Startup Professionals Musings

MAY 8, 2022

The downside is loss of control and financial dilution. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Both Sides of the Table

FEBRUARY 20, 2019

just having a sparring partner with a vested interest in your success can be useful. But gone are the days where VCs put dollars into companies and ask founders to step aside quickly so that the VC can install their favorite management team. Can I really manage a 7-person board plus 2 board observers? Legally speaking.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

Berkonomics

FEBRUARY 1, 2024

The rule of thumb for an advisory board member is to expect a half to a full day each year on site, typically in a strategic planning meeting with numerous members of the staff, as well as some reasonable number of phone calls from senior members of management during the year. How about using the names for marketing, fundraising?

Advisory Board 62

Advisory Board Dilution Stock Vesting 62

This is going to be BIG.

NOVEMBER 28, 2021

We’re overjoyed and we’ve begun the task of learning how to manage all the logistics of her care—while somehow doing the bare minimum of that for ourselves. Plus, you can allow people to vest into the program. That also makes our senior management much more gender diverse—which tends to lead to better decision making and collaboration.”

Hiring 179

Hiring Early Stage Marketing Term Sheet 179

Startup Professionals Musings

JANUARY 29, 2018

Now is the time to talk to a qualified attorney, and get some discipline in place for the following strategies: Manage founder’s shares like gold with partners. Always specify a vesting period for new partners. Manage dilution with proper use of new investment terms.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

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.” 7% Product Manager,2 -.3% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Equity 237

Equity Stock Options Advisory Board Stock 237

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

www.avc.com

SEPTEMBER 22, 2011

The other important data point is the number of fully diluted shares. The first bracket is the senior management team; the CFO, Chief Revenue Officer/VP Sales, Chief Marketing Officer/VP Marketing, Chief Product Officer/VP Product, CTO, VP Eng, Chief People Officer/VP HR, General Counsel, and anyone else on the senior team.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

Startup Professionals Musings

AUGUST 10, 2019

The downside is loss of control and financial dilution. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Steve Blank

APRIL 10, 2019

Startup employees calculated that a) their hard work could change the odds and b) someday the stock options they were vesting might make them into millionaires. The stock trickled out over four years, as you would “vest” 1/48 th of the option each month. Essentially the company sells them the stock at zero cost, and they reverse vest.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

www.mattbartus.com

SEPTEMBER 24, 2011

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.” People tend to underestimate how much record keeping is involved with managing employees and consultants, and this just adds an unacceptable extra burden. What are the potential issues?

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

www.inc.com

SEPTEMBER 24, 2011

Leadership & Managing | Tuesdays. LEADERSHIP & MANAGING. Managing Creativity. Durkin , managing partner with the Boston -based law firm Lucash, Gesmer & Updegrove LLP. Besides the future potential earnings youre forgoing, youre also diluting your own ownership in the company. Technology | Thursdays. Leadership.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Berkonomics

DECEMBER 14, 2017

The rule of thumb for an advisory board member is to expect a half to a full day each year on site, typically in a strategic planning meeting with numerous members of the staff, as well as some reasonable number of phone calls from senior members of management during the year.

Advisory Board 97

Advisory Board Dilution Vesting Stock 97

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.” 7% Product Manager,2 -.3% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Stock 140

Stock Stock Options Advisory Board Startup 140

Startup Professionals Musings

DECEMBER 14, 2014

The downside is loss of control and financial dilution. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Should you start a company solo or find co-Founders to help you? In my view, two heads are always better than one.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

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.” 7% Product Manager,2 -.3% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Stock Options 224

Stock Options Stock Advisory Board Startup 224

Startup Professionals Musings

AUGUST 19, 2017

The downside is loss of control and financial dilution. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Startup Professionals Musings

JULY 19, 2013

The downside is loss of control and financial dilution. Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Should you start a company solo or find co-Founders to help you? In my view, two heads are always better than one.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

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.” 7% Product Manager,2 -.3% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Stock Options 230

Stock Options Stock Advisory Board Startup 230

www.instigatorblog.com

OCTOBER 23, 2010

I get that the numbers are post Series A, but even if you assume 50% dilution, you're giving your first hire developer between 1-2%. I get that the numbers are post Series A, but even if you assume 50% dilution, you're giving your first hire developer between 1-2%. 1% is even less after you factor in dilution.

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.” 7% Product Manager,2 -.3% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Equity 234

Equity Advisory Board Stock Options Stock 234

Up and Running

JANUARY 23, 2013

Don’t expect to have a real “manager” If you want or need a boss, work for a big company. Learn the basics of things like shares, options, vesting schedules, dilution and taxes. Learn the basics of things like shares, options, vesting schedules, dilution and taxes. Life is short. Be informed.

