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. These shares are allocated and committed, but not really issued and owned (vested) until later.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

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. These shares are allocated and committed, but not really issued and owned (vested) until later.

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 173

Cofounder Equity Founder Sweat Equity 173

Steve Blank

APRIL 10, 2019

For most startup employee’s startup stock options are now a bad deal. Why Startups Offer Stock Options. In tech startups stock options were here almost from the beginning, first offered to the founders in 1957 at Fairchild Semiconductor , the first chip startup in Silicon Valley. Not everyone got the same amount of stock.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

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. These shares are allocated and committed, but not really issued and owned (vested) until later.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

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. Spread stock issuance over an earning period. This is the purpose of a vesting schedule, which issues allocated stock over time.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Steve Blank

OCTOBER 24, 2017

Why do these founders get to stay around? Because the balance of power has dramatically shifted from investors to founders. VCs competing for unicorn investments have given founders control of the board. A pre-IPO board usually had two founders, two VCs and one “independent” member. Technology Cycles Measured in Years.

Founder 245

Founder Technical Review CTO Hire IPO 245

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. These shares are allocated and committed, but not really issued and owned (vested) until later.

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

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

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

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. I see that all the time. My colleague: Whoa. These are all real conversations.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

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

Both Sides of the Table

MAY 13, 2013

I’m supposed to believe that my best innovation can only come from scores of startup founders who just made millions and have now become CVOs at my company? Chief Vesting Officers)? ” Mark – doesn’t the acquiring company mostly care about the super innovative founders? The Aqui-hire Business.

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

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

blog.simeonov.com

FEBRUARY 22, 2010

Simeon, can you tell us how you structure ownership and control so you can fire your co-founders if necessary? The first part will dispel some myths, address the lifecycle of founder agreements and the key compensation and control parameters in them. Let’s start by dispelling some myths: There is a standard founder agreement.

Founder 44

Founder Vesting Agile Startup 44

www.payne.org

SEPTEMBER 22, 2011

2 Stock Classes: Common and Preferred. 4 Vesting. 5 Stock vs Options. 6 Founders / Restricted Stock. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers.

Equity 56

Equity Employee Vesting Preferred Stock 56

Early Growth Financial Services

DECEMBER 17, 2012

What is founder restricted stock? Founder restricted stock refers to shares of common stock that are owned by a founder but are subject to forfeiture upon the occurrence of certain contractually agreed upon events.

Stock 35

Stock Founder Common Stock Private Equity 35

Gust

SEPTEMBER 17, 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. of the time I have no vested interest in having the debate. I see that all the time.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Gust

DECEMBER 8, 2011

Likewise, founders can benefit from understanding basic characteristics of the overall legal structure, formation and governance documents, rights and responsibilities of team members, etc. Determine who will serve on the Board of Directors and in executive officer positions (usually founders). Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

ithacaVC

DECEMBER 13, 2013

They are typically pretty simple: (i) shares owned by founders and (ii) shares authorized for issuance in a stock option pool, some of which may be issued to employees already and some of which will be available for future issuance. If no additional equity is ever granted to Founder X and Founder Y, then Founder Y will ALWAYS own 1.63

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Tim Keane

JANUARY 12, 2010

These include: ·       Vesting of Founder Stock. Especially in situations where the founders have a large position and are key employees, it is not uncommon for investors to request that they agree to have some portion of their holdings vest on a schedule.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

thestartuplawyer.com

FEBRUARY 24, 2010

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. He obviously never launched a startup and got shafted by a co-founder. You can start by examining every aspect of the co-founder relationship.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

The Next Web

JUNE 15, 2012

And giving equity as compensation can help build loyalty among contractors and consultants, as they now have a truly vested interest in your company’s success. It’s wise to create a stock options pool that includes all the employees and contractors you plan on hiring in the next 18 months and how many shares each might get.

Equity 116

Equity Stock Options Vesting Stock 116

www.paulgraham.com

APRIL 28, 2010

I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. Few startups get it quite right. Many are underfunded.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Up and Running

SEPTEMBER 20, 2021

Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors. Founders can apply the information to instantly ascertain what percentage of the startup they have to propose a new investor. Total share ownership.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

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. The options typically vest monthly over 1-2 years with 100% single-trigger acceleration and no cliff. Advisory shares are normal common stock. What are advisory shares?

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Austin Startup

MAY 17, 2017

Instead, the company just has a loose set of individual advisors they work with on strategic matters, often in exchange for equity with a vesting schedule. The majority of companies we see have Founders only on the Board before closing their Series A. Sometimes it’s just the CEO; other times it’s 2 or 3 founders.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48

venturehacks.com

OCTOBER 21, 2010

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! Do you mean the shares go to the founders?

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68