David Teten

SEPTEMBER 23, 2017

Private equity and venture capital investors are copying our sisters in the hedge fund and mutual fund world: we’re trying to automate more of our job. High-frequency trading, algorithmic by its nature, is estimated to account for at least 50% of US equity markets trading volume. . But we’re doing it slowly. Pitchbot.vc

Private Equity 60

Private Equity Venture Capital Equity Technical Review 60

ithacaVC

DECEMBER 13, 2013

When raising money from investors (angels or VC), it is critical to have a presentable and clean cap table. Let’s assume that Founder X owns 800,000 shares of common stock and Founder Y owns 1,300,000 shares of common stock and that the option pool in total has 356,758 shares allocated (to make the total stated above).

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Altgate

JUNE 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. Re-posted from post co-authored with Prof. million.

Equity 44

Equity Vesting Cap Table Technical Review 44

Hunter Walker

FEBRUARY 20, 2024

Founder Vesting [Jared Hecht/USV] – Jared joined USV earlier this year and it’ll be interesting to see how his writing changes as he adds ‘institutional VC’ to his founder and angel investor knowledge. Stretching things out to a six-year vest helps to prevent co-founder abandonment.

Founder Vesting 59

Founder Vesting Vesting Cap Table Founder 59

VC Adventure

OCTOBER 8, 2012

This is typically reflected on cap tables in a completely separate tab to the spreadsheet that shows the debt total by investor and then some kind of interest calculation. The problem, of course, is that their convert is already a part of their capitalization – even though it’s not reflected on the cap table.

Cap Table 93

Cap Table Dilution Equity Deal Structure 93

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. For background, see Revenue-Based Investing: A New Option for Founders who Care About Control.

Revenue 60

Revenue Technical Review Software Review Equity 60

Hunter Walker

JANUARY 2, 2017

” But we also knew that most Fortune 500 M&A transactions aren’t at unicorn levels (actually well sub-$250m), so we advise founders to not over-raise capital until they’re using it to fund profitable growth (or a clear path to profitability). OR, the team and/or investors will be ready to take their money off the table.

Technical Review 115

Technical Review Cap Table Acquisition Startup 115

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. Re-posted from post co-authored with Prof. million.

Equity 28

Equity Vesting Cap Table Technical Review 28

OnlyOnce

JULY 30, 2020

If you’re a founder entrepreneur who has led your company for several years, the odds are you have a significant amount of emotional investment in your company, too. Sometimes you can have a major internal problem related to the cap table–a founder with a lot of stock needs liquidity or you need to push this person out of the company.

Cap Table 48

Cap Table Institutional Investors Startup Early Stage 48

genylabs.typepad.com

SEPTEMBER 24, 2011

Working for Equity Instead of Cash. has an article on service firms waiving their fees and instead taking equity in their clients. Interest in this waned when the Internet bust resulted in most tech start-up equity becoming worthless, but it seems to be coming back. Not all start-up stock is created equally.

Equity 40

Equity Technical Review San Jose Stock 40

Pascal's View

JULY 9, 2017

Unfortunately, what the CEO/founder forgets most often is that the notes have a multiplier effect in the post-money calculation; the more notes and the further the cap is from the new priced equity, the greater the variance between actual and nominal pre- and post-money valuations. It’s going to be great!”.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

This is going to be BIG.

MAY 4, 2022

For most founders, fundraising is a struggle. Would you take a check from a corporate raider whose private equity dollars come with mass layoffs and union-busting? Morality aside, I’d say given the inherent riskiness of startups, I’m not sure this would be a great addition to your cap table. Drug kingpin?

Cap Table 163

Cap Table Cofounder Private Equity Finance 163

ithacaVC

DECEMBER 9, 2013

Also, during the process, we had to clean up the company’s cap table and make sure that we all agreed on who owned what on a pro forma pre-money basis. Without having a complete pre-money cap table, it is impossible to calculate a share price. Sometimes those issues take extra time to resolve.

Term Sheet 58

Term Sheet Cap Table Technical Review IP 58

VC Adventure

OCTOBER 8, 2012

This is typically reflected on cap tables in a completely separate tab to the spreadsheet that shows the debt total by investor and then some kind of interest calculation. The problem, of course, is that their convert is already a part of their capitalization – even though it’s not reflected on the cap table.

Cap Table 48

Cap Table Dilution Equity Deal Structure 48

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

Hunter Walker

FEBRUARY 2, 2023

Ask her if there’s someone senior in her career that’s been a great manager, and if so, bring them on as an equity-compensated advisor to your company. Or ask your cap table who is the best “XYZ” that they know and give them some skin in the game. What should your relationship (as a founder) be with this person?

Hiring 60

Hiring Cap Table Equity Dividend 60

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). Venture, private equity and more: Here we lump a large number of investor classes into one.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Hunter Walker

MAY 13, 2023

I was on both sides of these transactions – buying startups for Google/YouTube and angel investing in high quality technical founders. 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.

