Both Sides of the Table

JANUARY 4, 2014

Nowhere is the politics more difficult than with co-founders, which is why for years I’ve spoken publicly about “ the co-founder mythology.” ” Of course we all go into businesses expecting to be aligned with our co-founders but over time life changes. Equity for the future? We sat down the three of us.

Founder 340

Founder Cofounder Sacramento Technical Review 340

Startup Professionals Musings

JULY 31, 2012

It is just really hard to found a technology company successfully with only one founder, technical or non-technical. Focus on finding the right partner to double your strength rather than dilute it. Investors know this, and look for two or three-person teams who have the requisite complementary skills. Marty Zwilling.

Technical Review 230

Technical Review Technology Founder Management 230

Startup Professionals Musings

SEPTEMBER 10, 2018

I always tell entrepreneurs that two heads are better than one, so the first task in many startups is finding a co-founder or two. Giving a co-founder a salary won’t get you the “fire in the belly” you want. Each co-founder should get equity for value, based on these key variables: Lived a key role in a previous startup.

Equity 238

Equity Cofounder Technical Cofounder Intellectual Property 238

VC Cafe

FEBRUARY 27, 2024

A founder asked me what makes a $2M round “pre-seed”? To reduce the impact of dilution, the expectation is that startup valuation should more or less double between the pre-seed to the seed, and seed to series A (ideally backed by reasonable traction/ revenue multiples). especially if the startup already has a product and revenue?

Valuation 186

Valuation Generative AI Software Review Technical Review 186

View from Seed

MAY 2, 2019

There may be some twists and turns along the way, like a bridge or seed extension, but I think something like this is plan A for most founders. The challenge with pre-seed rounds is that pricing will sometimes be pretty dilutive. But I’ve recently noticed a few common offshoots of this path that I’ve seen repeated a number of times.

Early Stage 214

Early Stage Dilution Valuation .Net 214

View from Seed

JANUARY 13, 2021

The objection goes something like this: “yes, I can see rookie founders turning to you for a seed round. But won’t all good founders go to established firms that raise series A’s out of the gate?”. And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. But guess what?

Dilution 399

Dilution Later Stage Portfolio Technical Review 399

Both Sides of the Table

JULY 22, 2010

Other founders, “as a privately held company we don’t disclose our valuation.&# Me, “dude, I’m not a journalist. Investors own 25%, the founders own 75%. The VC’s $1 million still buys them 25% of your company – it’s you who has diluted to 60% ownership rather than 75%.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Both Sides of the Table

SEPTEMBER 15, 2022

But it will be patiently deployed, waiting for a cohort of founders who aren’t artificially clinging to 2021 valuation metrics. Pitchbook estimates that there is about $290 billion of VC “overhang” (money waiting to be deployed into tech startups) in the US alone and that’s up more than 4x in just the past decade. What is a VC To Do?

Technical Review 416

Technical Review Pre-Money Valuation San Francisco Valuation 416

View from Seed

OCTOBER 24, 2019

As seed rounds have atomized, it’s not uncommon for founders to raise 3 or even 4 rounds prior to a series A. The reality is that if a founder raised every one of these rounds, and lead investors always got their “target” ownership, the level of dilution would be ridiculous. Founders with limited experience.

Dilution 149

Dilution B2B Burn Rate Early Stage 149

Startup Professionals Musings

MAY 8, 2022

Most entrepreneurs struggle with many startup founders quandaries in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-founders to help you? The downside is loss of control and financial dilution.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Startup Professionals Musings

JUNE 28, 2021

It doesn’t seem to matter what the founders’ projections are, or how fast they believe they will turn profitable. Thus every serious investor reserves a certain amount of his investment capital for follow-on rounds, which allows them to stay to course to success, even with dilution. All startups always need more money.

Angel Investor 361

Angel Investor Accredited Investor IRR Angel Groups 361

Feld Thoughts

MARCH 24, 2017

Foundry Group is best known for our investments in startups, but our vehicle currently investing in other venture funds, Foundry Group Next, is off to what we believe to be a great start and I wanted to share an update about it by talking about our new investment in a fund managed by Founder Collective.

