Both Sides of the Table

NOVEMBER 14, 2017

As a startup in this phase you often raise capital, get press, hire staff and everything feels possible. As an early-stage VC I love this phase. I always push companies to hire “an operationally focused CFO” during this phase because in order to systematize you need somebody who brings economic rigor to decision making.

Operations 286

Operations New York City Technical Review Startup 286

Both Sides of the Table

SEPTEMBER 17, 2011

I recently wrote a post about why I didn’t think early-stage startups should have COOs. One great solution I see is to hire an outstanding CFO who runs both. Dilute your cash, equity or both. In summary, tons of early-stage M&A is driven by only one thing: CEO ego. But they aren’t the COO.

Operations 292

Operations CTO Hire Startup Early Stage 292

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 113

Startup Technical Cofounder Merger Early Stage 113

Both Sides of the Table

JULY 22, 2010

You’ll need to hire and retain talen to grow your company. The VC’s $1 million still buys them 25% of your company – it’s you who has diluted to 60% ownership rather than 75%. Privately some early-stage VC’s talk about participation helping them to “juice their returns&# on smaller exits.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Both Sides of the Table

SEPTEMBER 10, 2021

A-Rounds used to be $3–7 million with the best companies able to skip this smaller amount and raise $10 million on a $40 million pre-money valuation (20% dilution). The biggest change for us in early-stage investing is that we now need to commit earlier. So in a way it’s self selecting. That used to be called A-round investing.

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Austin Startup

MAY 8, 2018

Background reading: Founder Compensation: Cash, Equity, Liquidity Fatal Errors in Early Startup Hiring Early Hires: Options or Stock Given how deeply involved we are with early-stage startups hiring their first key employees, I figured it would be helpful to outline a few key principles to help entrepreneurs navigate the topic.

Employee 48

Employee Seed Stage Startup Equity 48

View from Seed

APRIL 30, 2015

In many instances, you raise an institutional round to either fulfill a product strategy or go-to-market strategy or you’re increasing sales and marketing hires, so you have better visibility into what needs to happen in the next six, 12, 18 months. NVV: Is there any dilution? But the costs are definitely there.

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

Both Sides of the Table

DECEMBER 1, 2009

I know this is unconventional thinking but if you want to understand more I cover my rationale on this post about The Most Common Early Stage Startup Mistakes and again in this post covering how to implement startup prenuptials. Resist the temptation to hire clones of you. Are you intuitive vs. process oriented? Plug your gaps.

Hiring 289

Hiring Cofounder Dilution Startup 289

The Equity Kicker

MARCH 17, 2015

In the 1990s when companies needed £2-5m to get a product to market they had money to hire a team of people to help them. Big picture this increased capital efficiency is great for entrepreneurs because they suffer less dilution, but it does mean they have to do things they aren’t skilled at.

Early Stage 60

Early Stage Venture Capital San Francisco Silicon Valley 60

Both Sides of the Table

JUNE 5, 2011

Early-stage investors in technology startups are only looking for growth-oriented companies that can achieve an “exit&# someday – either via selling your company to a larger company or via an IPO. 1 year in you stop catching early morning flights. But 6 months later you’re not working past 10pm.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

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

Austin Startup

FEBRUARY 13, 2019

Either way, if you know you’re going to fail, it’s much better to do so with your own money on the line than money that also costs you in dilution, perpetuity or more. Some came from angel investors, but we also sought out industry experts to be early contributors in this stage, which leads me to tip number three.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

Both Sides of the Table

JUNE 5, 2015

In the old days there usually weren’t convertible notes on early-stage deals and there weren’t party rounds with 20 angels or 6 seed funds. So how DOES a VC think about financings at early stages? Option pool (likely dilution in the future, which is a function of a higher price just not yet defined).

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

View from Seed

SEPTEMBER 9, 2014

Many startup CEOs hire COOs or launch companies with a co-founder carrying the title. When should founders hire one? For most of my career, I’ve served startups and early-stage companies as an operating executive or advisor. This is a guest post from Stephano Kim , former co-founder of Web 1.0 Based on what criteria?

Hiring 336

Hiring Cofounder Startup Technical Cofounder 336

YoungUpstarts

DECEMBER 7, 2014

Many new starters are reluctant to ask for any kind of assistance in the early stages, and it’s difficult to understand why. The starter may feel that outside assistance somehow dilutes the stand-alone nature of the operation, but this isn’t really the case. Advice For The Young At Heart building a team hiring outsourcing'

Dilution 202

Dilution Early Stage Hiring Employee 202

Hunter Walker

JUNE 9, 2021

Ok, the headline is announcing Screendoor , a $50m+ collaboration of some like-minded early stage investors to back new VCs from underrepresented groups (basically people who don’t look like me). Well, I couldn’t be more excited to do just this. The 10 initial Screendoor Venture Advisors.

Columbus 134

Columbus Institutional Investors Dilution Early Stage 134

ReadWriteStart

OCTOBER 28, 2010

Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. It is very likely that one or more co-founders will be putting in some cash in the early stages of the company. What happens if one of us leaves the company? Is it debt?

Cofounder 128

Cofounder Founder Equity Dilution 128

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

Both Sides of the Table

FEBRUARY 17, 2011

If you are able to raise money from credible sources at a reasonable dilution percentage then I personally favor getting the round done now and building your business. How much dilution am I going to have to take now? So if you can take 27% dilution for $1.5 So if you can take 27% dilution for $1.5 25% dilution).

