Startup Professionals Musings

AUGUST 4, 2014

The first question I usually get is what percent of the company or equity is that person worth? Just because it was your idea doesn’t mean you “deserve” 90 percent of the equity. The value in a startup is all about tangible results, so there is no equity value in the idea alone. Amount of venture funding provided.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

techcrunch.com

JUNE 22, 2012

Free Startup Docs: How Much Equity Should Advisors Get? Entrepreneurs want to compensate their mentors and advisors for the time they dedicate to helping their businesses grow, but they have no idea how much equity to offer. In particular, Ressi said, the team is interested in reactions to the above equity matrix. Headphones.

Equity 94

Equity San Francisco Startup Silicon Valley 94

Startup Professionals Musings

JANUARY 15, 2021

This is the purpose of a vesting schedule, which issues allocated stock over time. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year cliff ). Key founder vesting should have no cliff.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Altgate

JUNE 25, 2012

—————– Dead equity — equity held by employees and founders no longer working at the company — is a large and growing problem. Choe opted to forgo a cash payment “in the thousands” for the equity equivalent at the time. Dead equity has always been a significant issue for startups.

Equity 44

Equity Vesting Cap Table Technical Review 44

The Startup Magazine

FEBRUARY 21, 2024

Simultaneously, we conducted a thorough operational review to identify inefficiencies and areas for cost reduction. This hands-on approach is indicative of a vested interest in the success of the business, far removed from the notion of lending to “bad” companies.

Technical Review 134

Technical Review Due Diligence Bankruptcy Intellectual Property 134

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. Below, Lee Hower offers advice for approaching these equity discussions objectively and properly. Sometimes co-founders put off the equity split question for some time.

Equity 315

Equity Founder Sweat Equity Cofounder 315

www.startuplessonslearned.com

MAY 4, 2012

Founders Dilemmas: Equity Splits. The following is an exclusive excerpt which sets up a common pitfall regarding equity splits. In Noam’s dataset, 73% of founding teams split equity within a month of founding, a striking number given the big uncertainties early in the life of any startup. Lessons Learned. by Eric Ries.

Equity 72

Equity Founder Technical Cofounder Cofounder 72

YoungUpstarts

AUGUST 19, 2019

For equity trading, the general rule of thumb is to start an investment portfolio of at least $1000. However, with an investment club, splitting the costs of getting started can allow people to start investing earlier with less cash. . Everyone gets to learn something new and shares a mutually-vested interest in success.

Investment Bankers 127

Investment Bankers Technical Review Stock Vesting 127

YoungUpstarts

OCTOBER 19, 2018

When you’re looking for extra funds, there are typically two options: debt financing and equity financing. It’s important to understand the difference between debt financing and equity financing so when it comes time to get additional funding, you know which is the right fit for your business and how to get it. Equity Financing.

Finance 138

Finance Equity Vesting Dividend 138

Agile VC

DECEMBER 4, 2014

As a result, one of the trickier things co-founders tackle is determining the equity split amongst the founding group of individuals. Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

Altgate

AUGUST 25, 2012

—————– Dead equity — equity held by employees and founders no longer working at the company — is a large and growing problem. Choe opted to forgo a cash payment “in the thousands” for the equity equivalent at the time. Dead equity has always been a significant issue for startups.

Equity 28

Equity Vesting Cap Table Technical Review 28

Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. Over time, other people receive pieces of equity in exchange for work (employee stock options), money (seed, angel and venture investors), services (attorneys, directors, etc.). Uncategorized company equity dilution founder investors startup'

Dilution 150

Dilution Equity Vesting Stock Options 150

www.inc.com

SEPTEMBER 24, 2011

Should You Share Equity with Consultants? To grow his cash-strapped start-up, Parker ended up sharing equity -- not only with employees, but also with consultants and vendors. Parker found that equity as compensation helped build loyalty to his company -- even among consultants. But sharing equity can have pitfalls, too.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Agile VC

DECEMBER 4, 2014

As a result, one of the trickier things co-founders tackle is determining the equity split amongst the founding group of individuals. Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

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). Bigger/better advisors who get more equity have things like; excellent domain expertise to help you avoid pitfalls, deep connections within the industry to help with the intros, partnerships, and more.

Equity 98

Equity Vesting Cap Table Common Stock 98

ReadWriteStart

MAY 3, 2012

Offer Equity Compensation to Team Members: Generate interest in joining your team by giving equity to others with complementary skill sets to yours. With a four-year vesting schedule and a six-month “cliff” or trial period, you can get others to join in on the fun of startup, and make progress without expending cash.

Bootstrapping 137

Bootstrapping Software Review Startup Equity 137

Gust

DECEMBER 1, 2011

Notice what is missing from this list of priorities: The company itself – that is, a business entity, most often a corporation , that will own the entire business (however defined), issue equity to founders, take investment capital , enter into contracts, make sales, pay employees and contractors, and so forth. Good stuff!

IP 114

IP Intellectual Property Equity Liquidity Event 114

Scott Edward Walker

FEBRUARY 6, 2016

“I didn’t even know what a vesting schedule was… [and] that mistake probably cost me billions of dollars.” Indeed, the failure to set-up vesting schedules is now the most common mistake I see startups make. This is exactly what would happen without vesting schedules. www.youtube.com/watch?v=-R01YcgJ3Yw. v=-R01YcgJ3Yw.

