Agile VC

DECEMBER 4, 2014

As a result, one of the trickier things co-founders tackle is determining the equity split amongst the founding group of individuals. Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

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. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Startup Professionals Musings

MAY 18, 2015

When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. This is called stock dilution control. Minimize your own loss of ownership as major investors contribute.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Startup Professionals Musings

JANUARY 29, 2018

I’ll never forget that great sense of excitement I felt when I incorporated my first business, and realized that I was now the proud owner of 10 million shares of common stock. Even though initial stock has no market value today, it is extremely valuable in dividing equity ownership between co-founders, investors, and early partners.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

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.

Salary 50

Salary Equity Startup San Francisco 50

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 3 Dilution. 5 Stock vs Options. 6 Founders / Restricted Stock. 7 Salary vs Equity. Important disclaimer: Ive got experience negotiating stock compensation packages from both sides of the table. From Payne.org Wiki. 4 Vesting.

Equity 56

Equity Employee Vesting Preferred Stock 56

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. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Both Sides of the Table

SEPTEMBER 5, 2012

This time by the efforts of Adeo Ressi to introduce a new kind of structure called “ convertible equity.” My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Scott Edward Walker

APRIL 9, 2012

Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) ii) what happens if the maturity date is reached prior to the note’s conversion to equity? A convertible note is short-term debt that converts into equity. What is a Convertible Note?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Startup Company Lawyer

MAY 4, 2009

Startup companies consume resources intelligently, put people to work in efficient ways, and produce market driven products at lower costs. The application fee is $50, which only partially offsets costs associated with processing applications. Helping smart people start new companies should, in fact, help the global economy.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Tim Keane

JANUARY 12, 2010

The investors and the entrepreneurs are – or should be – aware that the price of the company’s equity is set by the market – in simplest terms, what an informed buyer is willing to pay.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

The Startup Lawyer

FEBRUARY 4, 2011

If an incubator offers your startup $25,000 in exchange for 6% equity, the pre-money valuation is a whopping $391,667. Rather than assign a monetary value to the intangibles, a startup should instead assign an equity percentage value to intangibles like mentorship. Other incubators may want to set up an option pool.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Startup Professionals Musings

OCTOBER 29, 2013

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. Do your financial model first with the volume, cost, and pricing parameters you want. The investor would be buying your company five times over, and he doesn’t want it.

Valuation 258

Valuation Early Stage Warrant Common Stock 258

Startup Professionals Musings

SEPTEMBER 19, 2012

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. Do your financial model first with the volume, cost, and pricing parameters you want. The investor would be buying your company five times over, and he doesn’t want it.

Valuation 236

Valuation Early Stage Warrant Common Stock 236

www.paulgraham.com

APRIL 28, 2010

Whatkind of anti-dilution protection do they want? Some VCsnow require that in any sale they get 4x their investment backbefore the common stock holders (that is, you) get anything, butthis is an abuse that should be resisted. Theres only common stock at this stage. They just want to invest in this startup.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

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. Do your financial model first with the volume, cost, and pricing parameters you want. The investor would be buying your company five times over, and he doesn’t want it.

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. Do your financial model first with the volume, cost, and pricing parameters you want. The investor would be buying your company five times over, and he doesn’t want it.

Valuation 227

Valuation Early Stage Warrant Common Stock 227

venturehacks.com

MARCH 21, 2008

Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options. Finally, there is a beauty to paying in equity rather than an equivalent amount of cash. If you pay in equity, you pay once and keep getting served ad infinitum.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

venturehacks.com

OCTOBER 21, 2010

Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# 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.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68