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.).

Dilution 150

Dilution Equity Vesting Stock Options 150

The Next Web

OCTOBER 7, 2013

However, at the very early stage, they are taking as much risk with their future as the founders. From the perspective of my outside friends, why are employees that so clearly impact the growth trajectory of a company look like they’re getting screwed? Every time a startup raises capital, all common shareholders are diluted.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Feld Thoughts

FEBRUARY 28, 2023

However, the lack of a conversion right also has implications for anti-dilution protection: in the U.S., In Germany, anti-dilution protection is achieved by issuing additional preferred shares. It is not uncommon for companies wanting to go public to relocate their registered office to the USA at an early stage.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

Startup Professionals Musings

DECEMBER 11, 2022

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

Both Sides of the Table

NOVEMBER 14, 2017

As an early-stage VC I love this phase. Sam also had a vision as early as 2012 about how MakeSpace would be a large employer of middle-income jobs: The company would hire employees rather than just have contractors and he would lead the effort to ensure they had opportunities for growth and benefits for their families.

Operations 286

Operations New York City Technical Review Startup 286

YoungUpstarts

MAY 6, 2019

In this article, we will discuss why it is important to understand the whole startup stages concept before you start a business to get the most benefit. Early Stage. This startup stage starts from the day you decide to work on a startup idea. Here is the complete list of points available in early stage startup.

Startup 104

Startup Technical Cofounder Merger Early Stage 104

Both Sides of the Table

SEPTEMBER 25, 2010

I talked about this in my social proof post where I gave some suggestions about how to get the early guys off of the fence. Most early-stage entrepreneurs who have worked with me (either as an angel or as a seed VC) know that I don’t rely at all on the social proof of other investors. When I’m in, I’m in.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Startup Professionals Musings

MARCH 14, 2020

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Startup 308

YoungUpstarts

MAY 31, 2016

Hire smart, ambitious, get-it-done employees and lead them with emotionally intelligent innovation leadership skills. While it’s fair to say that the aforementioned cornerstones apply to more established companies and are intended to ensure for their continued well-being, early stage entrants can benefit from their guidance as well.

Technical Review 100

Technical Review Leadership Early Stage Initial Public Offering 100

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. His company had just closed an early round of funding and he wanted to cement the employee relationships. Those first employees will take 0.5-1%

Equity 41

Equity Employee Startup Vesting 41

David Teten

NOVEMBER 17, 2011

In particular, this model is designed to help all team members understand the impact of dilution on their options. Such a model is particularly helpful for those founders looking for a co-founder or key employee. I couldn’t find one online, so I built it. Download the Startup Options Valuation model here.

Employee 155

Employee IRR Startup Mexico 155

The Next Web

OCTOBER 3, 2012

Here’s the problem: this opportunity doesn’t exist for early-stage startups, because, by definition, they have no users or customers. Worrying about “scale” in the early days of your startup is simply a bad investment. Bigger companies simply move slower. Bigger companies simply spend more.

Cofounder 155

Cofounder Technical Cofounder Technical Review Software Review 155

Berkonomics

OCTOBER 26, 2010

Many early stage CEOs and board members have asked for some guidance regarding pay and time commitments for board members. Pay early stage board members of companies that are not lifestyle businesses one percent of the fully diluted equity in the form of an option that vests over four years of service.

Stock Options 66

Stock Options Early Stage Stock Vesting 66

Both Sides of the Table

JULY 25, 2010

Rincon is part of the new breed of Seed Stage VCs and with the leadership of Jim Andelman has charted out the most authentic early-stage investment strategy in Southern California. Any SoCal entrepreneur raising early-stage money should put Rincon on their short list.

Silicon Valley 293

Silicon Valley Technical Review Southern California Angel Investor 293

Up and Running

SEPTEMBER 20, 2021

Here you can see that the founders own most of the shares at 67.7%, then the ESOP (employee stock option pool) at 12.31 Recruitment of more employees will also need testing schedules and tracking the option grants, which will need formulas and more sheets. Outline your plans for future employee stock option pools.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Haystack

JULY 8, 2018

So, that’s why I’m writing this short post specifically for 1) employees of early-stage startups and 2) the earliest investors in these startups, who are often themselves new to the entire sector. And as a disclaimer, 1) I am figuring this out myself in real-time.

Early Stage 95

Early Stage Dilution Private Equity Equity 95

JANUARY 9, 2014

I recently developed a more human framework for early-stage startups to define their startup DNA and lay some foundations for a sustainable business. By trying to appeal to everyone and adding features left, right and centre, you will actually dilute your message and could end up with a complex, bloated product.

Early Stage 102

Early Stage Startup Cofounder Design 102

David Teten

AUGUST 19, 2019

Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. The mode purpose for funding is (in order of frequency) Sales, Marketing, Market Expansion, Product Development, and Hiring Employees. GSD Capital. “ GSD Capital partners with early-stage SaaS founders to fund growth initiatives.

Revenue 60

Revenue Technical Review Software Review Equity 60

Seeing Both Sides

AUGUST 28, 2017

Early stage entrepreneurs will also still likely value experienced advice on company-building from seasoned venture capitalists. In short, token sales allow early stage companies to skip the series B round and beyond. But many are. Shift of value from equity holders to token holders. Fuzzy Governance.

Early Stage 20

Early Stage Equity Venture Capital Government 20

Seeing Both Sides

AUGUST 28, 2017

Early stage entrepreneurs will also still likely value experienced advice on company-building from seasoned venture capitalists. In short, token sales allow early stage companies to skip the series B round and beyond. But many are. Shift of value from equity holders to token holders. Fuzzy Governance.

