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

www.mattbartus.com

SEPTEMBER 24, 2011

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. Equity for Consultants – Keep it Simple! posted Feb 3 in Equity , People issues. for every hour works, consultant accrues [hourly wage]in debt that will convert to equity in the next round).

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

keen.io

FEBRUARY 5, 2013

How I negotiated my startup compensation. When I started thinking about joining Keen, I quickly realized there is a lot I don’t know about startups. For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. I knew enough to know I wanted to join a startup.

Salary 50

Salary Equity Startup San Francisco 50

Startup Professionals Musings

SEPTEMBER 26, 2015

Perhaps they're way off in their valuation (usually far too high), or paralyzed by fear at seeing the other terms, because they have no idea what's normal, and what's worth a fight to the death (their startup's). Investors, on the other hand, look at the money figure, and even the equity, as the easy part.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

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. Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

ithacaVC

APRIL 5, 2011

It should also provide a combined summary so that it is easy to see who owns what % of the company on a fully diluted and converted basis. One rule of simple cap tables is to issue “normal” stock to founders (common stock only) and investors (typically preferred stock, but sometimes common stock to early friends and family).

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

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? If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. Stock Option plans. A down round?

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

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.

Equity 56

Equity Employee Vesting Preferred Stock 56

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

Both Sides of the Table

MARCH 21, 2010

This is part of my ongoing series on Startup Advice. As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. Large companies can be strange sometimes. Sometimes it actually does.

Warrant 298

Warrant Dilution Startup Stock Options 298

Haystack

JULY 8, 2018

And with this, every year, a new cohort enters into the “tech startup” world, and there’s no official canon to read, no “one-stop shopping” site or user manual to get briefed on the things you absolutely need to know. You can read more about the types of stock granted in startups here.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

Startup Professionals Musings

JANUARY 27, 2012

Define equity type. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Anti-dilution protection. But some dilution is almost inevitable. But the lead Angel would certainly ask to be given a seat. Right of first refusal.

Term Sheet 223

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 223

Scott Edward Walker

JUNE 9, 2019

Accordingly, I thought it would be helpful for founders to discuss these rights and to point out the problems they create for startups. For example, an investor that agrees to purchase 20% of the equity in a Series A round requests the right to purchase up to 50% of the subsequent Series B round. Pro Rata Rights.

Preferred Stock 56

Preferred Stock Term Sheet Dilution Stock 56

Startup Professionals Musings

SEPTEMBER 14, 2010

Define equity type. The first capital a young company receives usually takes the form of common stock, the same class of shares the founders hold. Anti-dilution protection. But some dilution is almost inevitable. Tags: entrepreneur startup angel investment term sheet business. Right of first refusal.

Term Sheet 227

Term Sheet Pre-Money Valuation Due Diligence Post-Money Valuation 227

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

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. 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. By Tim Keane, Angel Investor, Golden Angels Investors, LLC.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. It also gets the new investor concerned that management (common stock holders) will not be incentivized because they realize that the investors will take most of the money unless there is a big upside scenario.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Dividend 289

The Equity Kicker

NOVEMBER 9, 2016

Additionally, they introduce a small amount of complexity and an element of misalignment between the investor and the common stock holder (usually the founder). That trade gives them less dilution and therefore more cash in upside scenarios but less cash (and potentially nothing) in extreme downside scenarios.

Liquidation Preference 122

Liquidation Preference Silicon Valley Participating Preferred Common Stock 122

Scott Edward Walker

APRIL 9, 2012

Venture capital funds, seed funds, super angels, angel groups, incubators, and “friends and family” are all playing the seed financing game and investing early in startups in an attempt to land the next Facebook. ii) what happens if the maturity date is reached prior to the note’s conversion to equity? What is a Convertible Note?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

The Next Web

JUNE 15, 2012

From Silicon Valley to Peoria, Illinois, cash-strapped startups look for inventive way to finance their business – often handing out equity to employees, consultants, vendors, and other service providers. Pitfalls in sharing equity. While equity can be a great tool for compensating early on, the drawbacks are significant.

