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

OCTOBER 23, 2012

And even if they wanted the index return, there is essentially no way to buy (or sell) a broad-based basket of VC funds in the way you can trade the S&P 500 or Russell 2000 or other public equity index. Startup outcomes are a power law distribution rather than a standard distribution. What about fund of funds (FoF), you ask?

LP 176

LP Accredited Investor Carried Interest Portfolio 176

www.instigatorblog.com

OCTOBER 23, 2010

Changing Equity Structures for Early Startup Employees Tweet Recently someone asked me for advice on how much equity they should give to their early employees. 1% but they’re not going to be overwhelmed by it, or insanely incentivized by that equity alone. I do believe that early employees should trade salary for equity.

Equity 41

Equity Employee Startup Vesting 41

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. This is particularly relevant for VC funds because they do not follow a normal distribution, they follow the power-law curve.

Valuation 319

Valuation Pre-Money Valuation Distribution Early Stage 319

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. This is particularly relevant for VC funds because they do not follow a normal distribution, they follow the power-law curve.

Valuation 295

Valuation Pre-Money Valuation Distribution Early Stage 295

Up and Running

JUNE 14, 2012

Should co-founders have the same equity stake? Now that I have launched some startups, I would say there is no reason to have co-founders have the same equity stake. Most co-founders decide on the equity structure in a very arbitrary way. There are two parts to the equity: Founder’s Part. Skills Part. Conclusion.

Cofounder 90

Cofounder Technical Cofounder Accredited Investor Equity 90

The Startup Magazine

JULY 1, 2022

If you are providing a service, you will need to determine how to distribute your service and whether to offer it for free or charge for it. The most common types of financing are debt financing, equity financing, and venture capital. The most common types of financing are debt financing, equity financing, and venture capital.

Technology 138

Technology Venture Capital Finance Startup 138

ReadWriteStart

JULY 18, 2011

He says that one is too lonely, two is good and three is a great number if they can combine their skills to cover design, development and distribution. He believes that equity need not be distributed equally, as long as everyone involved is happy with their arrangement. How to Hack the Investment World.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Hunter Walker

JANUARY 2, 2017

The total value of these deals might look higher than when a tech company makes an acquihire but the premium tends to go to retention rather than the cap table (especially since (a) the acquirer might not be seen as an ‘attractive’ place to work and (b) there’s assumption of less equity upside post-acquisition).

Technical Review 115

Technical Review Cap Table Acquisition Startup 115

View from Seed

SEPTEMBER 14, 2021

That’s a bit of a cautionary tale to VC investors today who might think it’s inevitable that the private value they are enjoying in their portfolios will certainly translate to distributions in the near future. This is particularly relevant for VC funds because they do not follow a normal distribution, they follow the power-law curve.

Valuation 156

Valuation Pre-Money Valuation Distribution Early Stage 156

Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

David Teten

SEPTEMBER 2, 2017

It’s hard enough to get a job at a venture capital or private equity firm; it’s even more complex to join as a Partner. Also see Preqin’s Key Due Diligence Considerations for Private Equity Investors. . VC and private equity are very illiquid on both the investing and the personnel side. – Tax distributions.

Private Equity 60

Private Equity Venture Capital Equity Partner 60

Austin Startup

MARCH 23, 2017

To briefly recap: 3/12 : Fred Wilson discussed why he dislikes convertible notes and SAFEs, and how priced equity rounds make more sense at the seed level. 3/20 : danprimack provided detail on Wal-mart/Jet.com’s acquisition of ModCloth, and how substituting (rather than supplementing) debt for equity can cause problems.

Dilution 54

Dilution Equity Warrant Distribution 54

Lightspeed Venture Partners

OCTOBER 14, 2012

The entrepreneur is seeking not just money, but primarily contacts with buyers at big retailers to get wider distribution. Instead of taking equity, he asked for a $2 per dress royalty until he recovered his capital, then $1 per dress thereafter. They argue over who can help Cozy Bug with distribution more. Kevin offered $50k.

