Rob Go

JUNE 17, 2014

In my last post about raising seed vs. jumping straight to A, I received a good comment from Chris Woods that my analysis neglected to include the impact of option pools that are created at each financing round. Essentially, the new investor wants there to be a certain % of options available to employees after they invest.

Option Pool 65

Option Pool Dilution .Net Term Sheet 65

www.inc.com

SEPTEMBER 24, 2011

Employee Benefits. Should You Share Equity with Consultants? Back in 1997, Randy Parker was staring at a blank whiteboard, wondering where hed find the money to hire the employees and consultants he needed to build his new product. "We But sharing equity can have pitfalls, too. Financing A Small Business. Business Taxes.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

www.instigatorblog.com

OCTOBER 23, 2010

Changing Equity Structures for Early Startup Employees Tweet Recently someone asked me for advice on how much equity they should give to their early employees. His company had just closed an early round of funding and he wanted to cement the employee relationships. Those first employees will take 0.5-1%

Equity 41

Equity Employee Startup Vesting 41

Agile VC

DECEMBER 4, 2014

As a result, one of the trickier things co-founders tackle is determining the equity split amongst the founding group of individuals. Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Hunter Walker

AUGUST 7, 2017

But employee option pool is important enough that I wanted to briefly expand upon my comment above. While you should expect these sorts of hires to take below market cash comp versus what Google is paying them, this tradeoff needs to be replaced with equity upside.

Equity 94

Equity Pre-Money Valuation Option Pool Founder 94

Business Plan Blog

NOVEMBER 20, 2013

Raising Funding From Family and Friends: Division of Equity. When it comes to the division of equity in startup, there is a similar process every entrepreneur must follow beginning with raising the first round of startup funding and, if you’re lucky, finishing at the point of IPO. How much equity do you offer? It depends.

Equity 61

Equity Option Pool Cofounder Vesting 61

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 5 Stock vs Options. 7 Salary vs Equity. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. From Payne.org Wiki. 3 Dilution. 4 Vesting.

Equity 56

Equity Employee Vesting Preferred Stock 56

Agile VC

APRIL 17, 2011

5) High Productivity: Kayak had 148 employees at the end of 2010. That means that Kayak generates roughly $1.15M in revenue for each employee which puts it in the same league as Google and Apple (both >$1M/head). So these three companies account for about half Kayak’s revenues today. as of 12/31/09).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

The Next Web

OCTOBER 21, 2013

In many cases we have observed, the founders have given away too much equity to their first investors — typically angels and family offices, who have little experience with fast-growing startups or the venture capital funding model. Of course, not all of the fault in these lopsided structures lies with the angel investors.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

Eric Friedman

DECEMBER 30, 2020

4/ Streaming equity – venture funds + employee stock becomes more liquid. 7/ SaaS roll-ups and micro-private equity become huge. This is a fun area for me as there are founders and companies I am supporting in the space, and its great to see how they have grown during the “crypto winter” of the last few years.

Stock 120

Stock Private Equity Option Pool LP 120

Hippoland

APRIL 10, 2016

We are trying to decide how much equity to allocate to each person. I would like to split the equity equally, since it seems only fair. But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool. Super active, hands-on advisors are typically granted < 5%.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

venturehacks.com

SEPTEMBER 22, 2011

The Equity Equation. As this nuclear winter of venture hacks continues, I thought you might enjoy our thoughts on Paul Graham’s The Equity Equation. ” Read the rest of The Equity Equation first; it is great. You have to pay market rates regardless of the equity equation. by Nivi on July 19th, 2007. Summary: 1.

Equity 40

Equity Cap Table Valuation RSS 40

Genuine VC

FEBRUARY 28, 2011

This post doesn’t going into general tactical approaches of job offer negotiation, but rather focuses on the fact that with startups a significant part of compensation is related to equity or options. So optimizing a startup offer involves not just one key figure – salary – but also the option package.

Startup 121

Startup Equity Vesting Salary 121

The Next Web

JUNE 15, 2012

From Silicon Valley to Peoria, Illinois, cash-strapped startups look for inventive way to finance their business – often handing out equity to employees, consultants, vendors, and other service providers. Pitfalls in sharing equity. While equity can be a great tool for compensating early on, the drawbacks are significant.

