Hunter Walker

AUGUST 7, 2017

But employee option pool is important enough that I wanted to briefly expand upon my comment above. As a result we’re often amenable to a CEO suggesting, “hey, I’ve thought about it and I’d actually like to create a 12% pool instead of a 10% one.

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

Gust

AUGUST 30, 2012

Valuation, Size of Raise, Amount of Investment, Form of Investment, Liquidation Waterfall, Option Pool, Board Composition, Anti-Dilution Rights, Protective Provisions, Founder Vesting, *original post can be found on Quora @ : [link] *.

Founder Vesting 144

Founder Vesting Option Pool Exit Strategy Vesting 144

The Next Web

OCTOBER 21, 2013

More often than not, these companies have no formal option pool, although many have either formal or informal promises to grant options to key employees. While there are no hard and fast rules, when we make a Series A investment we expect to own around 20% of the company on a fully-diluted basis. Alarm bells.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

View from Seed

DECEMBER 4, 2014

It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Equity 315

Equity Founder Sweat Equity Cofounder 315

Agile VC

DECEMBER 4, 2014

It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

Early Growth Financial Services

JUNE 26, 2014

Valuation — Know what these terms mean: Fully-diluted — This includes all issued stock and anything that could be converted into common stock (typically after an acquisition or IPO), such as your stock option pool.

Pre-Money Valuation 51

Pre-Money Valuation Option Pool Dilution Common Stock 51

www.inc.com

SEPTEMBER 24, 2011

Besides the future potential earnings youre forgoing, youre also diluting your own ownership in the company. If youre offering the consultant stock options, youll also want to take into consideration what the exercise price is going to be and how long the options will be outstanding.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

ithacaVC

DECEMBER 13, 2013

They are typically pretty simple: (i) shares owned by founders and (ii) shares authorized for issuance in a stock option pool, some of which may be issued to employees already and some of which will be available for future issuance. And don’t forget that the options granted would come out of the available option pool.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Agile VC

DECEMBER 4, 2014

It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

The Next Web

OCTOBER 7, 2013

Startup employees are granted common shares out of something called an option pool. Every time a startup raises capital, all common shareholders are diluted. In one post on Ravikant’s Venture Hacks blog called, “ The Option Pool Shuffle ,” it notes market expectations are to set aside 1 to 2 percent for a VP-level hire.

Engineer 129

Engineer Dilution Option Pool Vesting 129

venturehacks.com

OCTOBER 21, 2010

SUPPORTED BY Products Archives @venturehacks Books AngelList About RSS The Option Pool Shuffle by Nivi on April 10th, 2007 “Follow the money card!&# – The Inside Man, Three-Card Shuffle Summary: Don’t let your investors determine the size of the option pool for you. Don’t lose this game. share to $1.00/share:

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Rob Go

AUGUST 29, 2016

Founders also had to do a little math on the new option pool to really understand what their ownership would be post investment, since it was typically taken out of the company pre-money. In the old world, this additional dilution would end up being shared, since the pre-money was fixed.

Post-Money Valuation 52

Post-Money Valuation Valuation Cap Table Term Sheet 52

Business Plan Blog

SEPTEMBER 18, 2012

Most sophisticated investors will require a stock option pool upon investment, and a company that fails to reserve a sufficient amount of equity up-front runs the risk of being forced to establish a pool at a later date that may dilute the founders’ ownership. 2: Issue Options According To Value Added And Risk Taken.

Stock Options 61

Stock Options Stock Option Pool Dilution 61

ithacaVC

JANUARY 24, 2013

Option pool: 500,000 shares (some issued, some reserved, but that is typically irrelevant as the whole pool is normally factored into the premoney share price calculation). Granted, that is not much dilution, BUT what if there were like $600K of convertible debt instead of $62K. Ouch, then the dilution is real.

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53

Tim Keane

JANUARY 12, 2010

.   This is most commonly used when a conversion confers superior economic benefits on the preferred stockholder. ·       Anti-dilution provisions that reduce the price of the preferred shares (using a variety of formulas) in the event that the company issues new stock at a lower price.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Berkonomics

DECEMBER 6, 2010

If an imminent fund-raising effort will be undertaken and the corporate growth is slow, it is logical to fear that the next round will be dilutive and perhaps at a lower valuation than the current value per share. It is the same logic larger corporations use when deciding whether to use cash or stock to make an acquisition.

Stock Options 61

Stock Options Stock Warrant Common Stock 61

ithacaVC

SEPTEMBER 4, 2011

Note how the new CTO Praveena implicitly negotiated to get her 15% founders shares after creation of the stock option pool. This is significant because Jane and Dick took all the dilution from the option pool creation. I think Brad’s post simplified a few things (a bit too much) so I will expand some here: 1.

Cap Table 49

Cap Table Finance Option Pool Warrant 49

Scott Edward Walker

AUGUST 31, 2011

But more importantly, a good startup lawyer will also discuss with you the business terms, including the structure of the deal.