Founder 75

Founder LP Technical Review Seed Stage 75

The Next Web

NOVEMBER 20, 2013

With all other things equal, that means that a 50/50 split between two co-founders (evenly split if there are more than two), or a 66/33 split based on the premium for coming up with the original idea, and for starting the initial development efforts and sourcing the original team. Whose idea was it? How important is this person’s role?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Startup Professionals Musings

AUGUST 21, 2019

A particularly critical moment is when the founders hand over the leadership to a more managerial regime. A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. Geographic expansion. Product-line expansion. Efficiency and scale.

Dilution 224

Dilution Merger Flash Global 224

Startup Professionals Musings

SEPTEMBER 27, 2023

Every entrepreneur needs to understand the following basics, to be addressed at company formation, as they engage a qualified attorney to draw up the paperwork: Allocate founder’s stock commensurate with commitment. Key founder vesting should have no cliff. This is called stock dilution control.

Stock 240

Stock Vesting .Net Founder Vesting 240

View from Seed

AUGUST 17, 2021

A few weeks ago, we hosted a small dinner for a number of portfolio company founders, LP’s, and friends of the firm. It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. at exit due to dilution.

IRR 205

IRR Dilution Founder Portfolio 205

Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. The Founder of a company starts by owning all the shares representing ownership of the company. Therefore, to avoid dilution to its existing equity holders, all a company has to do is not hire any more employees who get options, or take any more money from investors.

Dilution 150

Dilution Equity Vesting Stock Options 150

Berkonomics

APRIL 4, 2024

Start-ups with one founder rarely have or need a board of directors. These events, one or all, usually are triggers for the founders to seek to create a board for oversight and guidance. In fact, such a board would seem out of place in a one-person company. Ownership is spread among several classes of investors.

Covenant 48

Covenant Software Review Vesting Stock Options 48

View from Seed

AUGUST 17, 2021

A few weeks ago, we hosted a small dinner for a number of portfolio company founders, LP’s, and friends of the firm. It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. at exit due to dilution.

IRR 156

IRR Dilution Founder Portfolio 156

Startup Professionals Musings

JANUARY 31, 2020

In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Good entrepreneurs are often diluted in their potential by trying to attack too many new market opportunities or customer requests concurrently. Certainly interfacing to the outside world may not be an inventor forte.

Founder 312

Founder Intellectual Property Dilution Startup 312

SoCal CTO

SEPTEMBER 27, 2011

Founders vs. Early Employees To help with this discussion, let me start with a definition of "early employee." The first few people into a startup are on a spectrum of founder vs. early employee. Founders are likely not paid for a long time and have a sizeable equity percentage for early risk and having the concept.

Early Stage 391

Early Stage Equity Sweat Equity CTO Hire 391

Both Sides of the Table

MAY 9, 2018

I left the meeting and had to attend a 3-hour board meeting where two founders have been fighting and each want the other one fired. But your co-founder had been senior at one of the big enterprise software companies and if I remember correctly American Express had run a big pilot with you. Some were interesting, some weren’t.

Software Review 381

Software Review Churn Rate Due Diligence New York 381

This is going to be BIG.

MARCH 28, 2021

It’s the one time that, as an investor, I’m not aligned with the founder at all. I want to try to buy up shares of the company as cheaply as possible (and own more) and the founder wants to give up as little of the company as possible. That’s because dilution isn’t subtraction. A lot is made out of the price of a round.

Founder 120

Founder Post-Money Valuation Dilution Valuation 120

Both Sides of the Table

MAY 28, 2018

There’s a quick litmus-test conversation any early-stage VC will have with the founder and it’s one that you should be as prepared for as your elevator pitch. Founder: “$8–10 million” VC: “What’s your current burn rate?” Founder: “$250k / month.” Founder: “Um. Why are you raising so much?” Let me check my plan.”

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

thinkspace.com

SEPTEMBER 7, 2012

How to Divide Equity to Startup Founders, Advisors, and Employees. The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees? Equity for Founders. Should founders have anti-dilution rights?

