Both Sides of the Table

AUGUST 14, 2017

Boards are not appointed to be founder-friendly lapdogs for the 1–3 founders who start companies and usually own the largest equity positions in the company. To be clear — most founders I’ve ever worked with have been super ethical, very conscientious, not overly greedy and take their personal responsibilities very seriously.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

Startup Professionals Musings

JANUARY 15, 2021

Make sure the government waits for a stock sale to collect taxes. This is called stock dilution control. While new equity owners always have to get it from someone, actual re-allocation of existing shares should be based on a formula to maximize the value of your remaining founder shares. In the U.S.,

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Startup Professionals Musings

JULY 1, 2022

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Advisory Board Member, 1% Senior Engineer,3 -.7% 7% Product Manager,2 -.3%

Stock Options 343

Stock Options Advisory Board Stock Startup 343

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

David Teten

JANUARY 19, 2021

From traditional equity VC, Flexible VC borrows the option to pursue and reap the rewards of an outsized exit. Flexible VC 101: Equity Meets Revenue Share. Equity Ownership. Yes, typically preferred equity. On average, founders own just 43% of equity by Series B , declining thereafter. Flexible VC 102: Variations.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

www.inc.com

SEPTEMBER 24, 2011

Sales & Marketing | Wednesdays. SALES & MARKETING. Should You Share Equity with Consultants? To grow his cash-strapped start-up, Parker ended up sharing equity -- not only with employees, but also with consultants and vendors. But sharing equity can have pitfalls, too. The Goods: Your Business Toolbox | Thursdays.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

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 need a COO to focus on the business while I focus on M&A and strategic discussions.&# The company that wrote me this told me they were doing $4 million in sales. What will it do?

Operations 292

Operations CTO Hire Startup Early Stage 292

Berkonomics

DECEMBER 31, 2020

The company was funded entirely by grants from the National Institute of Health, amounting to millions of non-dilutive dollars in all. No dilution to shareholders or the founders. The post Financing with grants, not equity or debt first appeared on BERKONOMICS. How refreshing! How grants are considered. Other sources of grants.

Equity 62

Equity Finance Dilution Founder 62

Startup Professionals Musings

MAY 8, 2022

The downside is loss of control and financial dilution. You have very little money, and you don’t want to give away your equity. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Should you start a company solo or find co-founders to help you?

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

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. I’m not saying there are never reasons to buy another company for cash and/or equity. BUT … it’s your company.

Merger 276

Merger Technical Review Early Stage Dilution 276

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

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

OCTOBER 11, 2009

They are usually offered around 0.25% of the companies equity in exchange for their role and I’ve seen many companies hand out a total of 2% to advisers. My main advice to you if you’re considering it is don’t waste much equity on it. Using this approach you may be able to get a few key advisers with no equity at all.

Advisory Board 306

Advisory Board Startup Equity Valuation 306

Up and Running

JULY 1, 2020

You may grow to tap new markets or increase sales in your current markets. It starts with a high-level strategy and continues all the way to market analysis, sales plans, operations planning, and financial modeling. Lenders and equity investors are less emotionally involved in the plan as people within the company.

Business Plan 152

Business Plan Forecast Operations Dilution 152

Both Sides of the Table

SEPTEMBER 28, 2014

Gross margin (GM) is the amount of profit you make per sale of your product or service taking into account your total costs of selling that product or service. If you have a very low gross margin (10-30%) it can be very hard to build a large, scalable business because you need to make a lot of sales to cover your operating costs.

Burn Rate 383

Burn Rate Balance Sheet .Net Valuation 383

Startup Professionals Musings

JULY 24, 2011

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Advisory Board Member, 1% Senior Engineer,3 -.7% 7% Product Manager,2 -.3%

Equity 234

Equity Advisory Board Stock Options Stock 234

The Startup Magazine

JULY 1, 2022

The three main components of a company are production or service, marketing and sales, and finance. Marketing and sales are how you reach and sell to your target market. 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.

Technology 138

Technology Venture Capital Finance Startup 138

Austin Startup

FEBRUARY 4, 2019

L to R: Tiara Zolniez (Co-Founder & Sales), Dr. Roshawnna Novellus (Co-Founder & CEO), Alisha Griffey (COO) The Forrest Four-Cast: February 4, 2019 Fifty diverse startups will aim to impress a panel of judges and a live audience with their skills, creativity and innovation at SXSW Pitch Presented by Cyndx.

