VC Adventure

AUGUST 16, 2020

Despite how much time companies talk about the importance of their employees and, in many cases, how every employee is also an “owner” of their business through their option program, most companies are pretty ad hoc (or down right sloppy) about how they plan for and execute their option program.

Programming 149

Programming Vesting Equity Software Review 149

The Next Web

OCTOBER 7, 2013

They were referring to non-founder engineers, most commonly the first hire for technology businesses. Quite frankly, waiting provides more assurance around employment risk without the commensurate sacrifice in equity comp. Startup employees are granted common shares out of something called an option pool.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Berkonomics

NOVEMBER 23, 2023

Here is the warning: The execution of equity allocations and of a good incentive program using equity is often mismanaged, damaging the corporate capitalization structure and even affecting the outcome of subsequent investment into the company. … Equity is divided between the founders and the business begun.

Equity 62

Equity Stock Options Vesting Early Stage 62

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. Don’t hire a homogenous team.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

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.inc.com

SEPTEMBER 24, 2011

Employee Benefits. Should You Share Equity with Consultants? Back in 1997, Randy Parker was staring at a blank whiteboard, wondering where hed find the money to hire the employees and consultants he needed to build his new product. "We But sharing equity can have pitfalls, too. Financing A Small Business.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

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

Up and Running

JULY 1, 2020

While it’s called a business plan, it can be written and utilized to successfully enter a new market, launch a product, or weigh the potential of adding an employee. Executive summary: This short summary quickly informs your employees, lenders, and investors about the nature and benefits of the expansion.

Business Plan 152

Business Plan Forecast Operations Dilution 152

discuss.joelonsoftware.com

NOVEMBER 1, 2010

where I can learn about how to build a sweat equity team? Right now, my business is just myself and a part-time employee who does support, testing, and product usability design. Rather, it is a proposal for sweat-equity investors. Equity partners need to have a hand in guiding the enterprise. The gist: 1.

Sweat Equity 40

Sweat Equity Equity Angel Investor Affiliate 40

Hunter Walker

JANUARY 3, 2020

2019 didn’t herald any major innovations in how early startup employees receive equity. Which is a shame since, on the margins, the most talented hires deserve more of it. They are often more aware of what their role requires as CEO (and sometimes their own strengths vs weaknesses).

Equity 56

Equity Employee Dividend Cofounder 56

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 Next Web

OCTOBER 10, 2013

Hire everyone you need as an employee. Too dilutive.”. Dilution – bringing on a co-founder likely means you’re splitting your share in half. Your company needs to be worth three times more for your equity to be worth the same. The required number of cofounders for success is: “Zero” – You don’t need a cofounder.

Cofounder 143

Cofounder Technical Cofounder Kenya Dilution 143

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

Berkonomics

SEPTEMBER 28, 2017

For those negotiating equity allocations it covers some of the most complex issues to address in the process. Equity is divided between the founders and the business begun. An option plan should carve out an addition of about 15% of the “fully diluted” shares. Director level employees are typically granted ½%.

Early Stage 102

Early Stage Equity Stock Options Vesting 102

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

Andrew Payne

SEPTEMBER 9, 2017

I’ve probably had a thousand or more discussions about startup equity: figuring out how much to offer, negotiating, or advising others. In practice, most equity grants within a company are driven by broad calibrations with existing employees. With a total of 16 units, the initial ownership (pre-funding) is: Alice.

Equity 71

Equity Founder Vesting Dilution 71

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

blog.nahurst.com

JULY 19, 2010

This covers one of the most common situations I encounter: For a pre-funding web startup whose team includes only a non-technical cofounder, how much equity should an incoming technical cofounder get? This is an area that varies widely and can significantly impact how much equity a technical cofounder receives (if they take more salary).

Technical Cofounder 43

Technical Cofounder Cofounder Equity Salary 43

David Teten

OCTOBER 1, 2015

intrapreneurs, e.g., the employee of GE who is tasked with launching a new business. Not surprisingly, the list above also is ranked from least to most equity stake in an investment for the investor, relative to the cash they invest. equity that belongs to departed cofounders)? mentor VCs, e.g., most VCs. What are the timelines?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

The Startup Magazine

JULY 1, 2022

The most common types of financing are debt financing, equity financing, and venture capital. Equity financing is when you sell a part of your company for cash. Equity financing can give you a lot of cash upfront, but it can also dilute your ownership stake in your company. Financing Your Startup.