Vesting 40

Vesting Cofounder Equity Dilution 40

Startup Lessons Learned

APRIL 24, 2012

." - Eric The following is an exclusive excerpt which sets up a common pitfall regarding equity splits. In Noam’s dataset, 73% of founding teams split equity within a month of founding, a striking number given the big uncertainties early in the life of any startup. But such a best-case approach is hazardous. Uncertainties abound.

Equity 168

Equity Founder Cofounder Vesting 168

Startup Professionals Musings

JANUARY 29, 2018

Even though initial stock has no market value today, it is extremely valuable in dividing equity ownership between co-founders, investors, and early partners. Always specify a vesting period for new partners. Buying back stock on the open market may cost a huge premium. Manage dilution with proper use of new investment terms.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

Berkonomics

JANUARY 25, 2024

Board members or lead investors as coaches If you take smart money from a good angel or venture organization, the lead investor usually becomes your board member and has a vested interest in your success. How do you pay a coach?

SBA 62

SBA Warrant Stock Options Vesting 62

NZ Entrepreneur

MAY 27, 2019

If you’re scared about giving up on control or equity, then read on. After you have validated your idea and studied your market (which costs next to nothing), you can build screenshots or a very simple demo. If you are a solo founder, you may be able to do it all on your own initially but you’re making it very difficult for yourself.

Technical Cofounder 64

Technical Cofounder Cofounder Technical Review Software Review 64

Scott Edward Walker

OCTOBER 19, 2020

Unfortunately, I was involved in such a scenario a few years back, and it cost the founders a lot of money to get the prior employer to agree to execute a waiver. This issue is akin to trying to negotiate with a departed founder who is not subject to a vesting schedule – see post here.). Any IP created by a founder (e.g.,

IP 52

IP Software Review Founder Technical Review 52

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Pre-Money Valuation Denver 137

Startup Professionals Musings

MAY 18, 2015

This is the purpose of a vesting schedule, which issues allocated stock over time. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year cliff ). Key founder vesting should have no cliff.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Growthink Blog

MARCH 19, 2012

Letting small companies sell equity stakes online would be a huge boost to those firms—like angel investing on steroids. The businesses would get access to tens of millions more potential investors, and could reach out to them at little or no cost through online outlets like Facebook.

Equity 88

Equity Securities and Exchange Commission Private Equity SEC 88

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 4 Vesting. 7 Salary vs Equity. 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. From Payne.org Wiki. 2 Stock Classes: Common and Preferred.

Equity 56

Equity Employee Vesting Preferred Stock 56

blog.aparttimecto.com

OCTOBER 23, 2010

Flexibility - You won’t need to commit to something, either cash, equity or involving other people, upfront. Cons: Money - Unless you have cash to pay, the pool of developers willing to work for equity is small. Cost - Outsourcing tends to be cheaper than hiring on developers and building your product internally.

CTO Hire 40

CTO Hire Fractional CTO Equity Vesting 40

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

www.seriesseed.com

DECEMBER 9, 2012

We went with equity because ivestors would prefer to get equity for the following reasons: 1. One of the reasons notes have become so popular is that the equity documents were too expensive. All of those cost us as much if not more in legal time than the seed round. Posted by: toby | 03/01/2010 at 09:52 PM. Great effort!

Finance 40

Finance Term Sheet Vesting LLC 40

The Next Web

AUGUST 26, 2013

I’ve seen a few businesses where the first investors took huge pieces of equity for very little money. 15-20% equity for first investors. Depending on your team and the risk of the business, you should reserve 15% to 20% of equity for the first investors you get on board. But never give away shares without vesting.

Management 120

Management Cofounder Startup Bootstrapping 120

Austin Startup

AUGUST 20, 2017

They’re looking to be paid properly in the context of the overall salary structure, including cash, benefits, and equity, and to be paid commensurate with performance. Set any vesting schedules and expiration dates on roughly similar terms, if for no other reason just so you can track all of them correctly. You’ve just got to listen.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

Both Sides of the Table

SEPTEMBER 18, 2014

There are a million ways to do quick, easy, low-cost rounds with prices. of the time I have no vested interest in having the debate. “But lawyers will charge much more for equity.” Try doing THAT with equity. My colleague: Whoa. These are all real conversations. I have them all the time. I’m bored of it.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

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. VCs (and LPs) have a vested interest in having more data, whether they want to invest in your company / firm or not. They aren’t doing this viciously?—?they

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Berkonomics

DECEMBER 7, 2017

If you take smart money from a good angel or venture organization, the lead investor usually becomes your board member and has a vested interest in your success. The one warning: avoid those looking to become partners, asking for larger portions of equity than, say, 5% when they contribute no cash to the enterprise.

Warrant 97

Warrant Stock Options Vesting Equity 97

venturehacks.com

SEPTEMBER 22, 2011

The Equity Equation. As this nuclear winter of venture hacks continues, I thought you might enjoy our thoughts on Paul Graham’s The Equity Equation. ” Read the rest of The Equity Equation first; it is great. You have to pay market rates regardless of the equity equation. Venture Hacks Good advice for startups.

Equity 40

Equity Cap Table Valuation RSS 40

Early Growth Financial Services

DECEMBER 4, 2014

It could be the size of the option pool, or maybe the provisions around reverse vesting. I discussed Change of Control, Reverse Vesting, and Liquidation Preferences in … Continue reading → Equity / Debt / Venture Funding' Most investors will expect this. There’s less chance of you being blindsided.

Term Sheet 51

Term Sheet Liquidation Preference Vesting Option Pool 51