Both Sides of the Table

SEPTEMBER 18, 2014

And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? There are a million ways to do quick, easy, low-cost rounds with prices. There are a bunch of ways to offer cheaper pricing to people who commit early without notes. A down round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

JULY 8, 2011

Here are the parameters you should use in sizing your request, and be able to explain in justifying your request to investors: Consider implied ownership cost. If your company is early stage and has a valuation under $1M, don’t ask for a $5M investment. Single or staged delivery. See where your cashflow bottoms out.

Entrepreneur 234

Entrepreneur Valuation Early Stage Warrant 234

Startup Professionals Musings

JUNE 9, 2010

Here are the parameters you should use in sizing your request, and be able to explain in justifying your request to investors: Consider implied ownership cost. If your company is early stage and has a valuation under $1M, don’t ask for a $5M investment. Single or staged delivery. Calculate what you need.

Valuation 227

Valuation Early Stage Warrant Common Stock 227

Gust

SEPTEMBER 17, 2014

And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? There are a million ways to do quick, easy, low-cost rounds with prices. There are a bunch of ways to offer cheaper pricing to people who commit early without notes. A down round? And so forth.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

keen.io

FEBRUARY 5, 2013

These were the best resources I found: Equity for Early Employees in Early Stage Startups. Startup Equity for Early Employees. If the company is pre-funding or only has a small friends-and-family seed round, then the numbers should go up from there, based on expected dilution and greater risk.” 8 and 2.5%

Salary 50

Salary Equity Startup San Francisco 50

Tim Keane

JANUARY 12, 2010

  A cumulative dividend can get to be very expensive and is not often a feature in early stage terms.   In some rare cases, there may also be a participation provision for dividends which pays the preferred a dividend beyond their own equal to any dividend paid to the common.   I’ve never seen it in practice.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

www.payne.org

SEPTEMBER 22, 2011

2 Stock Classes: Common and Preferred. 3 Dilution. 5 Stock vs Options. 6 Founders / Restricted Stock. 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. 4 Vesting.

Equity 56

Equity Employee Vesting Preferred Stock 56

www.paulgraham.com

APRIL 28, 2010

Sometimes angels deal terms are as fearsome as VCs.Other angels, particularly in the earliest stages, will invest basedon a two-page agreement. Whatkind of anti-dilution protection do they want? Angels and even VC firms occasionally do this, but they alsoinvest at later stages. The problems are different in the early stages.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

The Startup Lawyer

FEBRUARY 4, 2011

As equity in the company tends to be the currency of early stage startups, the startup should have a good foundation for assigning value in terms of equity. Most incubators take common stock and sit “side-by-side&# with the founders, but some may want some (weak) preferred stock and/or dilution protection.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105