Startup Professionals Musings

SEPTEMBER 10, 2018

Building a new business is quite different from an executive role in a mature company, so people from these backgrounds are often a liability. Of course, all co-founders need to remember that allocated percentages will be diluted as angel and VC investors are brought in.

Equity 238

Equity Cofounder Technical Cofounder Intellectual Property 238

View from Seed

JANUARY 13, 2021

And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. We’ve had multiple companies in our early funds that hit bumps and had to raise flat rounds, which hurts from a dilution standpoint but doesn’t wipe out our position. So yes, seed funds will own less. But guess what?

Dilution 399

Dilution Later Stage Portfolio Technical Review 399

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.). Uncategorized company equity dilution founder investors startup'

Dilution 150

Dilution Equity Vesting Stock Options 150

Startup Professionals Musings

APRIL 27, 2019

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Lots of people still believe the major cost of a new product is development. Product development chasm. Another common chasm is never-ending product development.

Technical Review 255

Technical Review Dilution Early Stage Product Development 255

Startup Professionals Musings

AUGUST 4, 2014

Building a new business is quite different from an executive role in a mature company, so people from these backgrounds are often a liability. Of course, all co-founders need to remember that allocated percentages will be diluted as angel and venture capital investors are brought in.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

SoCal CTO

SEPTEMBER 27, 2011

The first few people into a startup are on a spectrum of founder vs. early employee. While Jason Cohen suggests that investment cash and sweat equity should be viewed the same, quite a few people suggest that there should be a risk premium for early employees at early-stage startups. Risk Premium on Equity Compensation?

Early Stage 391

Early Stage Equity CTO Hire Sweat Equity 391

Startup Professionals Musings

SEPTEMBER 27, 2023

Otherwise, people with no ongoing effort (“free riders”) will own the value growth that you are adding after their departure. This is called stock dilution control. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions.

Stock 240

Stock .Net Vesting Founder Vesting 240

Both Sides of the Table

MAY 28, 2018

Of course there are times where 15% dilution is more appropriate and other times it can be 33% but in a first meeting we’re just trying to establish general ranges for reasonableness. was originally published in Both Sides of the Table on Medium, where people are continuing the conversation by highlighting and responding to this story.

Burn Rate 247

Burn Rate Valuation Pre-Money Valuation Dilution 247

Startup Professionals Musings

JANUARY 15, 2021

Otherwise, people with no ongoing effort (“free riders”) will own the value growth that you are adding after their departure. This is called stock dilution control. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Both Sides of the Table

MAY 9, 2018

I also had to negotiate a follow-on round at a portfolio company because new investors were trying to force a bit option-pool top-up that would dilute the founders and existing shareholders and existing investors were fighting over prorata rights. I always tell people that fund raising is a sales process. Remind Me Why I Love You?

Software Review 381

Software Review Churn Rate Due Diligence New York 381

View from Seed

AUGUST 17, 2021

at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money. One mistake we made was defining the market as “of all the people who play fantasy sports, how many would want to play for money”. And how many of those people like sports?”. That approach yields a huge market.

IRR 205

IRR Dilution Founder Portfolio 205

Startup Professionals Musings

AUGUST 24, 2016

Building a new business is quite different from an executive role in a mature company, so people from these backgrounds are often a liability. Of course, all co-founders need to remember that allocated percentages will be diluted as Angel and VC investors are brought in. But don’t get greedy.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

Both Sides of the Table

FEBRUARY 6, 2013

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. Without strong PMs you build crappy products that nobody needs or that real people can’t use. Don’t hire “relationship management” sales people too early.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

View from Seed

AUGUST 17, 2021

at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money. One mistake we made was defining the market as “of all the people who play fantasy sports, how many would want to play for money”. And how many of those people like sports?”. That approach yields a huge market.

IRR 156

IRR Dilution Founder Portfolio 156

Startup Professionals Musings

APRIL 23, 2017

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Lots of people still believe the major cost of a new product is development. Product development chasm. Another common chasm is never-ending product development.

Customer 191

Customer Entrepreneur Technical Review Dilution 191

The Startup Magazine

MARCH 14, 2022

The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. People have started reposing faith in the potential of startups. At this stage, the founder mainly raises funding from their sources or family and friends. 2) Seed funding. The transforming startup ecosystem.

Technical Review 143

Technical Review Due Diligence India Startup 143

Startup Professionals Musings

OCTOBER 13, 2021

The trouble is that disruptive change usually takes more time, and scales slower than most people expect. It’s easy to say “yes” to one more feature request after another, until the potential for real impact gets diluted. Everyone, especially your investors, wants high-growth, higher-return decisions, to make them a hero sooner.

Dilution 334

Dilution Metrics Acquisition Revenue 334

YoungUpstarts

APRIL 19, 2012

When not approached carefully, growth can destroy value as it outstrips a company’s managerial capacity, processes, quality, and financial controls, or substantially dilutes customer value propositions. Let up on the growth gas pedal as needed to give your people, processes, and controls time to catch up. Respect growth.

Dilution 209

Dilution Virginia Management Washington 209

View from Seed

AUGUST 17, 2021

at exit due to dilution. It creates dilution, and investing in these rounds increases your effective post-money. One mistake we made was defining the market as “of all the people who play fantasy sports, how many would want to play for money”. And how many of those people like sports?”. That approach yields a huge market.

IRR 136

IRR Dilution Founder Portfolio 136

Startup Professionals Musings

DECEMBER 16, 2017

The many crowd funding platforms on the Internet, led still by Kickstarter and IndieGoGo , and the latest stages of the Jobs Act , were expected by many to put regular people in charge of funding new opportunities, and kill the need for angel groups. I still don’t see it happening any time soon. Neither does David S.