Early Stage 117

Early Stage Cap Table Acquisition Sales 117

Both Sides of the Table

MAY 19, 2018

Your historical trading information including financials and a “customer file” which shows the history of your transactions so that investors can run “cohort” analyses Customer reference, personal references, key team members, compensation, cap table, stock option plan, etc. and then asking to take a brochure home with you. No problem.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Hippoland

APRIL 10, 2016

Dear elizy : I started a company in school with two co-founders. We are trying to decide how much equity to allocate to each person. I would like to split the equity equally, since it seems only fair. But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool. Let’s call them Ada and Bob.

Cofounder 48

Cofounder Cap Table Equity Vesting 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. The founders had been dropping hints that they wanted me to join them. From there, I began googling things like “first employee startup equity” and “startup offer negotiation.” Paul Graham’s Equity Equation.

Salary 50

Salary Equity Startup San Francisco 50

Austin Startup

OCTOBER 27, 2017

TL;DR : “Founder friendliness” should mean not being hostile, but also not being submissive, to founders. Common Stock Ask the Users Because we’re known as Startup/VC lawyers who don’t represent VCs (just companies), I often get asked about my thoughts on “founder friendliness.” Good entrepreneurs and advisors know that.

Founder 48

Founder Cap Table Preferred Stock Common Stock 48

Genuine VC

SEPTEMBER 5, 2012

The following is a first pass at a checklist of items for Founder CEOs to take care of in the first couple weeks after they’ve closed their initial round of seed funding. Communications with New Board & Investors Ensure all of your investors have all legal documentation of the round, including an electronic version of the final cap table.

Founder 156

Founder Cap Table Stock Options PR 156

Hunter Walker

JULY 18, 2021

All in all it worked out fine, driven primary by some fortunate acquisitions to companies like Microsoft, Pinterest and Facebook, the latter two in pre-IPO equity which grew substantially prior to their public listings. I never really tracked IRR or net returns, but I did pay close attention to ‘lessons learned.’ Ok, now that half-mistake….

Cap Table 140

Cap Table IRR Angel Investor IPO 140

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

OnlyOnce

DECEMBER 1, 2021

Sometimes a founder or a founder’s spouse even steps in on this front. Are you way under market in compensation and trying to overcome that by offering equity or “perks” to attract top talent? (This is the second post in the series…the first one on How to Engage with Your CFO is here.).

Hiring 117

Hiring Cap Table Finance Equity 117

Up and Running

SEPTEMBER 20, 2021

This is all incorporated into a document called a Cap Table. . A cap table will help you in the strategic management of business decisions. Wondering what a cap table is, its importance, and how you can maintain it to expand your business? What is a cap table? Let’s dive in.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

The Next Web

OCTOBER 21, 2013

Neil Rimer is a Partner and co-founder of Index Ventures. Yet, surprisingly, we continue to come across founders who have made significant mistakes in their early capital raises that we suspect go against their own instincts and jeopardize the foundations of the businesses they are building.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

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. Revenue-based investing VC.

SBIC 60

SBIC SBA Cap Table Database 60

Feld Thoughts

AUGUST 26, 2011

When we were last with our SayAhh cofounders, they had implemented an accounting system and Jane had contributed $50,000 for a 55/45% equity split. The investments by the founders created two transactions. The Basic Accounting Equation states that Total Assets always must equal Total Liabilities plus Equity.

Balance Sheet 128

Balance Sheet Cofounder Cap Table Delaware 128

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

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

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 6 Founders / Restricted Stock. 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. Founders / Restricted Stock. 3 Dilution.

Equity 56

Equity Employee Vesting Preferred Stock 56

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. For more background, see Revenue-Based Investing: A New Option for Founders who Care About Control. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

Board Effect

MAY 10, 2019

Capitalization tables—”cap tables” for those who don’t have time for extra syllables—map the balance of power in a company. If org charts are about people power , cap tables are about money power. In reality, however, cap tables are often far more complex. What is a cap table?

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

OnlyOnce

FEBRUARY 9, 2022

In our prior lives, the Bolster founders worked together to scale up a business called Return Path and also. worked as advisors and mentors to numerous early stage founders and startups. The roots of Bolster Prime and Bolster Ventures pre-date the founding of Bolster. What about the middle?

Silicon Valley 62

Silicon Valley Venture Capital Cap Table Early Stage 62

Haystack

AUGUST 18, 2019

You lose influence as larger investors come into the cap table and start throwing their weight around. 4/ Orthogonal Competition – I recently tweeted about a new breed of early-stage technology investor that has its roots in public equities (hedge funds, long/short, etc.) You lose way more than you win.

Seed Stage 108

Seed Stage Cap Table Early Stage Malaysia 108