View from Seed

DECEMBER 4, 2014

Editor’s note: Understanding how to divide founder equity at a startup can be tricky, even to the point of reaching emotional riffs between founders. I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder.

Equity 315

Equity Founder Sweat Equity Cofounder 315

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. Vesting with no cliff.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Agile VC

DECEMBER 4, 2014

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder. But not all co-founders are equal in terms of title, ownership, responsibilities, and so forth. Sometimes co-founders put off the equity split question for some time.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

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. Vesting with no cliff.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

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. Speed is often of the essence early on in the startup lifecycle, and that often means rushing into casual arrangements.

Equity 116

Equity Stock Options Vesting Stock 116

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

Agile VC

DECEMBER 4, 2014

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder. But not all co-founders are equal in terms of title, ownership, responsibilities, and so forth. Sometimes co-founders put off the equity split question for some time.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

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. Of course, initially these founder’s shares were worth essentially nothing, but it doesn’t take much of an imagination to grasp the possibilities.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

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. Vesting with no cliff.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

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

Up and Running

DECEMBER 1, 2015

Typically, employers that offer employees equity compensation will do so in the form of common stock, preferred stock, or stock options. Stock options are issued to employees usually through an Employee Stock Option Plan (ESOP) and include what is called a “vesting period.” Restricted stock: .

Equity 60

Equity Employee Stock Options Vesting 60

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. Vesting starts now.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

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. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

Founder 87

Founder Common Stock Preferred Stock Stock 87

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. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

Founder 84

Founder Common Stock Preferred Stock Stock 84

www.mattbartus.com

SEPTEMBER 24, 2011

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. We will grant him/her X% fully diluted shares up front, and every time he/she makes an introduction, he/she will vest in 100 shares.” The most you lose is 1 or 2 months of vesting on the stock.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

The Startup Lawyer

MARCH 17, 2010

4) Type of Shares: Common Stock. (5) 5) Par Value of Common: $0.0001. (6) 6) Initial Founders Issuance: 8,000,000 Shares. (7) 7) Founders Equity Split: Depends on the Team, But Quickly and After the Awkward & Difficult Conversations. (8) 8) Vest Founders Shares?: Hell Yes. (9) Raising Capital. (1)

Accredited Investor 112

Accredited Investor Delaware NDA Vesting 112

The Startup Lawyer

MARCH 17, 2010

4) Type of Shares: Common Stock. (5) 5) Par Value of Common: $0.0001. (6) 6) Initial Founders Issuance: 8,000,000 Shares. (7) 7) Founders Equity Split: Depends on the Team, But Quickly and After the Awkward & Difficult Conversations. (8) 8) Vest Founders Shares?: Hell Yes. (9) Raising Capital. (1)

Accredited Investor 112

Accredited Investor Delaware NDA Vesting 112

Both Sides of the Table

SEPTEMBER 18, 2014

I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies. Startup Lessons' I see that all the time. My colleague: Whoa. ” Simple.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Up and Running

SEPTEMBER 20, 2021

Since almost all startups do not possess traditional debt lenders, the list usually consists of data of the shareholders and the percentage they own. Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. A couple of tech giants throw millions around in either cash (for which they have hoards) or part with some publicly traded stock. Chief Vesting Officers)?

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Eric Friedman

JUNE 27, 2016

Total = 0.75% for 3 advisors that vest as you see fit to help you over the next 1–4 years (more on vesting below). Here are the questions I like to see founders ask potential advisors; 1. Vesting Schedules. Advisors typically ask to vest in equal installments over 48 months. Typically these folks get between .01-.25%

Equity 98

Equity Vesting Cap Table Common Stock 98

www.payne.org

SEPTEMBER 22, 2011

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

Equity 56

Equity Employee Vesting Preferred Stock 56

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. All founders have the same agreement. Urban legends.

Founder 44

Founder Vesting Agile Startup 44

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success. These include: ·       Vesting of Founder Stock.   Oftentimes, term-sheets specify provisions under which there is not a majority on the board from either founders or investors. « Power of Angel Investing in Milwaukee | Main.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

venturehacks.com

MARCH 21, 2008

Venture Hacks Good advice for startups. Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options. The options typically vest monthly over 1-2 years with 100% single-trigger acceleration and no cliff. Disclaimer: This is not legal advice.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Austin Startup

MAY 17, 2017

It’s pretty well known that startups usually undergo a meaningful change in Board composition at their Series A round. Less has been written about what startup boards tend to look like before a Series A round. The majority of companies we see have Founders only on the Board before closing their Series A. They just advise.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48

Early Growth Financial Services

DECEMBER 17, 2012

By Sean Greaney: sgreaney@stubbsalderton.com Originally published on Stubbs Alderton & Markiles, LLP Sean Greaney, attorney with Stubbs Alderton & Markiles, LLP gives an informative introduction to Restricted Stock for startup companies. What is founder restricted stock?

Stock 35

Stock Founder Common Stock Private Equity 35

Gust

DECEMBER 8, 2011

In Part I , I gave a quick summary of the who, when and why of forming and documenting a new startup company. This week we’ll delve into what , exactly, is necessary or desirable to lay a solid legal foundation for a startup to build upon. Pick a name for the new legal entity (e.g., Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

venturehacks.com

OCTOBER 21, 2010

Venture Hacks Good advice for startups. Third, if you sell the company before the Series B, all un-issued and un-vested options will be cancelled. 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!

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68