www.avc.com

SEPTEMBER 22, 2011

Employee Equity: How Much? The most common comment in this long and complicated MBA Mondays series on Employee Equity is the question of how much equity should you grant when you make a hire. And the amount of equity you need to grant to accomplish these hires is also an art and most certainly not a science.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

Both Sides of the Table

SEPTEMBER 28, 2014

by Michael Woolf that is worth any startup founder reading to get a sense of perspective on the reality warp that is startup world during a frothy market such as 1997-1999, 2005-2007 or 2012-2014. So if your costs are $500,000 per month and you have $350,000 per month in revenue then your net burn (500-350) is equal to $150,000.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Gust

MAY 24, 2012

Some commentators have suggested this is the wave of the future, signifying a shift in the balance of power from investors to founders of the relatively small, elite group of growth companies that make it to public markets. Nevertheless, these preferences aren’t intended to last forever.

IPO 159

IPO Equity Common Stock Stock 159

This is going to be BIG.

JANUARY 18, 2024

While they might be generally smart, they’re unsophisticated investors who don’t know what the market is for where you are. On the other hand, they could be the opposite—much more focused on near-term cash distributions than long-term equity appreciation. How long do they think it will take to make a return if there is one?

.Net 88

.Net Cap Table Startup Technical Review 88

View from Seed

APRIL 30, 2015

Glen Mello: Venture debt is a good complement to equity. It’s generally got a lower cost compared to equity capital and can help support growth. So it makes it a lot more challenging when you have debt on the books that isn’t as longer term as equity. What are some pros and cons?

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

Both Sides of the Table

AUGUST 3, 2010

I can save tons of development time and I think I can buy it for all equity. How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. It meant that the management teams hadn’t figured out a product / market fit for their own businesses. Your choice.

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

SEPTEMBER 17, 2011

.&# Still, I’ll bet that functionally you divide areas of competence like sales & marketing, product, engineering, biz dev, etc. I usually encourage people to think about titles like, “Founder & CTO&# or “Founder & VP Marketing.&#. Dilute your cash, equity or both. and my favorite].

Operations 292

Operations CTO Hire Startup Early Stage 292

Up and Running

JULY 1, 2020

You may grow to tap new markets or increase sales in your current markets. 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. A business plan for a new employee in a new market.

Business Plan 152

Business Plan Forecast Operations Dilution 152

Both Sides of the Table

JANUARY 4, 2014

– while the other might want a quick sale and pocket some bucks while the tech market is hot. Equity for the future? If you are the person staying how resentful will you become working your arse off for equity that your co-founder who leaves will get value from. Those are the easy cases. We sat down the three of us.

Founder 340

Founder Sacramento Cofounder Technical Review 340

Both Sides of the Table

OCTOBER 1, 2009

In the first post in this three part series I described why I believe the VC market froze between September 2008 – April 2009. We spent our future since the equity was artificial. When the market run started in March people were relieved that “the world wasn’t ending” so they started spending again. So why the ’09 bounce?

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

discuss.joelonsoftware.com

NOVEMBER 1, 2010

where I can learn about how to build a sweat equity team? After 14 years of trying to do most of it myself, Im ready to build a team, and aggressively build market share in a niche that I believe my competitors have neglected. Rather, it is a proposal for sweat-equity investors. But this proposal isnt for angel cash investors.

Sweat Equity 40

Sweat Equity Equity Angel Investor Affiliate 40

ReadWriteStart

JANUARY 27, 2011

And, oh by the way, we also really like the idea of the 1M/1M entrepreneurs building valuation and negotiating leverage through these business development efforts, instead of signing off large chunks of their company in form of equity early on. I also advised Andrew to greatly tighten his product and go-to-market strategy. Safarclick.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

David Teten

AUGUST 21, 2019

Most founders who are raising capital look first to traditional equity VCs. Or should they look to one of the new wave of Revenue-Based Investors? Revenue-Based Investing (“RBI”) is a new form of VC financing, distinct from the preferred equity structure most VCs use. Who are the major Revenue-Based Investing VCs?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

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

Business Plan Blog

OCTOBER 4, 2013

Furthermore, when faced with adversity only great teams can respond to competitors, markets, funding environments, staff departures, PR disasters and the like. Rather, give titles such as VP of Engineering, Product/Technology, Sales, Marketing, Finance, etc. Be sure to leave plenty of equity for investors. Early Stage.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

The Startup Magazine

JULY 1, 2022

The three main components of a company are production or service, marketing and sales, and finance. Production or service is the business’s core activity, which generates revenue. Marketing and sales are how you reach and sell to your target market. How To Create A Business Model And Identify Your Target Market.

Technology 137

Technology Venture Capital Finance Startup 137

David Teten

OCTOBER 1, 2015

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. How would one set up such a startup to eventually raise capital from outside VCs, who will be wary of ‘dead equity’ (i.e., equity that belongs to departed cofounders)? The cliffs?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

ReadWriteStart

SEPTEMBER 10, 2010

Whether it is in the emerging markets or in the U.S., They already have several customers including some telcos, and are at about $350,000 in revenues. Whether it is credit or equity, funding is very, very tight. You can get cash without diluting your ownership in the company. This is important, so please listen up.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

Ben's Blog

MAY 24, 2021

House of Representatives’ Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets (Committee on Financial Services) hearing on “Going Public: SPACs, Direct Listings, Public Offerings, and the Need for Investor Protections” May 2021. IPO market. In the first quarter of 2021 alone, SPACs raised $87.9

SEC 36

SEC Accredited Investor IPO Technical Review 36

Hunter Walker

JANUARY 2, 2017

The total value of these deals might look higher than when a tech company makes an acquihire but the premium tends to go to retention rather than the cap table (especially since (a) the acquirer might not be seen as an ‘attractive’ place to work and (b) there’s assumption of less equity upside post-acquisition).

