Both Sides of the Table

FEBRUARY 6, 2013

it’s the most expensive dilution you’ll ever face. But not anal if one founder who shares equity graciously with early employees who are treated as “co-founders” My idea startup team is heaving on tech personnel but also has strong product management. Be careful about board construction.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

The Next Web

OCTOBER 7, 2013

Quite frankly, waiting provides more assurance around employment risk without the commensurate sacrifice in equity comp. 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? Facebook’s engineer #100 isn’t doing poorly.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Feld Thoughts

SEPTEMBER 2, 2011

As Finance Fridays continues, we are introducing the concept of the Cap Table. Equity is split 55% and 45%, but where is that officially recorded? As first time entrepreneurs they did not create an employee options pool; we’ll fix that in a little while. Praveena wants to invest $20,000 and get 20% equity.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

David Teten

AUGUST 19, 2019

This structure offers some of the benefits of traditional equity VC, without some of the negatives of equity VC. I’ve been a traditional equity VC for 8 years, and I’m now researching new business models in venture capital. Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS.

Revenue 60

Revenue Technical Review Software Review Equity 60

The Startup Magazine

MARCH 30, 2022

This is where growth financing options come into play. So what is it exactly, and to what extent can you finance the growth of your startup using it? A quick overview of growth financing. Tip: carefully review your financing options. The scope of growth financing products. The advantages. Final thoughts.

Finance 134

Finance Dilution Green Revenue 134

www.inc.com

SEPTEMBER 24, 2011

Finance | Tuesdays. Financing a Small Business. Financing A Small Business. Personal Finance. Employee Benefits. Should You Share Equity with Consultants? a 50-employee provider of e-marketing solutions to small and midsize businesses, based in Needham, Mass. Start-up | Mondays. Innovation | Fridays.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

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

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 ties into this Paul Graham article: [link] /equity. This answer.

Equity 40

Equity Employee Founder Cofounder 40

Hunter Walker

JANUARY 3, 2020

2019 didn’t herald any major innovations in how early startup employees receive equity. A subset of startups we worked with also made changes to their equity plans which allowed for longer exercise windows in the case of an exiting employee in good standing (usually who have stayed a minimum of two years at the company).

Equity 56

Equity Employee Dividend Cofounder 56

The Startup Magazine

JULY 1, 2022

The three main components of a company are production or service, marketing and sales, and finance. Finance is how you manage your finances, including budgeting, accounting, and bookkeeping. Financing Your Startup. The most common types of financing are debt financing, equity financing, and venture capital.

Technology 137

Technology Venture Capital Finance Startup 137

ithacaVC

SEPTEMBER 10, 2012

But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” I am not even sure what “undiluted stock” is, but safe to say the person (I will call him Exec X) meant stock that his equity would not be dilutable in terms of ownership.

Dilution 53

Dilution Employee Cap Table Stock 53

www.mattbartus.com

SEPTEMBER 24, 2011

Equity for Consultants – Keep it Simple! posted Feb 3 in Equity , People issues. We will grant him/her X% fully diluted shares up front, and every time he/she makes an introduction, he/she will vest in 100 shares.” If you are paying in this manner and the person was truly an employee, you could have troubles.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

Up and Running

DECEMBER 9, 2014

Bates: Good morning and welcome to our CEO panel, “How to Fine-Tune Your Small Business Finances From Funding to Growth” which I think is the direction that we would all like to be going. I’m here with some really phenomenal CEOs who are going to talk to us today about small business finances from funding to growth.

Small Business 95

Small Business Finance Forecast Metrics 95

Hunter Walker

AUGUST 7, 2017

But employee option pool is important enough that I wanted to briefly expand upon my comment above. Employee options pools, typically created at the point of financings, shouldn’t be treated as haggling over dilution, but rather a strategic resource that will help founders build the best team and, by extension, a more valuable company.

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

ReadWriteStart

SEPTEMBER 10, 2010

Whether it is credit or equity, funding is very, very tight. I call it drip-financing. Most entrepreneurs have no choice but to avail of this sort of financing along with the mentoring and the contacts that could come with it (doesn't always come along, though). In 1M/1M, our preferred financing strategy is customers.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

Up and Running

SEPTEMBER 20, 2021

The use of a cap table for a company comes into play when it has to track the total amount of shares, the value of shares, and the equity ownership of all the shareholders. The data of the company, such as debt and the company’s equity ownership, is laid out with the help of a cap table. Convertible notes. Example of a cap table.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Both Sides of the Table

SEPTEMBER 18, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Less than you’ll probably grant your most junior employees in stock options? Me: More dilution? Me: I know.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

keen.io

FEBRUARY 5, 2013

For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. To begin answering this question, I started on a quest to understand startup financing. From there, I began googling things like “first employee startup equity” and “startup offer negotiation.”

Salary 50

Salary Equity Startup San Francisco 50

David Teten

NOVEMBER 17, 2011

I’ve often found it helpful to have on hand a simple model showing the impact of each financing stages on all team members, suitable for sharing with everyone in the company. In particular, this model is designed to help all team members understand the impact of dilution on their options.