Angel Investor 190

Angel Investor Accredited Investor IRR Angel Groups 190

Startup Professionals Musings

DECEMBER 18, 2013

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Lots of people still believe the major cost of a new product is development. Product development chasm. Another common chasm is never-ending product development.

Entrepreneur 252

Entrepreneur Marketing Technical Review Dilution 252

Startup Professionals Musings

FEBRUARY 27, 2023

The lesson of finding help, connections, and even funding where other people may never look is one that makes all the difference in the entrepreneur lifestyle. Every startup needs to start their funding search looking for grants, with no equity dilution, as well as contests and foundations. Attract a co-founder and key team members.

Arizona 276

Arizona Intellectual Property Accredited Investor Entrepreneur 276

The Startup Magazine

AUGUST 9, 2022

But with that said, the lack of too much capital has helped us run a really tight ship with great unit economics and KPI’s, something that given current market conditions people take notice of. One of the most underrated jobs of a leader in a scaling organization is making sure the culture doesn’t get diluted.

Cofounder 146

Cofounder Founder Miami Marketing 146

Startup Professionals Musings

JULY 1, 2022

Wouldn’t you like to be one of the lucky people who joined Google and Facebook when these were startups, and now be a multi-millionaire or better? So people ask me “How many shares should I ask for or expect when I join a startup today?” Yet it has been a source of great wealth to a tiny percentage of people.

Stock Options 343

Stock Options Advisory Board Stock Startup 343

Startup Professionals Musings

JANUARY 31, 2020

In my work with new startups, I often find people who believe that the terms “ entrepreneur ” and “ inventor ” are interchangeable. In my experience, most successful entrepreneurs have indeed created a new product, but most people who claim to be inventors have a hard time starting a business.

Founder 312

Founder Intellectual Property Dilution Startup 312

Startup Professionals Musings

NOVEMBER 5, 2022

Overall, I’m still convinced that businesses larger than twenty people needs a hierarchy. Certainly managers need to be better trained, more sensitive to worker needs, and focused on hiring and training the right people for the right job, rather than treating all as soldiers. Market evolution is not the same as company success.

Management 333

Management Dilution Forecast Leadership 333

Startup Professionals Musings

JULY 24, 2022

According to Narang and Devaiah, the people who accomplish real innovation results seem to exhibit a higher set of attitudes and motivation: Personal growth relates to the size of the challenge, not the size of the kingdom. What motivates real innovators is the more exciting challenge, not the number of people reporting to them.

Marketing 313

Marketing Dilution Social Network Government 313

The Next Web

NOVEMBER 20, 2013

These key factors must consider each employee’s role(s) within the company, the compensation they receive for their work, the people investing in the company, and the people behind the idea of the company. So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. Whose idea was it?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Startup Professionals Musings

NOVEMBER 10, 2012

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Lots of people still believe the major cost of a new product is development. Product development chasm. Another common chasm is never-ending product development.

Startup 254

Startup Technical Review Dilution Early Stage 254

Steve Blank

NOVEMBER 13, 2018

Now new people who knew none of that and appreciated little of it were coming in. The painful reality is that products change, strategies change, people change…things have to change for your company to stay in business and grow. Manager of people and process? Now we were going to have plans and a strategy. Lessons Learned.

Part-Time VPE 333

Part-Time VPE Employee Cofounder Hiring 333

YoungUpstarts

SEPTEMBER 23, 2017

It simply means honing in on what exactly you wish to attain with your business, instead of running with an idea, throwing money, and betting people would love it. Bear in mind to do the careful qualifying and quantifying research, and reach out to the people who you think would benefit from your service, and receive true to life feedbacks.

Cofounder 124

Cofounder Sweat Equity Equity Dilution 124

Startup Professionals Musings

DECEMBER 29, 2021

Customers today feel they are too savvy to believe your marketing pitches, so they look around to see what other credible people are saying about your offering. Don’t confuse and dilute your potential customer base by weakly trying to appeal to all. In today’s ease of global communication, people buy from people, not from companies.

Restful 336

Restful Differentiation Social Media Dilution 336

Startup Professionals Musings

MAY 8, 2022

People may jump into the lifestyle to be their own boss, achieve great wealth, start a new trend, or all the above. The downside is loss of control and financial dilution. Make sure these titles are handed out only to people who are willing and able to accept the responsibility and workload of the associated role.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Startup Professionals Musings

OCTOBER 7, 2022

Ancillary objectives, like retiring existing debt, buying a building or paying salaries to people with equity ownership will not get traction. Most professional investors will expect preferred stock, a board seat, rights to later rounds and perhaps anti-dilution protection. How much equity ownership are you willing to offer?

Preferred Stock 304

Preferred Stock Exit Strategy Equity Angel Investor 304

Startup Professionals Musings

NOVEMBER 8, 2021

It seems that more people are focused on money today. Of course, that doesn’t dilute the owner’s equity, but it may well limit you to organic growth, versus international rollouts and acquisition options. More recently, the desire for extra income has become the key driver in new startups, according to the popular press.

Entrepreneur 371

Entrepreneur Equity Dilution LLC 371

Startup Professionals Musings

JULY 23, 2021

Yet every change can cause brand dilution or competition you don’t need. Thus you need to see and be seen with your people, and walk the talk. Evaluate the brand impact of proposed market moves. The push is always on to grow your market with new geographies, new products, and new market segments.

Leadership 426

Leadership Management Brazil Differentiation 426

Startup Professionals Musings

DECEMBER 11, 2022

Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Investors invest in people, often more so than in the product. Dysfunctional or non-functional team members.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271