Gust

APRIL 11, 2014

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. The themes of equity ownership and Board control will converge in my next post, where we’ll discuss clashes at the Board and shareholder level.

Dilution 162

Dilution Equity Prospectus Pre-Money Valuation 162

Gust

DECEMBER 6, 2012

It depends on the quality of the idea. I’m a firm believer in Derek Sivers ‘ calculus, which goes like this: AWFUL IDEA = -$1. WEAK IDEA = $1. SO-SO IDEA = $5. GOOD IDEA = $10. GREAT IDEA = $15. BRILLIANT IDEA = $20. The real value, of course (as other answers here have noted), comes from executing on the idea.

Equity 150

Equity Distribution Entrepreneur Startup 150

Gust

NOVEMBER 2, 2014

Professionals maintain that there is plenty of money and equity for qualified startups, and funding marginal startups via any source will only make more people unhappy. But safely seeking equity investments from the crowd via the Jobs Act of 2012 is problematic and has still not been defined.

Non-disclosure Agreement 160

Non-disclosure Agreement Intellectual Property Accredited Investor Equity 160

Gust

DECEMBER 6, 2011

This graphic shows that the distribution of funding is not uniform across the spectrum of rounds size in dollars. So, generally, these three major sources of capital are complementary, not competitive. The figure below shows the number of investors by investment size for startup ventures. Copyright BillPayne.com 2011.

Angel Investor 179

Angel Investor Venture Capital Valuation Software Engineering 179

Gust

DECEMBER 8, 2011

Readers can anticipate my next point in continuing the analogy: It makes no more sense for a non-lawyer to prepare fundamental legal, governance, equity and intellectual property documents than it would for a patient to self-diagnose and begin taking prescription-strength antibiotics or other medications. Newco, Inc.”) Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Gust

OCTOBER 17, 2012

as well as a more detailed description of the distribution of outcomes: Kauffman Foundation Angel Returns Study and NESTA Angel Investing Study. The distribution of returns from the different U.S. Best case: equity investment (whether angel or VC) is a tremendous asset with a commensurate financial obligation. and the U.K.,

Angel Investor 152

Angel Investor Venture Capital Seed Stage Silicon Valley 152

Gust

OCTOBER 20, 2011

Individual accredited investors in typical angel deals put personal capital at risk for an equity share of growth-oriented, start-up companies. For this round of investment, the angels collectively purchase 20-40% of the equity of the company and are seeking a return on investment of 20-30X in a period of five to eight years.

Valuation 146

Valuation Pre-Money Valuation Intellectual Property Technical Review 146