Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. Over time, other people receive pieces of equity in exchange for work (employee stock options), money (seed, angel and venture investors), services (attorneys, directors, etc.). original post can be found on Quora @ [link] *.

Dilution 150

Dilution Equity Vesting Stock Options 150

The Next Web

NOVEMBER 20, 2013

There are a lot of variables to go into calculating a fair equity split a startup team. So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. You need to collectively take all four paragraphs into consideration, in calculating a fair equity split between the founders.

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Startup Professionals Musings

JANUARY 15, 2021

This is the purpose of a vesting schedule, which issues allocated stock over time. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year cliff ). Key founder vesting should have no cliff.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

VC Adventure

AUGUST 16, 2020

Yet others try to use cash to minimize dilution for early employees and try to rapidly reduce their reliance on options. Both of those things are not good for your business, so while it’s ok to offer some level of cash/equity trade-off, it shouldn’t be over-done. But better to have a view on this that is deliberate.

Programming 149

Programming Vesting Equity Software Review 149

Feld Thoughts

SEPTEMBER 2, 2011

The founders each have common shares that will vest over four years. The vesting schedule protects each of the co-founders in case one gets hit by a bus or decides to drop the project after a short period of time. Equity is split 55% and 45%, but where is that officially recorded? Time to update the cap table.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

Startup Professionals Musings

SEPTEMBER 25, 2019

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.” Advisory Board Member, 1% Senior Engineer,3 -.7%

Equity 237

Equity Stock Options Advisory Board Stock 237

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

Startup Professionals Musings

JULY 1, 2022

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.” Advisory Board Member, 1% Senior Engineer,3 -.7%

Stock Options 343

Stock Options Advisory Board Stock Startup 343

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

View from Seed

DECEMBER 4, 2014

Editor’s note: Understanding how to divide founder equity at a startup can be tricky, even to the point of reaching emotional riffs between founders. Below, Lee Hower offers advice for approaching these equity discussions objectively and properly. Sometimes co-founders put off the equity split question for some time.

Equity 315

Equity Founder Sweat Equity Cofounder 315

Agile VC

DECEMBER 4, 2014

As a result, one of the trickier things co-founders tackle is determining the equity split amongst the founding group of individuals. Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

www.inc.com

SEPTEMBER 24, 2011

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. Parker found that equity as compensation helped build loyalty to his company -- even among consultants. But sharing equity can have pitfalls, too.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

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.” The most you lose is 1 or 2 months of vesting on the stock. link] mattbartus.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

Agile VC

DECEMBER 4, 2014

As a result, one of the trickier things co-founders tackle is determining the equity split amongst the founding group of individuals. Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

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. For example, if four co-founders agree to equal equity, they each own 25% at the very outset.

Equity 71

Equity Founder Vesting Dilution 71

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. 1% but they’re not going to be overwhelmed by it, or insanely incentivized by that equity alone. I do believe that early employees should trade salary for equity.

Equity 41

Equity Employee Startup Vesting 41

Startup Professionals Musings

JULY 24, 2011

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” It never hurts to ask in a job interview what stock options are available, and don’t accept an offer which promises to “work out the equity terms later.” Advisory Board Member, 1% Senior Engineer,3 -.7%

Equity 234

Equity Advisory Board Stock Options Stock 234

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

Startup Professionals Musings

JANUARY 29, 2018

Even though initial stock has no market value today, it is extremely valuable in dividing equity ownership between co-founders, investors, and early partners. Always specify a vesting period for new partners. Manage dilution with proper use of new investment terms. Maximize your own vesting if the business is acquired early.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

Scott Edward Walker

FEBRUARY 6, 2016

“I didn’t even know what a vesting schedule was… [and] that mistake probably cost me billions of dollars.” Indeed, the failure to set-up vesting schedules is now the most common mistake I see startups make. This is exactly what would happen without vesting schedules. www.youtube.com/watch?v=-R01YcgJ3Yw. v=-R01YcgJ3Yw.

Vesting 40

Vesting Cofounder Equity Dilution 40

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

MAY 18, 2015

This is the purpose of a vesting schedule, which issues allocated stock over time. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year cliff ). Key founder vesting should have no cliff.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Feld Thoughts

JULY 29, 2011

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business.

Equity 137

Equity Finance Pre-Money Valuation Denver 137

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. Give them a large sum of equity. Vested over 4 years. If you do decide to go down the 50/50 route, please at least consider: Make sure you have founder vesting for both of you. Hire your co-founder.

Cofounder 393

Cofounder Founder Vesting Founder Vesting 393

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

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.” Advisory Board Member, 1% Senior Engineer,3 -.7%

Stock 140

Stock Stock Options Advisory Board Startup 140

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. – Share and vesting of Carry.

Private Equity 60

Private Equity Venture Capital Equity Partner 60

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 3 Dilution. 4 Vesting. 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. diluted) terms. From Payne.org Wiki.

Equity 56

Equity Employee Vesting Preferred Stock 56

Hippoland

APRIL 10, 2016

We are trying to decide how much equity to allocate to each person. I would like to split the equity equally, since it seems only fair. But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool. First off, whatever you decide, you should implement vesting.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

Startup Professionals Musings

AUGUST 19, 2017

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 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Startup Professionals Musings

OCTOBER 17, 2013

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.” Advisory Board Member, 1% Senior Engineer,3 -.7%

Stock Options 224

Stock Options Stock Advisory Board Startup 224

Both Sides of the Table

SEPTEMBER 18, 2014

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? of the time I have no vested interest in having the debate. “But lawyers will charge much more for equity.” Try doing THAT with equity. A down round? And so forth.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

JULY 19, 2013

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 245

Founder Hockey Stick Cofounder Liquidity Event 245

Hunter Walker

DECEMBER 18, 2015

In no particular order: Startup Equity Is Unlikely to Make You Fabulously Wealthy After Four Years Unless One or More of the Following Apply… You were a founder. Even in successful companies, most initial equity grants will be worth a few hundred thousand dollars to perhaps $1-2m, when fully vested. Assume you get.25%

Equity 48

Equity Employee IPO Vesting 48

Startup Professionals Musings

SEPTEMBER 22, 2012

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.” Advisory Board Member, 1% Senior Engineer,3 -.7%

Stock Options 230

Stock Options Stock Advisory Board Startup 230

Startup Professionals Musings

MARCH 29, 2015

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.” Advisory Board Member, 1% Senior Engineer,3 -.7%

Stock Options 120

Stock Options Stock Advisory Board Startup 120

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