Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. Because the total percentage of equity will always equal exactly 100%, every time anyone gets another piece, by definition it “dilutes” all of the previous equity holders. Uncategorized company equity dilution founder investors startup'

Dilution 150

Dilution Equity Vesting Stock Options 150

Startup Professionals Musings

AUGUST 24, 2016

Even with an agreed initial equity split, it’s smart to have Founder’s stock actually issue or vest over a period of at least two years, on a month-by-month basis. 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

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. Praveena is just like the other two founders, where her equity will vest over 4 years. Time to update the cap table.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

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. My background thesis inherent in this is that employees with options should continue to vest new option as they continue to work for your business. I think this is both practical and fair.

Programming 149

Programming Vesting Equity Software Review 149

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.” 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 343

Stock Options Advisory Board Stock Startup 343

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. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one. The co-founder relationship dilemma.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

The Next Web

NOVEMBER 20, 2013

So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. The calculation comes as follows: original 50/50 diluted down 20 percent to 40/40 for the financing, and then the one funding founder gets that 20 percent. How important is this person’s role?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Startup Professionals Musings

JANUARY 22, 2013

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Startup Professionals Musings

MARCH 23, 2014

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Both Sides of the Table

FEBRUARY 20, 2019

just having a sparring partner with a vested interest in your success can be useful. For starters, the incoming CEO will demand between 4–6% of the company so shareholders will immediately face dilution. If you get a smart person on the board?—?just With that said, no venture capital firm really wants to replace a CEO.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

Berkonomics

FEBRUARY 1, 2024

And now the expected cost… [Email readers, continue here…] For this, an advisory board member for a small to medium sized company should expect to receive options equal to ¼% of the fully diluted stock of the company, vesting over two years, and subsequent grants if there has been additional stock issued to dilute the advisor, bringing the (..)

Advisory Board 62

Advisory Board Dilution Stock Vesting 62

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

Startup Professionals Musings

JANUARY 29, 2018

Always specify a vesting period for new partners. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent vesting only after a participant has satisfied commitments for at least 12 months (one year cliff). Manage dilution with proper use of new investment terms.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

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

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.” 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

Gust

MARCH 16, 2014

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

www.avc.com

SEPTEMBER 22, 2011

The other important data point is the number of fully diluted shares. Then you divide the dollar value of equity by the "best value" of your business and multiply the result by the number of fully diluted shares outstanding to get the grant amount. Let's say the number is $25mm. x $125k which is equal to $31.25k.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

This is going to be BIG.

NOVEMBER 28, 2021

Plus, you can allow people to vest into the program. Take a little more dilution, raise a little more money, and spend on the most ignored personal goal in the market. Consider extended family leave—six months paid at minimum for all parents of all genders.

Hiring 179

Hiring Early Stage Marketing Term Sheet 179

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. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one. The co-founder relationship dilemma.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

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

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

Startup Professionals Musings

OCTOBER 7, 2010

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting starts now.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

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.” Imagine when it comes time to sell the company and the buyer says “Tell me how many shares are vested because this will impact how much we pay per share.” Categories.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

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. 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. Give them a large sum of equity.

Cofounder 393

Cofounder Founder Vesting Founder Vesting 393

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

Andrew Payne

SEPTEMBER 9, 2017

Five percent might feel fair in a particular situation for a near-founder post-funding, but how much is that pre-funding, with unknown dilution? First, founders can agree on ownership ratios among themselves, completely isolating unknown, future dilution. Also, founders should absolutely implement some form of vesting.

Equity 71

Equity Founder Vesting Dilution 71

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.” 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. Should you start a company solo or find co-Founders to help you? In my view, two heads are always better than one. The co-Founder relationship dilemma.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Berkonomics

DECEMBER 14, 2017

For this, an advisory board member for a small to medium sized company should expect to receive options equal to ¼% of the fully diluted stock of the company, vesting over two years, and subsequent grants if there has been additional stock issued to dilute the advisor, bringing the advisor back to this percentage if an advisor is renewed after subsequent (..)

Advisory Board 97

Advisory Board Dilution Vesting Stock 97

www.inc.com

SEPTEMBER 24, 2011

Besides the future potential earnings youre forgoing, youre also diluting your own ownership in the company. He suggests granting the options on day one but making sure they vest only upon satisfactory completion of the project. That way, he says, "Vesting is an encouragement for the project to be completed.".

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Both Sides of the Table

JULY 16, 2013

Because at least while the VC spigot is open and flowing for high-potential individuals that fit a pattern that some VCs seem to favor they can access cheap capital that isn’t terribly dilutive and can use the to fund development and swing for the fences with limited focus on monetization. And the dilution that goes with it.

Burn Rate 412

Burn Rate Dilution Revenue Valuation 412

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.” 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

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 people seem pretty focused on that number. Raising lower seems kind of like something is wrong. A down round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

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. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. Ideation/IP.

Equity 315

Equity Founder Sweat Equity Cofounder 315

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. Should you start a company solo or find co-founders to help you? In my view, two heads are always better than one. The co-founder relationship dilemma.

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. Should you start a company solo or find co-Founders to help you? In my view, two heads are always better than one. The co-Founder relationship dilemma.

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.” 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