Genuine VC

FEBRUARY 28, 2011

So optimizing a startup offer involves not just one key figure – salary – but also the option package. Nearly all startup employees receive a number of options figure in their offer. It is essential that you ask the “number of fully-diluted shares outstanding.” Early-Stage. Late-Stage.

Startup 121

Startup Equity Vesting Salary 121

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

www.instigatorblog.com

OCTOBER 23, 2010

I recognize that it’s challenging to give much more than the accepted guidelines on equity to early startup employees. You can’t have an option pool that takes up 50% of the company’s shares, and you have to leave room for future employees as well. 1% is even less after you factor in dilution.

Equity 41

Equity Employee Startup Vesting 41

Tim Keane

JANUARY 12, 2010

  A cumulative dividend can get to be very expensive and is not often a feature in early stage terms.   A full ratchet anti-dilution clause is very unfriendly to entrepreneurs; it requires them to make up the entire difference in price from their own holdings.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

The Startup Lawyer

FEBRUARY 4, 2011

As equity in the company tends to be the currency of early stage startups, the startup should have a good foundation for assigning value in terms of equity. Most incubators take common stock and sit “side-by-side&# with the founders, but some may want some (weak) preferred stock and/or dilution protection.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

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

Professor VC

JANUARY 17, 2008

At a $1 million, pre-money, with an investment of $500K, that would leave 67% of the company for the founders and initial option pool. Keeping this simple with no employee option pool and just founders and investors, investors would hold 60% at this point (20% for angels and 40% for VCs) and founders would have 40%.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

www.payne.org

SEPTEMBER 22, 2011

3 Dilution. 5 Stock vs Options. The total preference is less of an issue in early stage companies (e.g. However, it can be a significant issue in later stage companies that have raised a lot of money. Those new shares are created out of thin air by the company, and will dilute all of the current stockholders.

Equity 56

Equity Employee Vesting Preferred Stock 56

Berkonomics

NOVEMBER 23, 2023

and here is the usual early-stage trap… First, a brand-new enterprise is often formed from the efforts of several “partners”, each with an expertise valued by the others. First you must create a stock option plan using your attorney, which must be registered in many states as a security offering. Here are some rules.

Equity 62

Equity Stock Options Vesting Early Stage 62

Up and Running

SEPTEMBER 20, 2021

Total share ownership is the sum of the common stock, stock options, preferred stock, and any other stock category for a single individual. 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 Outline your plans for future employee stock option pools.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

www.startupnorth.ca

OCTOBER 23, 2010

But for every founder, there is an early employee that takes near equal risks in joining an early-stage company. Remember the goal is to incent early employees to have an emotional ownership of the product and company they are building. Darmesh Shah has a great list of insights for employees joining early stage companies.

Employee 41

Employee Founder Salary Equity 41

Berkonomics

MAY 12, 2010

First you must create a stock option plan using your attorney, which must be registered in many states as a security offering. (The An option plan should carve out an addition of about 15% of the “fully diluted” shares. a share, then options must be priced at that amount. There are some rules.

Early Stage 85

Early Stage Equity Stock Options Vesting 85

venturehacks.com

SEPTEMBER 22, 2011

When you evaluate a candidate, ask yourself whether she is likely to increase the next round’s share price (include the dilution of her market rate options). That’s true – someone who can help you fundraise in the next round can easily make up for the added or extra dilution from the current round.

Equity 40

Equity Cap Table Valuation RSS 40

www.paulgraham.com

APRIL 28, 2010

Sometimes angels deal terms are as fearsome as VCs.Other angels, particularly in the earliest stages, will invest basedon a two-page agreement. Whatkind of anti-dilution protection do they want? Angels and even VC firms occasionally do this, but they alsoinvest at later stages. The problems are different in the early stages.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Both Sides of the Table

FEBRUARY 22, 2011

Here’s the problem: Let’s say you have 5 VCs (plus angels but let’s ignore that for now) and each one owns 5% so you took 25% dilution to get the round done. This is largely true because most VCs have a 20% minimum threshold in order to invest so bringing in multiple VCs can be very expensive in terms of dilution.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314