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

The Startup Lawyer

FEBRUARY 4, 2011

Most incubators take common stock and sit “side-by-side&# with the founders, but some may want some (weak) preferred stock and/or dilution protection. Other incubators may want to set up an option pool. If so, the startup’s founders need to know this option pool lowers your pre-money valuation.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Hippoland

APRIL 10, 2016

But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool. You will all be diluted down considerably, so even if you are ok with 20-33% stake now, that is not what you will actually end up with if you raise a few rounds of funding. We are trying to decide how much equity to allocate to each person.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

Feld Thoughts

FEBRUARY 28, 2023

However, the lack of a conversion right also has implications for anti-dilution protection: in the U.S., In Germany, anti-dilution protection is achieved by issuing additional preferred shares. Employee option pool: The framework conditions for employee option pools remain a major problem in Germany.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

www.instigatorblog.com

OCTOBER 23, 2010

You can’t have an option pool that takes up 50% of the company’s shares, and you have to leave room for future employees as well. 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

Seeing Both Sides

JULY 15, 2009

Another term that impacts the price is the size of the option pool. These new hires typically receive stock options, and the issuance of those stock options dilute the other investors. This relationship between option pool size and price isn’t always understood by entrepreneurs, but is well-understood by VCs.

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

www.mattbartus.com

DECEMBER 9, 2012

If you are a company that is fundraising, keep in mind that there are a few different levers you can pull to change the amount of dilution that the founders will experience. Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Genuine VC

FEBRUARY 28, 2011

So optimizing a startup offer involves not just one key figure – salary – but also the option package. Nearly all startup employees receive a number of options figure in their offer. It is essential that you ask the “number of fully-diluted shares outstanding.”

Startup 121

Startup Equity Vesting Salary 121

Professor VC

JANUARY 17, 2008

At a $1 million, pre-money, with an investment of $500K, that would leave 67% of the company for the founders and initial option pool. Keeping this simple with no employee option pool and just founders and investors, investors would hold 60% at this point (20% for angels and 40% for VCs) and founders would have 40%.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Up and Running

SEPTEMBER 20, 2021

Total share ownership is the sum of the common stock, stock options, preferred stock, and any other stock category for a single individual. Here you can see that the founders own most of the shares at 67.7%, then the ESOP (employee stock option pool) at 12.31 Outline your plans for future employee stock option pools.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

The Next Web

JUNE 15, 2012

Not to mention the fact that every time you compensate with equity, you dilute your own ownership of the business. Any decision to hand out stock or stock options should be made within the big picture context of your company’s valuation and the total number of shares you’ll be granting. Tips for compensating with equity.

Equity 116

Equity Stock Options Vesting Stock 116

www.payne.org

SEPTEMBER 22, 2011

3 Dilution. 5 Stock vs Options. 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

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. Director level employees are typically granted ½%.

Equity 62

Equity Stock Options Vesting Early Stage 62

www.startupnorth.ca

OCTOBER 23, 2010

The Adventure of a Lifetime 17 Pithy Insights for Startup Founders 17 Pithy Insights for Startup Employees Venture Hacks > Hiring Venture Hacks > Employees Venture Hacks > The Option Pool Shuffle Paul Graham > The Equity Equation [link] boris It's important to note that those options grants are AFTER a Series A funding.

Employee 41

Employee Founder Salary Equity 41

thinkspace.com

SEPTEMBER 7, 2012

Chris Dixon wrote a blog post about “ The one number you should know about your equity grant “ The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever – it doesn’t matter – just the % matters). Percent of the outstanding option pool: meaningless.

Equity 62

Equity Employee Founder CTO Hire 62

venturehacks.com

SEPTEMBER 22, 2011

When you evaluate a candidate, ask yourself whether she is likely to increase the next round’s share price (include the dilution of her market rate options). That’s true – someone who can help you fundraise in the next round can easily make up for the added or extra dilution from the current round.

Equity 40

Equity Cap Table Valuation RSS 40

www.paulgraham.com

APRIL 28, 2010

Whatkind of anti-dilution protection do they want? Theyleave 20% as an options pool for later employees (but they setthings up so that they can issue this stock to themselves if theyget bought early and most is still unissued), and the three founderseach get 25%. So after this the option pool is down to 13.7%). [

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

Both Sides of the Table

FEBRUARY 22, 2011

Here’s the problem: Let’s say you have 5 VCs (plus angels but let’s ignore that for now) and each one owns 5% so you took 25% dilution to get the round done. This is largely true because most VCs have a 20% minimum threshold in order to invest so bringing in multiple VCs can be very expensive in terms of dilution.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

Berkonomics

SEPTEMBER 28, 2017

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. Director level employees are typically granted ½%.

Early Stage 102

Early Stage Equity Stock Options Vesting 102