The Startup Magazine

JUNE 1, 2023

Be honest with yourself VCs are now going to be looking closer at margins, cost structures and true sales, and product market fit. There are startups out there that are valued at a billion dollars, but because of employee salaries, assets, etc. As a founder, ask yourself – does your business actually warrant VC funding?

Early Stage 146

Early Stage Los Angeles Silicon Valley Cofounder 146

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Less than you’ll probably grant your most junior employees in stock options? Stock Option plans.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Up and Running

JULY 2, 2014

Our attorney updated our operating agreement to include a “non-dilution clause” for this investor, and my business partner and I later found out how much this would cost our company—both financially and otherwise. Have they worked with companies who have raised multiple rounds of financing to start or grow?

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

Austin Startup

NOVEMBER 29, 2017

Partly as a result of the relatively low tax burden, the overall cost level is an order of magnitude lower than in the coastal tech hubs. For the time being, you’ll spend 40–50% less on renting a home or office and 20–30% less on employee salaries, while not giving up that much in terms of the startup ecosystem.

Early Stage 48

Early Stage Austin Silicon Valley Texas 48

Both Sides of the Table

FEBRUARY 25, 2019

Here are some observations I have from this exposure: If a company moves from strength-to-strength with predictable outcomes, easy financings, low staff turn-over, limited competitive threats then the composition of the board probably doesn’t matter as much.

LP 269

LP Startup Burn Rate Stock Options 269

Startup Company Lawyer

MARCH 12, 2009

C corps, LLCs, and S corps differ significantly in the areas of taxation, ownership, fundraising, governance and structure, and employee compensation. Any company that raises venture financing will need to be a C corp in order to issue preferred stock. Employee Compensation. citizen/resident stockholders.

LLC 61

LLC Stock Options Preferred Stock Stock 61

www.inc.com

SEPTEMBER 24, 2011

Finance | Tuesdays. Financing a Small Business. Financing A Small Business. Personal Finance. Employee Benefits. Back in 1997, Randy Parker was staring at a blank whiteboard, wondering where hed find the money to hire the employees and consultants he needed to build his new product. "We Start-up | Mondays.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Less than you’ll probably grant your most junior employees in stock options? Stock Option plans. Last year ….

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Both Sides of the Table

MAY 23, 2010

Often when startups who have raised venture capital need another round of financing they will turn to their existing investors to give them money before raising from outsiders. a loan) that is later converted to equity at the time of the next financing. It starts as a debt instrument (e.g.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

Gust

DECEMBER 8, 2011

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. Pick a name for the new legal entity (e.g., Newco, Inc.”) Independent contractor or consulting agreements.

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Tim Keane

JANUARY 12, 2010

For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.   First , dividends.   Why is this fair?

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 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

ithacaVC

JUNE 20, 2011

Cost is the overriding issue for startups when it comes to properly engaging a lawyer. My general retort on this point is this: expect to incur real lawyer costs and get over it. And each award to a given employee requires a separate grant agreement laying out the terms of the grant. and (v) how to properly fire employees.

Stock Options 58

Stock Options Vesting Subscription Agreement Founder Vesting 58

Agile VC

FEBRUARY 2, 2012

I’ll focus for now on the business itself, there’s plenty of other info on the web if you care to understand the equity ownership or financing history of Facebook and frankly this has been fairly well known for awhile. ==. Here’s my first look at Facebook viewed through the lens of their IPO filing. Facebook, Inc.

IPO 100

IPO South Korea Venezuela Revenue 100

Startup Company Lawyer

JULY 20, 2009

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. Hiring employees or third party contractors. Issuing stock options.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

thebarefootvc

MAY 13, 2015

After taking an economics class in college which sparked my interest in business, I changed my focus to a dual degree in finance and communications, with the goal of combining capitalism with media to make an impact on the world. The hidden cost of this (and employee burnout) is one that any investor is all too familiar with.

Silicon Valley 40

Silicon Valley Tanzania New Jersey United States 40

thebarefootvc

MAY 13, 2015

After taking an economics class in college which sparked my interest in business, I changed my focus to a dual degree in finance and communications, with the goal of combining capitalism with media to make an impact on the world. The hidden cost of this (and employee burnout) is one that any investor is all too familiar with.

Silicon Valley 40

Silicon Valley Tanzania New Jersey United States 40

VC Adventure

DECEMBER 4, 2009

This conclusion is backed up by the National Venture Capital Association which tracks the impact of private companies who receive institutional venture financing. This will surely result in fewer companies being able to obtain financing (and as far as I can tell provide no meaningful added investor protections).

Accredited Investor 49

Accredited Investor Venture Capital Stock Options Government 49

www.quora.com

SEPTEMBER 22, 2011

Type to Add and Search Questions; Search Topics and People Startups Startup Compensation Entrepreneurship Compensation Stock Options Major Internet Companies Silicon Valley Why is there such a large founder to early employee equity drop-off? This answer. Please specify the necessary improvements.

Equity 40

Equity Employee Founder Cofounder 40

Venture Chronicles

APRIL 19, 2010

Rather than focus on the valuation issue, which really isn’t that meaningful aside from generating a lot of attention and completely screwing up stock options for new employees, I’d like to look at the big picture here, which is the evolving nature of consumer buying behaviors.

San Francisco 39

San Francisco Stock Options Valuation Chicago 39

Duct Tape Marketing

MAY 23, 2019

Jenny Blake: I was there for five and a half years, and halfway into my time there … During that five years, the company grew from 6,000 to 36,000 employees, and one major issue became retention. Jenny Blake: Yes, I have a whole chapter in the book on pivot finances. But yeah, the idea that I’m going to just stop?

Programming 62

Programming Finance Turkey Stock Options 62

Small Business Force

JANUARY 1, 2012

You live and breathe the business, day in and day out, dealing with customers, employees and suppliers. This will cost you more than a breakfast, but it will be well worth it (see my previous post regarding "free advice being worth what you pay for it"). However, you often can't objectively assess product or marketing shortcomings.

Advisory Board 33

Advisory Board Stock Options Small Business Stock 33

ReadWriteStart

JANUARY 28, 2022

In the case of a warrant, the expiration date is the final day on which it can be converted into common stock. Considering that a warrant is often issued to decrease the cost of a debt issuer, the expiration period is typically more than two years after the warrant is first issued. Equity for Employees. Equity for Co-founders.

Valuation 108

Valuation Equity Warrant Common Stock 108

A Smart Bear: Startups and Marketing for Geeks

MARCH 11, 2014

How many employees would a medium-sized business have in your definition? Jason: If I’m managing my whole business with this tool, I don’t have 100 employees. You have your general management meeting and in your general management meeting you talk about product development, about marketing and about finance.

Technical Cofounder 220

Technical Cofounder Cofounder Software Review Management 220

Up and Running

JUNE 19, 2015

I have no idea what kind of offices, how many employees do you have, what are you doing, that is not my strength. They have resources as a person and so they use those resources in their business so they start to mix their personal finance and their business finance. My strength is understanding. That’s my dream.

Cloud 60

Cloud Small Business Silicon Valley Media 60

venturehacks.com

OCTOBER 21, 2010

Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# As your lawyer explains that the so-called pre-money valuation always includes a large unallocated option pool for new employees, your stomach sinks.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

venturehacks.com

MARCH 21, 2008

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. Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44