Equity 62

Equity Employee Founder CTO Hire 62

Startup Professionals Musings

JANUARY 15, 2021

Every entrepreneur needs to understand the following basics, to be addressed at company formation, as they engage a qualified attorney to draw up the paperwork: Allocate founder’s stock commensurate with commitment. Key founder vesting should have no cliff. This is called stock dilution control.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Startup Professionals Musings

AUGUST 24, 2016

I always tell entrepreneurs that two heads are better than one, so the first task in many startups is finding a co-founder or two. Giving a co-founder a salary won’t get you the “fire in the belly” you want. Each co-founder should get equity for value, based on these key variables: Lived a key role in a previous startup.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

View from Seed

AUGUST 17, 2021

A few weeks ago, we hosted a small dinner for a number of portfolio company founders, LP’s, and friends of the firm. It’s by far the longest time I’ve spent working on any one thing, and I feel very blessed to have been able to work with my partners, colleagues, founders, and collaborators. at exit due to dilution.

IRR 136

IRR Dilution Founder Portfolio 136

David Teten

DECEMBER 2, 2019

Now the bad news: some venture capitallists have a bias against startups with an explicit positive social impact, on the grounds that they have a smaller addressable market, and that the founders are not sufficiently focused on creating shareholder wealth. If you think I’ve missed any, please contact me. J.M.Kaplan Innovation Prize. “The

Technical Review 60

Technical Review SBIR Dilution Silicon Valley 60

The Next Web

OCTOBER 7, 2013

They were referring to non-founder engineers, most commonly the first hire for technology businesses. is frequently granted ownership significantly less than that of the founders. However, at the very early stage, they are taking as much risk with their future as the founders. Engineer #1?

Engineer 129

Engineer Dilution Option Pool Vesting 129

This is going to be BIG.

JANUARY 18, 2024

Some of these folks are founders and CEOs, but not at high-growth tech startups. Helpful investors should use their sage advice and support of the founder to make them into better, data-driven decision makers to impact a company, instead of relying on their contractually held voting rights. Perhaps they inherited it.

.Net 88

.Net Cap Table Startup Technical Review 88

The Startup Magazine

OCTOBER 9, 2017

But that will dilute your focus, time and energy and mean you have less time you to drive the business forward and expand. The post Navigating the Tricky World of ‘Experts’ – Start Up Advice from Founder of MyArtBroker appeared first on The Startup Magazine. It’s easy to fall into the trap of doing everything yourself.

Founder 68

Founder Dilution Web Development SEO 68

Steve Blank

APRIL 10, 2019

In tech startups stock options were here almost from the beginning, first offered to the founders in 1957 at Fairchild Semiconductor , the first chip startup in Silicon Valley. The investors were giving away part of their ownership of the company — not just to the founders, but to all employees. Here’s why.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

Both Sides of the Table

AUGUST 14, 2017

I read commentary or Twitter or blogs and realize that there are also strongly held convictions that there are these evil VCs who do terrible things to mostly altruistic founders. But unlike the popular press reporting of this conflict — 80% of the time it is founder-to-founder conflict and not investor-to-founder conflict.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

ithacaVC

OCTOBER 10, 2017

Here is the big problem with investors – they dilute the founders’ ownership in the company. Let’s cover some basics: It is impossible to issue stock to investors without existing shareholders (founders, employees and prior investors) being diluted. Are the founders happy?

Dilution 53

Dilution Stock Options Stock Valuation 53

Both Sides of the Table

FEBRUARY 6, 2013

Quick summary: Be careful not to have too many co-founders. it’s the most expensive dilution you’ll ever face. I don’t think VCs care as much about co-founders & economics as people think. And you need to be careful about giving up control to cofounders as much as VCs. For the wrong reasons.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

K9 Ventures

MAY 6, 2015

Conventional wisdom in the startup world dictates that two founders are ideal for a startup. There are lots of famous pairs of duo co-founders: Larry Page and Sergey Brin, Jerry Yang and David Filo, Hewlett and Packard, Bill Gates and Paul Allen. Having the right co-founder is perhaps the single most valuable thing in a startup.

Cofounder 48

Cofounder Founder Silicon Valley Technical Cofounder 48