Technology 137

Technology Venture Capital Finance Startup 137

Hunter Walker

DECEMBER 18, 2015

Bloomberg’s article about lower-than-expected financial gains from startup IPOs for midlevel employees stuck in craw this week because there’s a handful of complex issues at play here. Even in successful companies, most initial equity grants will be worth a few hundred thousand dollars to perhaps $1-2m, when fully vested.

Equity 48

Equity Employee IPO Vesting 48

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. 4 Vesting. 5 Stock vs Options.

Equity 56

Equity Employee Vesting Preferred Stock 56

keen.io

FEBRUARY 5, 2013

For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. 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.

Salary 50

Salary Equity Startup San Francisco 50

Hunter Walker

NOVEMBER 25, 2022

Once you’ve established that, and especially if there’s an opportunity to trade off cash compensation for equity [some startups will present two offers for you to choose from, or be open to some negotiation], figure out what your floor is for near-term salary. What do you want your equity to be worth at exit?

Salary 56

Salary Burn Rate Dilution Equity 56

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. So assessing fit is critical.

Private Equity 60

Private Equity Venture Capital Equity Partner 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. Hire your co-founder. Give them a large sum of equity. Involve them in fund raising, hiring, strategy, etc. Most senior employees who join are given 2% if they join early. Vested over 4 years.

Cofounder 393

Cofounder Founder Vesting Founder Vesting 393

Berkonomics

MAY 12, 2010

Equity is divided between the founders and the business begun. Most early stage companies make the mistake of making option grants to new hires at all levels that are too aggressive and distort the capital structure of the company to a degree that damages future professional investment. Email readers continue here.]

Early Stage 85

Early Stage Equity Stock Options Vesting 85

venturehacks.com

SEPTEMBER 22, 2011

The Equity Equation. As this nuclear winter of venture hacks continues, I thought you might enjoy our thoughts on Paul Graham’s The Equity Equation. ” Read the rest of The Equity Equation first; it is great. You have to pay market rates regardless of the equity equation. If no, she is a no hire.

Equity 40

Equity Cap Table Valuation RSS 40

Genuine VC

FEBRUARY 28, 2011

This post doesn’t going into general tactical approaches of job offer negotiation, but rather focuses on the fact that with startups a significant part of compensation is related to equity or options. Nearly all startup employees receive a number of options figure in their offer. So the number of shares you receive (e.g.

Startup 121

Startup Equity Vesting Salary 121

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. David Beisel We need to celebrate the employees at startups.

Employee 41

Employee Founder Salary Equity 41

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

Haystack

AUGUST 18, 2019

Those employees and operators, who often have some book wealth now (or are running syndicates on AngelList or acting as a scout for another fund) can easily dump $50K-$100K into one of their ex-colleague’s new startups, or put this money into their friend’s new startup, or their friend’s new hot deal.

Seed Stage 108

Seed Stage Cap Table Early Stage Malaysia 108

Diego Basch

MAY 1, 2013

One of them is “ the first employee of a startup gets screwed. The truth is that being the first employee of a startup could be shitty, or it could also be a great investment of your time and effort. They hire a few good people, operate for a few years, and exit for a number between 0 (failure) and maybe 100M.

Silicon Valley 59

Silicon Valley Employee Cofounder Salary 59

Rob Go

JUNE 17, 2014

In almost every financing round, there is an important stipulation in the term sheet that talks about the employee option pool that will be created in tandem with the financing. 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

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

venturehacks.com

MARCH 21, 2008

Or they bring you a handful of great employees. Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options. Finally, there is a beauty to paying in equity rather than an equivalent amount of cash. Equity is the gift that keeps on giving.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Both Sides of the Table

APRIL 25, 2011

Early in a services business there is usually no profits as the company reinvests in hiring people to grow, but by $20 million in sales the company should at least be pulling in 10% profits (if not more) depending on how much is reinvested. You don’t necessarily want to take on the extra employees and risks. But it might not.

Silicon Valley 332

Silicon Valley IP Dividend Finance 332