Equity 158

Equity Dilution Redemption Distribution 158

The Next Web

OCTOBER 21, 2013

In many cases we have observed, the founders have given away too much equity to their first investors — typically angels and family offices, who have little experience with fast-growing startups or the venture capital funding model. Alarm bells. Of course, not all of the fault in these lopsided structures lies with the angel investors.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

Up and Running

MAY 21, 2015

All the other sharks typically make a traditional equity investment; for example they’ll invest $100,000 at a $1,000,000 business valuation, and take 10 percent of the business. That’s called a traditional equity investment. Anti-dilution protection. See Also The 10 Questions I Didn’t Expect to Be Asked By Investors.

Covenant 60

Covenant Liquidation Preference Ratchet Dilution 60

Small Business Force

JANUARY 14, 2016

Equity and percentage ownership has always been a lightning rod for discussion and controversy with startups and entrepreneurs. It is also less understood than it should be, with dilution and control issues being major points of concern. The point of it was that with any kind of equity distribution, dilution will always occur.

Equity 20

Equity Dilution Distribution Valuation 20

Lightspeed Venture Partners

NOVEMBER 19, 2012

The first 15,000 units sold out in six weeks in specialty retailers that distributed it in the Quantico area, and another 80,000 are being made now. But I think that given the demand, he could have held firm on valuation and either given up slightly less equity or taken in slightly more money for the same dilution.

Pre-Money Valuation 160

Pre-Money Valuation Alabama Valuation Churn Rate 160

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

thinkspace.com

SEPTEMBER 7, 2012

How to Divide Equity to Startup Founders, Advisors, and Employees. The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees? Equity for Founders. Equity for Employees.

Equity 62

Equity Employee Founder CTO Hire 62

Up and Running

APRIL 24, 2018

Not only that, but global equity funding to digital health companies reached $3.67 Health care ethics are the moral principles and values that allow you to make the right choice while promoting, distributing, and operating your product to healthcare organizations or patients directly. billion in 2017 YTD (as of May 22, 2017).

SBIR 73

SBIR Startup Artificial Inteligence Intellectual Property 73

The Equity Kicker

MAY 31, 2016

The conclusion of the report is that returns in venture capital are distributed across a larger number of companies and across a wider number of venture capital funds than is widely believed. Their advice to LPs is to catch these distributed returns by investing in emerging managers outside of traditional US venture heartlands.

Venture Capital 60

Venture Capital Early Stage Dilution Later Stage 60

The Equity Kicker

APRIL 13, 2012

However, day-to-day dilution from routine equity-based employee compensation and other possible dilution, such as stock-based acquisitions, will likely undermine this dual-class structure and our aspirations for Google over the very long term. Effectively a Stock Split: And a New Class of Stock.

Dilution 87

Dilution Stock Government SEC 87

Austin Startup

MARCH 7, 2021

In 2019 and 2020, we saw hundreds of millions of dollars in non-dilutive funding go to Texas startups, most of which had never worked with the government before. In short, the first wave of internet companies were widely distributed and brought people online (AOL in Virginia, Microsoft in Albuquerque and Seattle, Dell in Austin, etc.)

Texas 90

Texas San Antonio Houston Dallas 90

Lightspeed Venture Partners

OCTOBER 22, 2012

The founders have more demand than they know what to do with, and want to raise $55k for 5% equity in the company to buy a second truck. The founders focused too much on dilution and on Barbara’s clever ideas on a dimension (marketing) that was not critical to the business. This implies a pre money valuation of $1.045M.

Pre-Money Valuation 101

Pre-Money Valuation Valuation Dilution Differentiation 101

The Equity Kicker

MAY 14, 2012

signing distribution deals. demonstrating that signed distribution deals are working. However, raising lots of money to buy lots of time is great if you can do it, but for a lot of startups it won’t be possible, at least not without excessive dilution. achieving first revenues. achieving first international sales.