Startup 50

Startup Cofounder Technical Review Equity 50

Berkonomics

FEBRUARY 23, 2023

So, the question: load up with more equity and dilution? For young companies, often the question is whether to suffer a new round of dilution to stimulate growth, or to sell earlier and not share the (presumably) increased proceeds with additional investors. Or sell now?

Dilution 62

Dilution Valuation Early Stage Equity 62

Startup Professionals Musings

AUGUST 10, 2019

The downside is loss of control and financial dilution. You have very little money, and you don’t want to give away your equity. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Should you start a company solo or find co-founders to help you?

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

David Teten

JANUARY 21, 2021

V: Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? VI: Revenue-based financing: The next step for private equity and early-stage investment. VIII: The Leading Flexible VCs, With Structures Between Equity and Revenue-Based Investing.

Equity 78

Equity Revenue Cofounder Colorado 78

Startup Company Lawyer

MARCH 14, 2010

After the recent announcement of the Series Seed Financing documents by Marc Andreesen, Brad Feld points out that there are now four sets of “open source&# equity seed financing documents: TechStars Model Seed Funding Documents (by Cooley). Y Combinator Series AA Equity Financing Documents (by WSGR). under $500K).

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

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?

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?

Early Stage 20

Early Stage Equity Venture Capital Government 20

ReadWriteStart

OCTOBER 28, 2010

More excerpts from "Do More Faster" Title chapter: " Do More Faster " by David Cohen How should we split the equity? Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. Or worse, one that claims equity that you don't believe is due.

Cofounder 128

Cofounder Founder Equity Dilution 128

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.

Dilution 114

Dilution Revenue Finance Entrepreneur 114

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 115

Technical Review Cap Table Acquisition Startup 115

ReadWriteStart

SEPTEMBER 10, 2010

Whether it is credit or equity, funding is very, very tight. You can get cash without diluting your ownership in the company. Because customer financing equals revenue, not equity. Kristen is doing about $70,000 year-to-date, and expects to hit $200,000 for the 2010 fiscal year based on her holiday sales projections.

Cloud 115

Cloud Silicon Valley Incubator Finance 115

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). So in a way it’s self selecting. These days $10 million is quaint for the best A-Rounds and many are raising $20 million at $60–80 million pre-money valuations (or greater).

Pre-Money Valuation 471

Pre-Money Valuation Valuation Venture Capital Early Stage 471

Berkonomics

MARCH 8, 2018

Give one percent equity to each outside board member vesting over four years of service. Pay early stage board members of companies that are not lifestyle businesses one percent of the fully diluted equity in the form of an option that vests over four years of service.

Early Stage 102

Early Stage Vesting Stock Options Preferred Stock 102

Startup Professionals Musings

SEPTEMBER 26, 2015

Investors, on the other hand, look at the money figure, and even the equity, as the easy part. This is a loan with an option to convert to equity at a later date. For later investments, the price is equity, with a percentage of the owner stock to be assigned to the investor. Terms to prevent equity dilution relative to others.

Term Sheet 120

Term Sheet Demand Preferred Stock Liquidation Preference 120

ReadWriteStart

JULY 18, 2011

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. VCs need to figure out the people side of the company and raising money is a sales job.

Investment Bankers 153

Investment Bankers Technical Review Cofounder Due Diligence 153

Startup Professionals Musings

DECEMBER 14, 2014

The downside is loss of control and financial dilution. You have very little money, and you don’t want to give away your equity. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Should you start a company solo or find co-Founders to help you?

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Startup Professionals Musings

OCTOBER 21, 2017

CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Advisory Board Member, 1% Senior Engineer,3 -.7% 7% Product Manager,2 -.3%

Stock 140

Stock Stock Options Advisory Board Startup 140

Both Sides of the Table

SEPTEMBER 29, 2009

Three reasons: There is a relative valuation between the price a VC pays and their expectations of what it will exit for in an IPO or trade sale. Also, it’s harder to pay a $30 million pre-money value on an unproved company when you see public companies with $100 million in sales trading for less than $20 million.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Haystack

JULY 8, 2018

For employees at early-stage companies… the equity you’ve been granted is likely common stock, just like the founders. While folks will feel sympathy for line employees at startups who don’t make any gains in a sale, no one will feel sorry for early-stage investors who get washed out.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

Both Sides of the Table

MARCH 21, 2010

I’ve heard the following so many times that it still makes me scratch my head, “if those guys are going to get rich off of our backs then we’re going to look like fools if we don’t have equity.&#. I’ve already made clear that I think raising equity from “strategic money&# is an oxymoron.

Warrant 298

Warrant Dilution Startup Stock Options 298