View from Seed

AUGUST 6, 2015

When someone goes to work for an early startup, the compensation package general includes an annual salary, health insurance, and, instead of fixed-cost performance upside, a percentage of unvested options to purchase equity in the company. What’s the strike price ($ value per) of the options I’m being granted?

Equity 120

Equity Employee Cap Table Stock Options 120

View from Seed

AUGUST 6, 2015

When someone goes to work for an early startup, the compensation package general includes an annual salary, health insurance, and, instead of fixed-cost performance upside, a percentage of unvested options to purchase equity in the company. What’s the strike price ($ value per) of the options I’m being granted?

Equity 120

Equity Employee Cap Table Stock Options 120

VC Adventure

AUGUST 15, 2018

Most boards did some level of work to determine the FMV of a company’s stock but generally options were priced between 10% and 15% of a company’s then preferred price (because common equity sits behind preferred equity there is typically a discount applied to the FMV of common stock to account for this “overhang”).

Valuation 48

Valuation Common Stock Cap Table Software Review 48

chrischandler.name

NOVEMBER 1, 2010

If you’ve considered finding and asking a developer for his or her time in exchange for sweat equity, I’m going to strongly advise you against it. All the engineers I trust to execute a project swiftly, professionally and with quality, especially under startup conditions, will not touch an upfront equity deal with a 10-foot pole.

Equity 40

Equity Developer Entrepreneur Syndicate 40

Both Sides of the Table

JANUARY 21, 2010

You never got around to agreeing exact equity splits but you had many conversations about it. Forget to get around to setting up that Employee Stock Option Plan and want to be able to give the early guys their options at a low strike price? I write about some of the lessons in my post on Startup Mistakes.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Berkonomics

JANUARY 25, 2024

If the coach is also a significantly large investor such as a VC fund, the board member-coach will offer a limited amount of time outside of board work at no extra cost, all for the good of the investment. And some will willingly work for stock options, an amount to be negotiated based upon time spent and stage of corporate development.

SBA 62

SBA Warrant Stock Options Vesting 62

Both Sides of the Table

SEPTEMBER 18, 2014

Less than you’ll probably grant your most junior employees in stock options? There are a million ways to do quick, easy, low-cost rounds with prices. “But lawyers will charge much more for equity.” Stock Option plans. Try doing THAT with equity. Him: Not so good. Me: I know.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

The Startup Magazine

AUGUST 6, 2021

You can search for co-founders who will contribute with capital, or skills, and share profits and equity with them. If your vision is powerful enough, you can make up for this by offering recruits stock options. For instance, in many parts of the world, WhatsApp is the default messaging service.

Limited Liability Company 163

Limited Liability Company Silicon Valley Business Model Stock Options 163

www.thedailymuse.com

SEPTEMBER 18, 2012

What’s the typical hourly cost? While the hourly rate is certainly a crucial part of the costs, you’ll also want to consider the mix of lawyers that will doing your work. How much will it cost to incorporate your new start-up? Establishing the ownership and equity rights of the company if there are multiple founders.

Hiring 56

Hiring LLC Intellectual Property Private Equity 56

Startup Company Lawyer

MARCH 12, 2009

However, such flexibility is countered by increased compliance costs due to the application of complex partnership tax rules that also apply to LLCs. Businesses that plan to use equity incentives (e.g. stock options) to attract and retain talent often prefer to operate as C corps. such as incentive stock options.

LLC 61

LLC Stock Options Preferred Stock Stock 61

Scalable Startup

AUGUST 9, 2018

There are so many Facebook/Google/Apple multi-millionaires who receive new stock options every quarter, often a few hundred thousand dollars every quarter, that feel they should put something back into the system, plus they like the idea of being an investor. Option Two: Post-Launch?—?Raise They’re betting on you.

Technical Cofounder 20

Technical Cofounder Silicon Valley Early Stage Cofounder 20

Both Sides of the Table

MAY 19, 2018

A detailed financial model that shows your anticipated revenue, costs and profits (Income Statement) as well as your balance sheet and cashflow statements. The buyer is shopping for equity in startups and the seller is looking for cash in exchange for equity and shared governing control of his or her company.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Berkonomics

DECEMBER 7, 2017

If the coach is also a significantly large investor such as a VC fund, the board member-coach will offer a limited amount of time outside of board work at no extra cost, all for the good of the investment. And some will willingly work for stock options, an amount to be negotiated based upon time spent and stage of corporate development.

Warrant 97

Warrant Stock Options Vesting Equity 97

Gust

OCTOBER 11, 2012

While you will definitely need to be a corporate entity before you can accept funding from any investor (or issue stock options to any employees), the specific corporate status of the venture at this stage is much less important to investors than its functional status.

Delaware 122

Delaware Stock Options Cofounder Stock 122

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 5 Stock vs Options. 6 Founders / Restricted Stock. 7 Salary vs Equity. Important disclaimer: Ive got experience negotiating stock compensation packages from both sides of the table. Buying your stock would cost $200,000!

Equity 56

Equity Employee Vesting Preferred Stock 56

This is going to be BIG.

APRIL 4, 2021

While those things are fun and exciting (well, maybe except for school), many argue that those things come at a cost—the monetary cost of living in NYC. That’s a very incomplete way to look at cost. The other major factor in what it costs to live in NYC is the opportunity cost of physical space. my annual salary.

New York City 74

New York City Wyoming New York Florida 74

The Next Web

MARCH 2, 2014

This process included several rounds of financial forecasting to understand the cost of achieving where we wanted the business and brand to be, and whether we could pay for that cost ourselves. Should we finance with debt or equity? This is the ultimate question to consider when weighing funding options.