Equity 116

Equity Stock Options Vesting Stock 116

The Startup Lawyer

FEBRUARY 4, 2011

Great news — your startup just got accepted to an incubator! But before your startup signs up and cashes that $[XX,000] check, your startup’s co-founders should sit down and evaluate the incubator’s offer. Pre-money valuations startups receive from incubators are typically low…really low.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Gust

OCTOBER 21, 2011

For convertible notes, the only liquidity event we need be concerned with is an acquisition of the startup in the near future, before the maturity date; otherwise, the notes will convert to equity of one kind or another, and the eventual sale of that equity (in a public offering, acquisition, or private sale) is a different subject for another day.

Finance 79

Finance Pre-Money Valuation Term Sheet Liquidity Event 79

Gust

OCTOBER 12, 2011

In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. That is obviously a challenge for the typical cash-strapped early stage startup that is seeking to raise more capital and is not in any kind of position to be repaying loans. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Startup Company Lawyer

MAY 4, 2009

The driving beliefs behind the Institute are that (1) great founders are often overlooked by the current entrepreneurial ecosystem, and that (2) innovative startups have a dramatic positive effect on the global economy. Description: What are the typical stages of the funding life cycle for different types of startup businesses?

Founder 28

Founder Warrant San Francisco Intellectual Property 28

K9 Ventures

NOVEMBER 21, 2011

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. They want to keep the founders “all-in” in the startup, because they feel that otherwise the founders won’t be motivated enough.

Founder 87

Founder Common Stock Preferred Stock Stock 87

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

K9 Ventures

NOVEMBER 21, 2011

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. They want to keep the founders “all-in” in the startup, because they feel that otherwise the founders won’t be motivated enough.

Founder 84

Founder Common Stock Preferred Stock Stock 84

Startup Company Lawyer

JANUARY 31, 2011

Automatic conversion: on a $1M equity financing with no conversion discount and no price cap , provided that the transaction documents provide for a right to purchase a pro rata share of future financings. (I Optional equity conversion: on other equity financings with no conversion discount and no price cap.

Preferred Stock 60

Preferred Stock Liquidation Preference IPO Common Stock 60

ithacaVC

FEBRUARY 23, 2011

The MCOP can serve a critical role as founders and other management team members are diluted down by rounds of financing or if their equity is not in the money. Also, if the preferred stock carries a multiple liquidation preference (like 2X), then the ALP will obviously be more than the original purchase price.

Liquidation Preference 55

Liquidation Preference Management Preferred Stock Dividend 55

ithacaVC

JUNE 28, 2011

Let’s assume that future equity financings will be needed as usually is the case. Pay to play provisions: simply stated, pay to play provisions provide that unless existing shareholders participate in the subsequent financing unfavorable things happen to their existing stock.

Warrant 53

Warrant Common Stock Liquidation Preference Institutional Investors 53

blog.simeonov.com

FEBRUARY 22, 2010

I have been thinking a lot recently about how to apply agile development principles to investing and key aspects of startup development such as team building. The first post is about agile startup fundraising. The follow-on post is about agile startup team building. Some get common equity for their investment.

Founder 44

Founder Vesting Agile Startup 44

Up and Running

SEPTEMBER 20, 2021

The use of a cap table for a company comes into play when it has to track the total amount of shares, the value of shares, and the equity ownership of all the shareholders. The data of the company, such as debt and the company’s equity ownership, is laid out with the help of a cap table. Common shares. Preference shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. Few startups get it quite right. 1 ] A startups life will be more complicated, legally, if any of theinvestors arent accredited.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Professor VC

JULY 25, 2013

Startup outcomes tend to be very binary. One area I''ve noticed a lot more recently are angel investors and seed stage funds trying to grab a little bit extra, whether it''s warrants for leading the round, advisor shares to go along with the investment, or a common stock stake for just being who they are.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

Startup Professionals Musings

OCTOBER 29, 2013

Startups ask me “How much money should I ask for?” The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options.

Valuation 258

Valuation Early Stage Warrant Common Stock 258

Startup Professionals Musings

JUNE 9, 2010

Startups ask me “How much money should I ask for?” The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options.

Valuation 227

Valuation Early Stage Warrant Common Stock 227