Finance 118

Finance Valuation Venture Capital Dilution 118

ConversionXL

JANUARY 14, 2020

It’s more than just a distribution channel. The answer is given by user intent: If your existing pages already target a clear intent, and the new feature would dilute it, create a new page for it. For inventory-driven sites, the website is a big part of the product. Anything behind a login or on a native app doesn’t work.

SEO 159

SEO Framework SCRUM Search 159

Agile VC

JULY 11, 2012

in equity & loans which was ultimately worth >170x ($355M) when DEC went public about a decade later. Should there be a notion of “founder equity” for those individuals who put in the hard work to start a firm and build the brand? Big success was Digital Equipment Corporation (DEC), in which ARD invested about $2.1M

Silicon Valley 240

Silicon Valley Carried Interest Cofounder Boston 240

Business Plan Blog

OCTOBER 4, 2013

While some investors will be willing to help you build your team, they will not be willing to invest in your startup if you are not willing to distribute responsibility and bring on diversified expertise. Be sure to leave plenty of equity for investors. Having too many co-founders will only lead to your eventual dilution.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

Professor VC

JUNE 20, 2011

The business model (OEM through broadband and home security companies for mass distribution) if not specific product functionality has remained largely the same. But of course, the model had us requiring only $10M equity to breakeven and to achieve $185M in revenues in 2008 (the magic Year 5 in all business plans).

San Jose 28

San Jose Angel Investor Term Sheet Venture Capital 28

Startup Professionals Musings

NOVEMBER 8, 2010

One of the first tough decisions that startup founders have to make is how to allocate or split the equity among co-founders. Another common “failure to start” situation I see is one where the “idea person” insists that the idea is 90% of the value (and 90% of the equity). Building a product doesn’t get it distributed and sold.

Equity 228

Equity Intellectual Property Cofounder CTO Hire 228

maplebutter.com

JANUARY 8, 2013

Ideally you can pay them based + equity so that you’ll get their attention and focus on the project. 2) Co-Founders are the largest form of dilution (if you’re raising) 3) Everything around LeanStartup / Customer Development 4) Understand the micro economics of your business early. Offer equity to a programmer? A few nuggets.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

Startup Professionals Musings

APRIL 23, 2012

One of the first tough decisions that startup founders have to make is how to allocate or split the equity among co-founders. Another common “failure to start” situation I see is one where the “idea person” insists that the idea is 90% of the value (and 90% of the equity). Building a product doesn’t get it distributed and sold.

Intellectual Property 252

Intellectual Property Equity Cofounder CTO Hire 252

abovethecrowd.com

APRIL 20, 2016

It will also minimize future dilution. I get that you want to grow and I want you to grow, but let’s internally finance that growth by spending gross margin dollars rather than new dilutive dollars of equity. Achieving profitability is the most liberating action a startup can accomplish. Now you make your own decisions.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Professor VC

DECEMBER 8, 2015

Musk was the early winner taking the CEO role (for a brief period) in the merged company and the largest equity stake as well. Not surprisingly, the merger was highly dilutive, particularly to Confinity/PayPal shareholders. I was a Limited Partner in Angel Investors II (Ron Conway's angel fund) that was an investor in Confinity.

Merger 28

Merger LP IPO Redemption 28

Life Beyond Code

SEPTEMBER 27, 2011

Once the $1 million revenue milestone is crossed, entrepreneurs find it easier to find additional customers, manage working capital, and access funding, whether it is credit or equity. a distributed, democratic model of capitalism. And finally, we have defined 1M/1M as a framework for capitalism 2.0, RS: What makes 1M/1M unique?

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

Up and Running

DECEMBER 9, 2014

Jared could you quickly tell us what are the pros and cons of a bank loan versus an investment for equity? The pro is that it’s cheap capital and it’s not diluted. You effectively become an employee of your equity holders which also has pros and cons as well. Are you going for private equity? Bates: Fantastic.

Small Business 95

Small Business Finance Forecast Metrics 95