Liquidity Event 139

Liquidity Event Equity Finance Dividend 139

infochachkie.com

SEPTEMBER 24, 2011

Instead of hearing from your long lost third-cousin, you will be inundated with an avalanche of ‘congratulatory’ emails, calls and letters from people who want to relieve you of the burden of your hard-earned equity round. The final straw came when I asked the latest 25-year old a simple ‘yes / no’ question related to stock options.

Equity 40

Equity Silicon Valley Cofounder Technical Review 40

Gust

DECEMBER 8, 2011

Readers can anticipate my next point in continuing the analogy: It makes no more sense for a non-lawyer to prepare fundamental legal, governance, equity and intellectual property documents than it would for a patient to self-diagnose and begin taking prescription-strength antibiotics or other medications. Newco, Inc.”) Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Both Sides of the Table

AUGUST 18, 2009

To be clear – it is not about being stingy with or hoarding equity – it is about having a prenuptial agreement. What if you have to make really tough calls on cutting costs, biz dev deals, fund raising and you violently disagree on direction? I believe that it very important to spread the equity. Who prevails?

Founder 251

Founder Cofounder Equity Stock Options 251

Both Sides of the Table

MAY 23, 2010

a loan) that is later converted to equity at the time of the next financing. If no financing happened then this “note&# may not be converted and thus would be senior to the equity of the company in the case of a bankruptcy or asset sale. It starts as a debt instrument (e.g.

Startup 290

Startup Burn Rate Warrant Bankruptcy 290

ReadWriteStart

JANUARY 28, 2022

With the rise of startups and growing businesses , it has become more critical for investors to have a thorough understanding of equity to be aware of all of the advantages they are receiving from the companies they have invested in. What is Company Equity? Types of equity. Common stock. Preferred shares.

Valuation 108

Valuation Equity Warrant Common Stock 108

Gust

SEPTEMBER 17, 2014

Less than you’ll probably grant your most junior employees in stock options? There are a million ways to do quick, easy, low-cost rounds with prices. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase. But lawyers will charge much more for equity.”

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

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. You might be doing a convertible debt round or an equity round. Lawyer time required (including vesting agreements for founders): 3 to 6 hours.

Stock Options 58

Stock Options Vesting Subscription Agreement Founder Vesting 58

YoungUpstarts

MAY 7, 2015

One of the main reasons ESOPs are often dismissed by business owners (and their advisors) as a legitimate succession planning option is due to the many unfounded misperceptions about them. The company just needs to be large enough to generate a profit to substantiate the annual costs of maintaining the ESOP.

Stock 100

Stock Employee Private Equity Valuation 100

Ben's Blog

APRIL 7, 2021

But network effects tend to persist because the value of the network to its participants outweighs the costs. Corporate incentives: Fairchild Semiconductor in 1957 developed a broad-based equity incentive compensation program known as stock options. Venture capital.

Silicon Valley 36

Silicon Valley Non-Compete San Francisco Government 36

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

Venture Chronicles

OCTOBER 31, 2010

Don Dodge wrote about a very dry but critically important issue facing private companies that issue equity to employees… 409A valuations : IPO bump? – If private investors have already bid up the valuation, will there be an IPO jump in the stock price? This breaks the conventional wisdom about pre-IPO stock options.

Valuation 42

Valuation Stock Options Lock-up Period IPO 42

Berkonomics

AUGUST 27, 2015

They financed their companies, to the extent possible, in a manner minimizing the cost of capital, planning for organic growth in the number of customers served and in associated revenues. The Flipper’s executives usually have significant equity holdings, either actually owned or reflected in stock options.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

Startup Company Lawyer

JULY 20, 2009

If there is more than one founder, the likelihood of an argument about how the equity should be split in the new company increases dramatically. Incorporating a company and issuing stock to the founders will help prevent misunderstandings among the founders about equity splits. Issuing stock options.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

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 ties into this Paul Graham article: [link] /equity. This answer.

Equity 40

Equity Employee Founder Cofounder 40

www.copelandfirm.com

OCTOBER 21, 2010

Startup Law 24 February 2010 There are a few common ways that founders split up equity and ownership of the company: 1.) Equally: each founder get the same amount of equity. Unequally: each founder gets a different amount of equity/shares depending upon various factors such as: i. Who helped refine the idea?

Intellectual Property 40

Intellectual Property Founder Vesting Bridge Financing 40

Berkonomics

JULY 3, 2010

If the coach is also a significantly large investor such as a VC fund, the board member-coach will offer a limited amount of time outside of board work at no extra cost, all for the good of the investment. And some will willingly work for stock options, an amount to be negotiated based upon time spent and stage of corporate development.

Warrant 71

Warrant Stock Options Vesting Equity 71

Tim Keane

JANUARY 12, 2010

The investors and the entrepreneurs are – or should be – aware that the price of the company’s equity is set by the market – in simplest terms, what an informed buyer is willing to pay.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

The Entrepreneurial Mind

MAY 19, 2010

For full time employees non-traditional compensation might include creative bonus plans, profit sharing plans, stock, stock options, phantom stock, and/or stock appreciation rights plans. There may be opportunity to meet their needs in ways that do not cost money.

Non-Compete 40

Non-Compete Marketing Stock Options Stock 40

Scott Edward Walker

APRIL 9, 2012

Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) ii) what happens if the maturity date is reached prior to the note’s conversion to equity? A convertible note is short-term debt that converts into equity. Speed, simplicity and cost.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Scott Edward Walker

FEBRUARY 1, 2014

LLC’s are geared for private equity funds, hedge funds and real estate guys, not startups, for a number of reasons: (i) extremely complicated tax partnership rules; (ii) creates capitalization/capital raising problems – e.g., essentially does not allow for stock options plans and convertible notes, etc.; (iii)

Software Review 111

Software Review Delaware Accredited Investor Due Diligence 111