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. However, if you are thinking about compensating non-employees with equity, make sure to consider the following points: 1.

Equity 116

Equity Stock Options Vesting Stock 116

Startup Professionals Musings

MARCH 23, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock dilution control.

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Stock Vesting Common Stock Founder Vesting 256

Agile VC

DECEMBER 4, 2014

You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

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Cofounder Equity Founder Sweat Equity 255

Austin Startup

JULY 22, 2021

It’s hard to describe in words the palpable energy when a room is this packed full of incredible female entrepreneurs at the Women in Tech Summit at Capital Factory. On October 4th, five technology startup finalists will pitch to a panel of advisors and judges made up of successful investors, entrepreneurs, and industry leaders.

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San Antonio Dallas Houston Founder 107

Scott Edward Walker

SEPTEMBER 28, 2011

Introduction This post was originally part of the “ Ask the Attorney ” series I am writing for VentureBeat (one of my favorite websites for entrepreneurs). and the employee handbook to determine if there are any provisions that may give the prior employer rights to your startup’s IP. Below is a longer, more comprehensive version.

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Vesting Software Review IP Intellectual Property 89

Up and Running

SEPTEMBER 19, 2017

For a business that anticipates needing, for example, $500,000 in startup capital, that means that best-case scenario Klemm can expect to give up half of his business’s common stock (and an even larger percentage of control of the business once the deal’s fine print provisions are considered). Those days are long gone.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

JANUARY 22, 2013

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock dilution control.

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Vesting Common Stock Stock Founder Vesting 245

Agile VC

DECEMBER 4, 2014

You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Gust

MARCH 16, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock dilution control.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

Startup Professionals Musings

OCTOBER 7, 2010

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock survives investment.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

Both Sides of the Table

MAY 13, 2013

A couple of tech giants throw millions around in either cash (for which they have hoards) or part with some publicly traded stock. And a few teams of super talented, educated and bright entrepreneurs make a few mill. And wants to structure a huge payout for the employees that will remain. I know many rank-and-file employees.

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Liquidation Preference Early Stage Retention Lock-up Period 357

www.inc.com

SEPTEMBER 24, 2011

Entrepreneur news from reporter Eric Markowitz. Employee Benefits. Jumpstart wasnt much at the time, just four employees working from home offices. In the 1990s, Graham was one of those entrepreneurs giving away equity in exchange for crucial services. Small Business Success | Mondays and Thursdays. Finance | Tuesdays.

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Arizona Equity Iowa Venture Capital 40

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. A rather common but small dividend rate of six percent becomes a massive amount after seven years, almost half again the value of the original investment.

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Dividend IRR Preferred Stock Participating Preferred 62

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. It’s like we need a finance 101 course for entrepreneurs.

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Liquidation Preference Valuation Term Sheet Stock 153

Both Sides of the Table

MARCH 21, 2010

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. Think of it as similar to an employee stock option. This is part of my ongoing series on Startup Advice.

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Warrant Dilution Startup Stock Options 298

Austin Startup

AUGUST 1, 2017

TL;DR: In a market that has historically idolized huge, splashy financings and exits, an increasing number of entrepreneurs are realizing that everyone else’s definition of success — particularly among certain large VCs — isn’t necessarily aligned with their own. Most individual VCs can only support about 7–10 companies at a time.

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Liquidation Preference Common Stock Valuation Silicon Valley 48

Berkonomics

APRIL 4, 2019

On the other side, entrepreneurs and CEO’s usually have a natural fear of giving too much information to us investors after the initial investment is received. Every investor wants regular information from companies taking their money. Of course, a public company is not entitled to pare its information to reduce exposure to competitors.

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Stock Options Balance Sheet Stock Common Stock 48

venturehacks.com

MARCH 21, 2008

Normal advisors are also assembled by naive entrepreneurs who think the mere presence of an advisory board will create social proof and help them raise money. Super advisors The super advisor can get as much stock as a board member: 1%-2% of a company’s post-Series A stock. Or they bring you a handful of great employees.