Technical Review 116

Technical Review Cap Table Acquisition Startup 116

ReadWriteStart

JULY 18, 2011

The market just isn't that efficient to truly determine the best. He believes that equity need not be distributed equally, as long as everyone involved is happy with their arrangement. And as long as founders don't have an argument about equity shares in front of the investors they are pitching.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Both Sides of the Table

SEPTEMBER 29, 2009

But any entrepreneurs raising capital should keep in mind that this opening of the markets could possibly be temporary. Why did the VC markets freeze so quickly? Market downturn – We all know that investors move in herds. Huge downturns have a real impact on the revenue line of start-ups and therefore the pressure on valuations.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Life Beyond Code

SEPTEMBER 27, 2011

One Million by One Million is a global initiative that aims to nurture a million entrepreneurs reach a million dollars each in annual revenue and beyond by 2020, thereby creating a trillion dollars in global GDP and ten million jobs. 1M/1M Program has a bold mission. This is where numerous ventures fail.

Programming 116

Programming Silicon Valley Bootstrapping Technical Review 116

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. Consider convertible debt Before diving into a seed round, you may want to consider convertible debt over equity financing. I speak from experience.

Strategic Investors 49

Strategic Investors Austin Angel Investor Bootstrapping 49

Version One Ventures

FEBRUARY 6, 2019

It’s no secret that biotech can be very lucrative – particularly when a drug successfully makes it to market. The cost of bringing a drug to market is expensive (hundreds of millions of dollars to billions of dollars) and risky (it simply might not work!). On the flip side, biotech is much more capital intensive than software.

Dilution 132

Dilution Artificial Inteligence IPO Valuation 132

ConversionXL

JANUARY 18, 2022

Founded in 2015, revenue intelligence startup Gong is now valued at $7.25 Gong is an excellent example of a company dedicated to finding the best content marketing fit and delivering insights that resonate in formats that engage. Develop a social media marketing strategy that nurtures relationships. Use data to validate this.

Social Media 145

Social Media Audience Media Marketing 145

K9 Ventures

JUNE 12, 2012

You get a situation whether investors are incentivized to put in more money into a company, not only to buy more equity, but also to fund the quick growth. Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing.

Venture Capital 117

Venture Capital Silicon Valley Founder Seed Stage 117

K9 Ventures

JUNE 12, 2012

You get a situation whether investors are incentivized to put in more money into a company, not only to buy more equity, but also to fund the quick growth. Founders typically get their equity in a company once — at the time of founding and then get diluted with each subsequent round of financing.

Venture Capital 105

Venture Capital Silicon Valley Founder Seed Stage 105

Berkonomics

DECEMBER 20, 2018

Since I am a proponent of using equity as a tool and he is so much opposed, this week it is his turn to make the case. These are your candidates, because they are companies already absorbing much or all the marketing expense necessary to make sales of your invention. Do I understand the royalty replaces the need for equity investors ?

IP 54

IP Intellectual Property Investment Bankers Product 54

Berkonomics

DECEMBER 20, 2018

Since I am a proponent of using equity as a tool and he is so much opposed, this week it is his turn to make the case. These are your candidates, because they are companies already absorbing much or all the marketing expense necessary to make sales of your invention. Do I understand the royalty replaces the need for equity investors ?

IP 48

IP Intellectual Property Investment Bankers Product 48

Both Sides of the Table

SEPTEMBER 18, 2014

Revenue multiple? It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. 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?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Both Sides of the Table

MARCH 21, 2010

As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. They negotiate a “master agreement&# to work with your company with some maybe minimum guarantees in terms of revenue.

Warrant 298

Warrant Dilution Startup Stock Options 298

Austin Startup

NOVEMBER 25, 2018

It was there that I met Eric Simone (one of the first investors in Bazaarvoice) as well as Josh Baer (one of the first investors in Bazaarvoice through his team building our first solution and getting paid primarily in equity versus cash). I decided not to do it, ultimately, because the market was too small when I ran the numbers.

Bootstrapping 48

Bootstrapping Austin Equity Cofounder 48

The Next Web

FEBRUARY 27, 2014

your equity in a hot new patented technology business), the higher the demand (e.g., As an example, a new restaurant may get valued at 3-4x EBITDA (earnings before interest, taxes, depreciation, and amortization) and a hot dot com business with meteoric traffic growth could get valued at 5-10x revenues. Supply and demand.

Valuation 167

Valuation Forecast Seed Stage .Net 167

Both Sides of the Table

APRIL 14, 2012

You’ve found yourself in a super hot category and – let’s face it – it’s still a very frothy venture capital funding market so you may have loads of VCs chasing you. You are either bought for stock or for equity. You just said, “nobody would take 1-2% dilution.” Think about it.

Valuation 316

Valuation Balance Sheet Dilution Term Sheet 316

Brandanew

JULY 11, 2015

So, it cannot be making a budget car even if there is a market. Its existing premium customers won’t take it kindly as it dilutes the said image. Positioning is the way a product is placed in the market. It basically defines what segments of the market it is targeting. Brand equity. Brand positioning.

Virginia 100

Virginia Equity Differentiation Dilution 100

Tim Keane

JANUARY 12, 2010

Bottom Up Market Sizing » January 12, 2010. Good investors use the valuation discussions to gauge the business savvy of the management team and to understand their ability to appreciate and deal with economic market forces that set values. Startups and angels: Along the way to success. times at 5 years and 11.39

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68