need for outside capital is high on our list of requirements and even the source for some sleepless nights as we worry over the availability and cost of capital. Taking this kind of money has a number of pitfalls you should be aware of.

Private Equity 69

Private Equity Valuation Cap Table Accredited Investor 69

venturehacks.com

MARCH 21, 2008

If your company hasn’t raised a Series A, increase the advisor’s equity by roughly 30%-50% to account for dilution from seed investors, Series A investors, option pools, swimming pools, and the like. Finally, there is a beauty to paying in equity rather than an equivalent amount of cash. What are advisory shares?

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

YoungUpstarts

OCTOBER 7, 2015

When we started our business, SecureDocs, we underestimated the cost of dedicated marketing software and also the potential value of marketing software. They’ll likely be trading salary for equity and a heavy dose of uncertainty. Relative to the cost of people it’s a small expense with a potentially large return.

Cap Table 100

Cap Table Intellectual Property Salary Bootstrapping 100

Startup Lessons Learned

JUNE 9, 2020

That meant of course initially raising money and cutting costs. We have to manage our stakeholders, raise money, diversify our business, and cut costs." Every single meeting I had I started with, we're here today because we have to manage the stakeholders, we have to raise money, we have to diversify our business and cut costs.

Silicon Valley 60

Silicon Valley Hosting Cofounder Employee 60

venturehacks.com

OCTOBER 21, 2010

If you don’t keep your eyes on the option pool, your investors will slip it in the pre-money and cost you millions of dollars of effective valuation. Update : Check out our $9 cap table which calculates the effect of the option pool shuffle on your effective valuation. Don’t lose this game. share to $1.00/share:

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

www.paulgraham.com

APRIL 28, 2010

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. Their main expenses are setting up thecompany, which costs a couple thousand dollars in legal work andregistration fees, and the living expenses of the founders.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

abovethecrowd.com

APRIL 20, 2016

In Silicon Valley boardrooms, where “growth at all costs” had been the mantra for many years, people began to imagine a world where the cost of capital could rise dramatically, and profits could come back in vogue. You can no longer simply look at the cap table and estimate your return. ” Go public.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

abovethecrowd.com

JUNE 2, 2021

According to an interview with Elon Musk, this campaign cost Paypal about $60 million , which most Silicon Valley historians would consider money well spent. It would cost a tremendous amount of money to run such a program. With the 7% banker fee that is a 35% AVERAGE cost of capital. Billions of dollars. first-day “pop.”

IPO 82

IPO Customer Matching Silicon Valley 82