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Advisory Board Cap Table Vesting Equity 44

Tim Keane

JANUARY 12, 2010

Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. Term-sheets and Valuations: Thinking about Negotiations.

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Term Sheet Valuation Dividend Liquidation Preference 68

Gust

DECEMBER 8, 2011

I urge all entrepreneurs to consult and develop a good working relationship with a qualified startup lawyer. Determine the allocation of equity among co-founders, early employees or other service providers, and future contributors as applicable, as well as the vesting schedule , if any, that will apply. Offer letters for employees.

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Intellectual Property Non-disclosure Agreement Delaware Stock 139

Startup Company Lawyer

MAY 4, 2009

Philip Kaplan – Entrepreneur. Description: How to set-up the right company structure to attract great employees and investors. The Founder Institute has developed Class F common stock , which provides founders with a maximum amount of control over the founder’s company. Jason Calacanis - CEO, Mahalo.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Gust

JULY 23, 2012

Donations of private stock enable investors, founders and employees to support charitable causes and contribute to the community while receiving simultaneous benefits in the form of substantial cash savings from reduced taxes as well as bypassing capital gains taxes. These assets often have a relatively low cost basis (e.g.

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Stock Capital Gains Warrant Stock Options 114

Growthink Blog

APRIL 7, 2010

It's just two successful entrepreneurs trying to improve on products in an established industry. The name "Series A" refers to the class of preferred stock that you sell to investors in return for their cash. Just another video game company in my book. But I included it here for just that reason.

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Angel Investor Preferred Stock Venture Capital Common Stock 54

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. A rather common but small dividend rate of six percent becomes a massive amount after seven years, almost half again the value of the original investment.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Agile VC

FEBRUARY 2, 2012

3) Employee Stock Purchases Are a Near-Term ATM - Facebook has issued a combination of stock options and more recently restricted stock units (RSUs) as compensation to employees. Im a former Silicon Valley entrepreneur turned East Coast VC. billion in cash profit last year. Read More ».

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IPO South Korea Venezuela Revenue 100

Growthink Blog

MAY 10, 2012

Many entrepreneurs end up taking their company in a different direction after some time spent testing your initial business model. Stage #2: Seed Funding Seed funding (also called seed capital) typically ranges from $100,000 to $500,000 and is often provided by angel investors, and is usually structured as convertible notes or common stock.

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Equity Mezzanine Later Stage Venture Capital 88

Startup Company Lawyer

JULY 20, 2009

At some point, however, an entrepreneur will need to formally incorporate a company. Once again, please keep in mind that the documents from typical online incorporation services do not contain IP assignment provisions in connection with the purchase of founders stock or separate IP assignment documents. Issuing stock options.

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IP Stock Options Preferred Stock Capital Gains 67

K9 Ventures

MAY 14, 2011

This is probably the very first group that an entrepreneur who is starting out may approach for some funding for his or her idea. The founders of these uVC funds are entrepreneurs in their own right – either as people who have founded successful startups before, or as the founders of their own venture funds – which are also startups.

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Preferred Stock Seed Stage Incubator Early Stage 125

Professor VC

JULY 25, 2013

This is the feeling you get from watching the venture capitalists talk about the entrepreneurs and other investors in the film. I''m all for transparency, but won''t be naming names in this post as I don''t want to put some entrepreneurs in a difficult position. Startup outcomes tend to be very binary.

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Term Sheet Silicon Valley Syndicate Syndication 46

venturehacks.com

OCTOBER 21, 2010

As your lawyer explains that the so-called pre-money valuation always includes a large unallocated option pool for new employees, your stomach sinks. This reverse dilution benefits all classes of stock proportionally even though the common stock holders paid for all of the initial dilution in the first place!

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Option Pool Pre-Money Valuation Dilution Warrant 68

blog.simeonov.com

FEBRUARY 22, 2010

Even if you are an experienced entrepreneur, you’ve probably only seen a few founder agreements in your life. This can be a convenient shortcut to separate someone’s status (founder) from their role (employee or contractor or advisor, etc.) For her services, the consultant will own common stock equal to $50K/$2M or 2.5%

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Founder Vesting Agile Startup 44