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

Up and Running

JULY 14, 2015

An early stage startup will want to access funds to help further validate its business proposition. You hire more staff than you need, become inefficient with operations, or move to bigger offices. They could be making a senior hire, developing your product, or achieving a certain number of users for your product.

Technical Review 60

Technical Review Valuation Due Diligence Finder 60

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. This is because excessive capital becomes toxic for an early stage company. The rush to hire results in a relaxation of “hire only A players rule.”

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

Haystack

AUGUST 18, 2019

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.) Many of these new data-driven funds are hiring experienced VCs across early stages and building outposts in the Bay Area.

Seed Stage 108

Seed Stage Cap Table Early Stage Malaysia 108

View from Seed

APRIL 16, 2015

An easy way to think about it is that value over time doesn’t go up and to the right in a straight line like this: Instead, it’s more of a stair step like this: So, what are the value inflection points that create the stair steps, and how does one think about it at the earliest stages? These might include: Bring on a technical co-founder.

Seed Stage 120

Seed Stage Cofounder Early Stage Startup 120

K9 Ventures

JUNE 12, 2012

Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing. This is because excessive capital becomes toxic for an early stage company. The rush to hire results in a relaxation of “hire only A players rule.”

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

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. Hire your co-founder. Involve them in fund raising, hiring, strategy, etc. Most senior employees who join are given 2% if they join early. I wrote about many of the early-stage startup mistakes here.

Cofounder 393

Cofounder Founder Vesting Founder Vesting 393

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. 1% is even less after you factor in dilution.

Equity 41

Equity Employee Startup Vesting 41

Berkonomics

DECEMBER 20, 2018

Why are you so strongly sold on royalty licensing as the most effective way to finance a tech-based early stage company? Would I hire a broker? What are the advantages of using royalties instead of raising investor funds, other than no dilution of equity? I have the weeks to follow to make mine. Investment banker?

IP 54

IP Intellectual Property Investment Bankers Product 54

Both Sides of the Table

SEPTEMBER 5, 2012

In a standard VC term sheet there is a standard term called an “anti dilution provision” and they are in nearly 100% of deals. You rarely find full ratchets in early-stage deals any more. It has nowhere near the same dilutive effects as a full ratchet except in extreme edge cases. ” Full R at-shits.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Berkonomics

DECEMBER 20, 2018

Why are you so strongly sold on royalty licensing as the most effective way to finance a tech-based early stage company? Would I hire a broker? What are the advantages of using royalties instead of raising investor funds, other than no dilution of equity? I have the weeks to follow to make mine. Investment banker?

IP 48

IP Intellectual Property Investment Bankers Product 48

The Startup Lawyer

AUGUST 22, 2011

. “Control&# of a startup can manifest itself in various forms such as equal (or investor-favorable) representation on the board of directors or a requirement of obtaining seed investor approval for new hires and/or budget matters. It does not belong in any early stage deal. Non-Dilution.

Angel Investor 99

Angel Investor Dividend Dilution Cofounder 99

keen.io

FEBRUARY 5, 2013

These were the best resources I found: Equity for Early Employees in Early Stage Startups. Startup Equity for Early Employees. On the other hand, this was new territory for the founders as well; they had zero experience making offers to new startup hires. Paul Graham’s Equity Equation. 8 and 2.5% in equity.

Salary 50

Salary Equity Startup San Francisco 50

David Teten

JANUARY 21, 2021

VI: Revenue-based financing: The next step for private equity and early-stage investment. Jonathan Bragdon , CEO, describes Capacity as “a team of founders-turned-funders making non-dilutive, founder-aligned investments of $50-$300k in post-startup, post-revenue businesses planning to 2X revenues in 12-24 months.

Equity 78

Equity Revenue Cofounder Colorado 78

rapidrollout.wordpress.com

JANUARY 15, 2011

He or she might call himself a “consulting CTO,&# “freelance CTO,&# “on-demand CTO,&# “CTO on call,&# “CTO for hire,&# or just a “technology strategy advisor.&# And finally, you may be able to avoid diluting your equity. And why would you hire a technology guy who launched a failed startup?

Fractional CTO 40

Fractional CTO CTO CTO Hire Fractional VPE 40

Genuine VC

FEBRUARY 28, 2011

It is essential that you ask the “number of fully-diluted shares outstanding.” At a board level, VCs and other members don’t like to see someone recently hired already receiving new options or a salary raise after a short period of time. Early-Stage. Late-Stage. Senior-level position.

Startup 121

Startup Equity Vesting Salary 121

The Next Web

OCTOBER 7, 2013

They were referring to non-founder engineers, most commonly the first hire for technology businesses. However, at the very early stage, they are taking as much risk with their future as the founders. Every time a startup raises capital, all common shareholders are diluted. Engineer #1? Let’s state the obvious first.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Both Sides of the Table

APRIL 3, 2010

So if a VC wants to work with really talented early-stage entrepreneurs there are times where they have to be willing to seed fund them in order to be in the deal. They said that they didn’t want the extra money or dilution. A very well known early stage fund used to have a rule that they didn’t do follow ons.

Venture Capital 265

Venture Capital Term Sheet Early Stage Silicon Valley 265

Berkonomics

SEPTEMBER 28, 2017

And then there are options: [Email readers, continue here…] Stock options or phantom stock are the tools of early stage businesses used to attract great talent when there is not enough cash to pay market rates. An option plan should carve out an addition of about 15% of the “fully diluted” shares.

Early Stage 102

Early Stage Equity Stock Options Vesting 102