Employee 155

Employee IRR Startup Mexico 155

Seeing Both Sides

AUGUST 28, 2017

But once entrepreneurs have their initial team and product in place, a few smart advisors around the table and the social proof required to attract great talent, why would they raise additional dilutive equity capital if they can raise non-dilutive capital through the sale of tokens? Fuzzy Governance.

Early Stage 20

Early Stage Equity Venture Capital Government 20

Seeing Both Sides

AUGUST 28, 2017

But once entrepreneurs have their initial team and product in place, a few smart advisors around the table and the social proof required to attract great talent, why would they raise additional dilutive equity capital if they can raise non-dilutive capital through the sale of tokens? Fuzzy Governance.

Early Stage 20

Early Stage Equity Venture Capital Government 20

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. For employees at early-stage companies… the equity you’ve been granted is likely common stock, just like the founders.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 3 Dilution. 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

ReadWriteStart

SEPTEMBER 9, 2019

Although some founders take venture capital in exchange for equity, that’s not the only way to do it. Here’s his take: Brad Anderson : As someone who’s worked in investment banking and been an early employee at a startup, do you think most founders understand their financing options? Why or why not? Oftentimes, it is.

Venture Capital 105

Venture Capital Equity SBA Finance 105

dondodge.typepad.com

JANUARY 15, 2011

Community is more powerful than money or technology » August 11, 2007 How much equity for investors and employees? How much equity should I give up? How much equity should I grant to early employees? No loss of equity, at least until they convert at Series A. Should I take Angel or VC money?

Equity 40

Equity Employee Dilution Valuation 40

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. For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

APRIL 25, 2011

It’s nearly impossible to get a services company financed by VCs. They have created two internal technology “products&# and wanted to figure out how they could turn their services business into a product business that could be financed. You’re a small fish. This team is talented. They wanted advice.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332

abovethecrowd.com

APRIL 20, 2016

Why the Unicorn Financing Market Just Became Dangerous…For All Involved. All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. By January of 2016, that number had ballooned to 229.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

Gust

SEPTEMBER 17, 2014

It’s like we need a finance 101 course for entrepreneurs. In finance they call it “terminal value” but the truth is the price is as arbitrary at your A round as it is at your seed round. Less than you’ll probably grant your most junior employees in stock options? Me: More dilution? There were no metrics. Last year ….

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Rob Go

JUNE 17, 2014

In my last post about raising seed vs. jumping straight to A, I received a good comment from Chris Woods that my analysis neglected to include the impact of option pools that are created at each financing round. Essentially, the new investor wants there to be a certain % of options available to employees after they invest.

Option Pool 65

Option Pool Dilution .Net Term Sheet 65

Altgate

MAY 24, 2012

Mark Zuckerberg and his executive team have been extremely successful at retaining equity in their company. As a whole, Zuckerberg, his co-founders, and his former and present employees, own about 55% of Facebook. On the other hand, they are also understandably greedy about maintaining a high equity stake, by minimizing their dilution.

Pre-Money Valuation 43

Pre-Money Valuation Cofounder Dilution Valuation 43

ithacaVC

DECEMBER 13, 2013

They are typically pretty simple: (i) shares owned by founders and (ii) shares authorized for issuance in a stock option pool, some of which may be issued to employees already and some of which will be available for future issuance. If no additional equity is ever granted to Founder X and Founder Y, then Founder Y will ALWAYS own 1.63

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Startup Lessons Learned

JUNE 19, 2019

Previously, on the venture side you wanted to invest as early as possible, because the first round of financing got you to a product, and then you'd get beta-type customers, and then you'd raise a second round at a much higher price, and the business could immediately take off from there. Employees are not entrepreneurs. Most hedge.

Silicon Valley 159

Silicon Valley Lean Venture Capital Pre-Money Valuation 159

Startup Company Lawyer

MAY 4, 2009

If a founder’s company raises more than $50,000 in debt or equity financing, excluding funds from the founder, within 18 months of formation, then the founder must pay a tuition fee of $4,500, which is used to cover the Institute’s expenses in providing the program. Incorporation. Mentors: Ken Ross |.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

venturehacks.com

MARCH 21, 2008

Or they bring you a handful of great employees. If your company hasn’t raised a Series A, increase the advisor’s equity by roughly 30%-50% to account for dilution from seed investors, Series A investors, option pools, swimming pools, and the like. Equity is the gift that keeps on giving.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

venturehacks.com

OCTOBER 21, 2010

Reading on, the term sheet states, “The $8 million pre-money valuation includes an option pool equal to 20% of the post-financing fully diluted capitalization.&# As your lawyer explains that the so-called pre-money valuation always includes a large unallocated option pool for new employees, your stomach sinks.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

epaley.com

MAY 6, 2013

Once financed, everyone at the startup should have a reasonable salary, but the real compensation for achieving the improbable is the equity that is typically shared between all employees proportional to the expected contribution of each person. Did that make the employees happy? The logic is compelling, but faulty.

Salary 41

Salary Startup Equity Forecast 41