Both Sides of the Table

JUNE 5, 2015

I am reminded of this problem every time my firm does a financing where a note went before us but more specifically I was reminded by this great post by Brad Feld to talk about the pre-money vs. post-money conversion issue. How much is in the option pool? It’s worth reading his post to understand the problem.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

View from Seed

DECEMBER 4, 2014

But delaying or avoiding the conversation often results in it being more awkward than it needs to be. You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Equity 315

Equity Founder Sweat Equity Cofounder 315

Pascal's View

JULY 9, 2017

However, many VCs experience vexing discussions with CEOs, and many CEOs belatedly realize that this is because they made a mistake: issuing multiple series of notes at various valuation caps without actually sitting down and figuring out the pro forma post-conversion equity ownership.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

Agile VC

DECEMBER 4, 2014

But delaying or avoiding the conversation often results in it being more awkward than it needs to be. You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

Agile VC

APRIL 17, 2011

At the end of the day Kayak’s playing a key role in the online travel process, but it appears more of the revenue comes from filling top of the conversion funnel rather than the middle or bottom of it. Precise valuations are impossible to determine because of adjustments to employee option pools, possible buybacks of common stock, etc.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Agile VC

DECEMBER 4, 2014

But delaying or avoiding the conversation often results in it being more awkward than it needs to be. You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Austin Startup

JANUARY 25, 2020

So one day in conversation with family, I decided to just share a full version of the idea with family, pitch deck and all, and that led to our kick-start amount of $25,000. was originally published in Austin Startups on Medium, where people are continuing the conversation by highlighting and responding to this story. We just have to.

Delaware 62

Delaware SEC New York City New York 62

VC Adventure

NOVEMBER 1, 2018

There are, of course, some items that the board has specific decision making authority over (buying another company, increasing the option pool, signing leases of a certain size, etc.). But by focusing on the why you’ll have a much more substantive conversation with your board than if you simply report on the what.

Design 257

Design Option Pool Operations Conversion 257

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. And don’t forget that the options granted would come out of the available option pool.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

The Startup Lawyer

JANUARY 10, 2011

Terms like the option pool , liquidation preference , and board composition are just a few other investment terms that have a meaningful impact on your startup. Of course, you can re-negotiate the pre-money and/or investment amount, but it still makes for potentially awkward conversations and/or feelings of mistrust.

Term Sheet 64

Term Sheet Pre-Money Valuation Liquidation Preference Option Pool 64

The Startup Lawyer

FEBRUARY 4, 2011

Thus your startup needs to determine the intangible value offered by the incubator (and yes, a $150,000 convertible note with no cap and no conversion discount qualifies as an intangible). Other incubators may want to set up an option pool.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

ithacaVC

JANUARY 24, 2013

Option pool: 500,000 shares (some issued, some reserved, but that is typically irrelevant as the whole pool is normally factored into the premoney share price calculation). And let’s assume that the debt has a 20% conversion discount. I am going to ignore any valuation cap feature. 7692 per share.

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53

David Teten

DECEMBER 3, 2019

The Long Term Stock Exchange is building out a set of tools for founders for managing their cap tables, 409A valuations, cash on hand, options pool, investor relations, etc. I’ve seen other VCs use Bridge to more efficiently make and track introductions. .

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Hippoland

APRIL 10, 2016

But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool. This will be a terribly difficult conversation, and you may need to move labs immediately. We are trying to decide how much equity to allocate to each person. I would like to split the equity equally, since it seems only fair.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

Seeing Both Sides

JULY 15, 2009

A typical start-up company will do 2-4 venture capital financings before a successful exit (or, conversely, an ignomious ending). Another term that impacts the price is the size of the option pool. These new hires typically receive stock options, and the issuance of those stock options dilute the other investors.

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

Tim Keane

JANUARY 12, 2010

.   This is perceived by some investors as a way to assure that the founders are in the game for the long run. ·       Conversion provisions allowing preferred to convert to common if they choose or upon the closing of an IPO at a specified price.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

venturehacks.com

MARCH 21, 2008

If an advisor can uncork a million dollars of your company’s latent value with 15 minutes of conversation or a single introduction, you should pay him appropriately. Many advisors want options they can exercise immediately —that’s fine. They’re not paid for their inputs—they’re paid for their outputs.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

thestartuplawyer.com

FEBRUARY 24, 2010

do not think being friends or relatives reduces the need for these difficult and/or awkward conversations. 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 And for the love of high-speed internet and all things Web 2.0,

Cofounder 40

Cofounder Founder Preferred Stock Startup 40