Early Stage 20

Early Stage Equity Venture Capital Government 20

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

thebarefootvc

MAY 8, 2012

This is also what I advise entrepreneurs when discussing dilution and valuation — think of the bigger picture and the end game of what you are looking to build — and who will help you get there. In early days, the network effect of employees, advisors, investors is key to gaining market traction and scale:

Venture Capital 78

Venture Capital Syndicate Syndication Bandwidth 78

ReadWriteStart

SEPTEMBER 10, 2010

You can get cash without diluting your ownership in the company. Next, Shirish Deodhar discussed InnovizeTech , an Indian company that has built software to capture how employees are spending their time in order to help manage and monitor productivity. In 1M/1M, our preferred financing strategy is customers. InnovizeTech.

Cloud 115

Cloud Incubator Silicon Valley Finance 115

YoungUpstarts

DECEMBER 7, 2014

It makes sense to surround yourself with the right team when starting your own business, and this group needs to include a qualified accountant, a sympathetic bank manager and, if appropriate, the very best partners and employees. For the latter, you should look to top quality recruitment specialists to find the best team members.

Dilution 183

Dilution Early Stage Hiring Employee 183

Haystack

AUGUST 18, 2019

When I put all of this together, what I see is: In the Bay Area, the seed stage is getting squeezed from all sides during this summer solstice of. 4/ Orthogonal Competition – I recently tweeted about a new breed of early-stage technology investor that has its roots in public equities (hedge funds, long/short, etc.)

Seed Stage 108

Seed Stage Cap Table Early Stage Malaysia 108

Berkonomics

MARCH 21, 2019

It is also a factor that early stage investors don’t want a controlling interest in your company. Remember your employee option allocation. Given your strong desire to keep controlling interest in the early stages of growth, the amount that can be raised must be lower than $2,000,000 in order to accomplish this goal.

Hockey Stick 63

Hockey Stick Liquidity Event Valuation Balance Sheet 63

Both Sides of the Table

SEPTEMBER 18, 2014

Less than you’ll probably grant your most junior employees in stock options? And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? Him: Not so good. Obviously he’d be pissed off. I hadn’t really thought about it. Me: I know.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 3 Dilution. NOTE: If youre an attorney or tax accountant with experience helping startup employees with stock and option issues, drop me a note. The preferred stock held by investors has (as the name implies) more rights and privileges than the common stock issued to employees. 4 Vesting.

Equity 56

Equity Employee Vesting Preferred Stock 56

Startup Professionals Musings

AUGUST 1, 2016

Getting investors to trust you with their money is always a challenge, and it’s even more difficult in the early stages, where you don’t have a significant revenue stream, a few customers, or maybe even a product yet. At these stages, it’s all about you, and your ability to communicate and execute effectively.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

Both Sides of the Table

MARCH 21, 2010

Think of it as similar to an employee stock option. In this example if they sell only $10,000 in total in year one they own zero warrants the same way that an employee with options who quits after 6 months usually owns no options when they leave your company (due to the cliff period in most vesting programs). Should You Offer Them?

Warrant 298

Warrant Dilution Startup Stock Options 298

keen.io

FEBRUARY 5, 2013

From there, I began googling things like “first employee startup equity” and “startup offer negotiation.” These were the best resources I found: Equity for Early Employees in Early Stage Startups. Startup Equity for Early Employees. Paul Graham’s Equity Equation. Result: A fair offer would be between.8

Salary 50

Salary Equity Startup Cap Table 50

David Teten

OCTOBER 1, 2015

intrapreneurs, e.g., the employee of GE who is tasked with launching a new business. At the same time, a direct equity investment (one where the dev shop acquires a share in the company immediately) puts the founders in a potentially uneasy position of having to dilute their company before a product is built.

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

Both Sides of the Table

MAY 9, 2011

Conventional wisdom says that you gain far more in working as a team than you lose by diluted by half before you start. Most senior employees who join are given 2% if they join early. Maybe they get up to 10% if they joined REALLY early and were senior. I wrote about many of the early-stage startup mistakes here.

Cofounder 393

Cofounder Founder Vesting Founder Vesting 393

Hunter Walker

JANUARY 15, 2016

My answer was, and still is, that socially-oriented purpose-driven for-profits outcompete their marketplace competitors due to superior revenues generated from deeply loyal customers and expense saving from free word-of-mouth marketing and long-term employee retention (and even sacrifice).

Technical Review 48

Technical Review Startup Cofounder SMS 48

www.startupnorth.ca

OCTOBER 23, 2010

Home Events Contact Jobs StartupIndex Founders versus early employees by David Crow on September 10th, 2009 in Resources Not everyone can be a founder. But for every founder, there is an early employee that takes near equal risks in joining an early-stage company. How do you compensate early employees?

Employee 41

Employee Founder Salary Equity 41

David Teten

NOVEMBER 10, 2011

This is designed to be a simple end-to-end financial model for an early-stage startup. The Cash Flow Statement , for a startup, will often prove particularly important, as it will tell you whether or not you can do the essential tasks like pay employees and bills. Download the template financial model in Excel here.

Balance Sheet 154

Balance Sheet Startup Equity Valuation 154

Rob Go

JUNE 8, 2014

Raising capital is really difficult, no matter what people say about the influx of seed and early-stage dollars into the startup eco-system. Getting access to a breadth of network and resources is pretty helpful in the early stages of a company when you are under-resourced and have no scale.

Dilution 69

Dilution Early Stage Angel Investor Venture Capital 69