Both Sides of the Table

MAY 13, 2013

If the money comes from professional investors it usually has a “liquidation preference” meaning that their money comes out before the founders or common stock. (If If you don’t know venture economics – there is an overview here.). And wants to structure a huge payout for the employees that will remain.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

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

www.mattbartus.com

SEPTEMBER 24, 2011

People tend to underestimate how much record keeping is involved with managing employees and consultants, and this just adds an unacceptable extra burden. First, you’d probably want them to receive common stock, not preferred stock (which is the likely next round). Venture Capital. link] mattbartus.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

Steve Blank

OCTOBER 24, 2017

The founders along with all the other employees would vest their stock over 4 years (earning 1/48 a month). They had to hang around at least a year to get the first quarter of their stock (this was called the “cliff”). Founders are taking control of the board by making the common stock the founders own more powerful.

Founder 252

Founder Technical Review CTO Hire IPO 252

ithacaVC

MAY 1, 2013

I read an article this morning in DealBook titled “ In Venture Capital Deals, Not Every Founder Will be a Zuckerberg “ Go ahead and give it a read. It must be paid out before the common shares, which are typically held by the founders and other employees.” But this time he missed a few things.

Dividend 45

Dividend Liquidation Preference Common Stock Venture Capital 45

Haystack

JULY 8, 2018

So, that’s why I’m writing this short post specifically for 1) employees of early-stage startups and 2) the earliest investors in these startups, who are often themselves new to the entire sector. For employees at early-stage companies… the equity you’ve been granted is likely common stock, just like the founders.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

Growthink Blog

MAY 10, 2012

If it's not your plan to get venture capital down the road, then you'll probably stop in Stage 2-receiving enough funding to boost your marketing, sales, and infrastructure to grow organically from there to the point where you are satisfied or ready to sell. Series B is the round that follows series A in early stage financing.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

Both Sides of the Table

MARCH 21, 2010

I make exceptions for companies with proper venture capital funds that are mostly autonomous like Comcast, Disney (Steamboat) and Intel Capital – all of which are great funds. A “warrant&# is a right, but not an obligation for a company to buy stock in your company at a future date and at a pre-agreed price.

Warrant 298

Warrant Dilution Startup Stock Options 298

Growthink Blog

APRIL 7, 2010

million from three individual angel investors and one early-stage venture capital fund. For those of you who don't understand the term "Series A," the Series A round is the name given to your first significant round of venture financing. read more.

Angel Investor 54

Angel Investor Preferred Stock Venture Capital Common Stock 54

Gust

SEPTEMBER 17, 2014

Me: So, you raised venture capital? Less than you’ll probably grant your most junior employees in stock options? 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. On the phone …. We raised a seed round.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

K9 Ventures

MAY 14, 2011

They are generally high net worth (accredited) individuals who have done well in their career, either as entrepreneurs or as executives and early employees at some of the companies that have done well (in the Valley that usually means Paypal, Google, Facebook etc). Common Stock. Convertible Note or Preferred Stock.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Tim Keane

JANUARY 12, 2010

  I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] These include: ·       Vesting of Founder Stock.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

ithacaVC

FEBRUARY 23, 2011

Note that MCOPs are rare when the company is young and has only raised a limited amount of venture capital – no need yet for the carve out as the founders still own a large chunk of the company (thankfully). A few key points to consider: 1.

Liquidation Preference 55

Liquidation Preference Management Preferred Stock Dividend 55

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

Professor VC

JULY 25, 2013

Mike Markkula presenting Steve Jobs with first investment in Apple I recently watched an excellent documentary on PBS, Something Ventured: Risk, Reward, and the Original Venture Capitalists. Angel Investors Silicon Valley term sheets venture financing venture capital' Startup outcomes tend to be very binary.

Term Sheet 46

Term Sheet Silicon Valley Syndicate Syndication 46

blog.simeonov.com

FEBRUARY 22, 2010

This can be a convenient shortcut to separate someone’s status (founder) from their role (employee or contractor or advisor, etc.) Compensation is a combination of cash (post funding) and common equity that is subject to vesting if professional investors are involved. of the fully-diluted capitalization of the company.

Founder 44

Founder Vesting Agile Startup 44

www.paulgraham.com

APRIL 28, 2010

The reason is that employees are investors too—oftheir time—and they want just as much to be able to cash out. Ifyour competitors offer employees stock options that might make themrich, while you make it clear you plan to stay private, yourcompetitors will get the best people. Theres only common stock at this stage.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76