Vesting 113

Vesting Dilution Startup Salary 113

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.” 7% Product Manager,2 -.3% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Stock Options 120

Stock Options Stock Advisory Board Startup 120

Tim Keane

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.   For individual angels and others investing their own money, this may be more fluid than for someone with responsibility for a managed fund.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

David Teten

SEPTEMBER 2, 2017

Sean Seton-Rogers, Partner, Profounders Capital, breaks the conversation into three areas: Control: voting/veto for new deals, share of management company. Compensation : base salary, share of profits of management company, carry. So assessing fit is critical. Contact : to existing portfolio, to internal team resources, to LPs.

Private Equity 60

Private Equity Venture Capital Equity Partner 60

www.payne.org

SEPTEMBER 22, 2011

3 Dilution. 4 Vesting. Those new shares are created out of thin air by the company, and will dilute all of the current stockholders. Since you still have 100,000 shares, your ownership percentage is now dropped to 0.8333% -- you just got diluted. In a startup, dilution happens, and you just need to factor it in.

Equity 56

Equity Employee Vesting Preferred Stock 56

Startup Professionals Musings

JUNE 20, 2010

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” 7% Product Manager,2 -.3% You should also assume that your percentage will go down through dilution as the company raises additional rounds, and offer sizes will go down as the company grows.

Stock 144

Stock Stock Options Advisory Board Startup 144

The Startup Lawyer

MARCH 1, 2010

The Amended and Restated Certificate of Incorporation includes the typical provisions you might find in a VC deal, less (i) preferential dividends, (ii) redemption rights, and (iii) price based anti-dilution. the CEO) elected by the common via fiat in the Investors Rights Agreement. (2) 2) Series Seed Stock Preferred Stock Purchase Agreement.

Preferred Stock 79

Preferred Stock Term Sheet Redemption Registration Rights 79

Berkonomics

NOVEMBER 23, 2023

An option plan should carve out an addition of about 15% of the “fully diluted” shares. If there are 85,000 shares issued to the founders, then a plan calling for 15,000 shares in a pool reserved for future hires is appropriate, making the fully diluted shares 100,000. How about “vesting” shares over time ?

Equity 62

Equity Stock Options Vesting Early Stage 62

Berkonomics

JULY 10, 2010

The rule of thumb for an advisory board member is to expect a full day each year on site, typically in a strategic planning meeting with numerous members of the staff, and a number of phone calls from senior members of management during the year. Email readers continue here.]

Advisory Board 63

Advisory Board Stock Options Stock Common Stock 63

The Startup Lawyer

MARCH 1, 2010

The Amended and Restated Certificate of Incorporation includes the typical provisions you might find in a VC deal, less (i) preferential dividends, (ii) redemption rights, and (iii) price based anti-dilution. the CEO) elected by the common via fiat in the Investors Rights Agreement. (2) 2) Series Seed Stock Preferred Stock Purchase Agreement.

Preferred Stock 40

Preferred Stock Term Sheet Redemption Registration Rights 40

ithacaVC

OCTOBER 16, 2011

They did not discuss vesting originally (a mistake). Sure, he will be diluted when the company raises funds in the future, but could still end up with a meaningful stake at exit. What is a good way to plan ahead for founder breakups before entity set up? And it definitely should address this critical issue.

Vesting 56

Vesting Cofounder Equity Dilution 56

thinkspace.com

SEPTEMBER 7, 2012

Manager or Junior Engineer 0.2 - 0.33. How long should people vest – four years? Should founders have anti-dilution rights? Investors routinely subject founder shares to vesting, but there is no rule that says that founders cannot, or should not, impose vesting on themselves. Title Range (%). CEO 5 - 10.

Equity 62

Equity Employee Founder CTO Hire 62

Pascal's View

DECEMBER 30, 2012

Wasserman notes that venture capitalists attribute 65% of the failures in their portfolio companies to problems with the startups’ management teams. “The Founder’s Dilemmas” is required reading for entrepreneurs and for the professionals who work with them, particularly venture capitalists.

Cofounder 34

Cofounder Liquidation Preference Vesting Equity 34

www.paulgraham.com

APRIL 28, 2010

And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. Whatkind of anti-dilution protection do they want? vesting would in that situation force founders to toe the line. Apparently our situation was not unusual. Hell if they know.In

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

David Teten

OCTOBER 1, 2015

At the same time, a direct equity investment (one where the dev shop acquires a share in the company immediately) puts the founders in a potentially uneasy position of having to dilute their company before a product is built. I spoke with Thatcher Bell , Managing Partner, CoVenture. 5% vest at clickable prototype.

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

Up and Running

SEPTEMBER 20, 2021

A cap table will help you in the strategic management of business decisions. Incoming investors make decisions based on the possible dilution of their investments on ownership and often find themselves surprised by overlooked convertible notes. Add details of possible dilution when bringing on investors. Let’s dive in.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112