Equity 116

Equity Stock Options Vesting Stock 116

thinkspace.com

SEPTEMBER 7, 2012

How to Divide Equity to Startup Founders, Advisors, and Employees. The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees? Equity for Founders. Equity for Employees.

Equity 62

Equity Employee Founder CTO Hire 62

Business Plan Blog

SEPTEMBER 18, 2012

Reserve 10-20% Of Your Company’s Outstanding Equity For A Stock Option Plan. Equity incentives are a major form of compensation for most emerging growth and technology companies. It is critical for a start-up to consider this reality and reserve 10-20% of its outstanding equity for a stock option plan.

Stock Options 61

Stock Options Stock Option Pool Dilution 61

www.startupnorth.ca

OCTOBER 23, 2010

Home Events Contact Jobs StartupIndex Founders versus early employees by David Crow on September 10th, 2009 in Resources Not everyone can be a founder. But for every founder, there is an early employee that takes near equal risks in joining an early-stage company. David Beisel We need to celebrate the employees at startups.

Employee 41

Employee Founder Salary Equity 41

Berkonomics

NOVEMBER 23, 2023

Here is the warning: The execution of equity allocations and of a good incentive program using equity is often mismanaged, damaging the corporate capitalization structure and even affecting the outcome of subsequent investment into the company. … Equity is divided between the founders and the business begun.

Equity 62

Equity Stock Options Vesting Early Stage 62

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. times more equity than Founder X. Well, that is really up to Founder X and Founder Y.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

The Next Web

OCTOBER 7, 2013

Quite frankly, waiting provides more assurance around employment risk without the commensurate sacrifice in equity comp. From the perspective of my outside friends, why are employees that so clearly impact the growth trajectory of a company look like they’re getting screwed? Facebook’s engineer #100 isn’t doing poorly.

Engineer 129

Engineer Dilution Option Pool Vesting 129

David Teten

DECEMBER 3, 2019

Private equity and venture capital investors are copying our sisters in the hedge fund world: we’re trying to automate more of our job. . In the private equity universe, most Partners have primary training as deal-makers, not as managers. Point Nine Capital uses 15Five for continuous employee feedback.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

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

Hunter Walker

MAY 7, 2014

I recommend to founders that if there’s a unicorn you need who isn’t on founding team, (a) start identifying those people in advance of fundraising and (b) prepare to compensate them generously via equity. Hiring a Head of Product as one of your first 10 employees? Do You Know Who You’re Hiring? That’s not healthy for a startup.

Hiring 108

Hiring Option Pool Early Stage Term Sheet 108

techcrunch.com

FEBRUARY 25, 2010

You could make the same argument about acquisitions and option pools. As Mark Suster recently noted , employees will never see a big payday at most startups unless the company shoots for the moon. The remaining $36 million is divided according to equity ownership. The remaining 95 employees split 7%, each earning $27,000.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

Tim Keane

JANUARY 12, 2010

The investors and the entrepreneurs are – or should be – aware that the price of the company’s equity is set by the market – in simplest terms, what an informed buyer is willing to pay.   Note that this applies only to earl stage Series A-type equity financings and assumes no cash dividends are paid to investors.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Professor VC

JANUARY 17, 2008

There needs to be enough equity to go around for founders, early investors, later investors, and employees. 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.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

www.mattbartus.com

DECEMBER 9, 2012

You have a 20% option pool, so you know this will take your ownership down from 80% to 60%, and the VC will get 25%. Option Pool. Option Pool. In Equity , Investors , Negotiating , Term Sheets Equity , Negotiating , Valuation , VCs. Equity for Consultants - Keep. Equity (5).

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Up and Running

SEPTEMBER 20, 2021

The use of a cap table for a company comes into play when it has to track the total amount of shares, the value of shares, and the equity ownership of all the shareholders. The data of the company, such as debt and the company’s equity ownership, is laid out with the help of a cap table. Convertible notes. Example of a cap table.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Berkonomics

SEPTEMBER 28, 2017

For those negotiating equity allocations it covers some of the most complex issues to address in the process. Equity is divided between the founders and the business begun. Each grant to new or existing employees must be approved by the board before issue. That size of grant would take much or most of the option pool.

Early Stage 102

Early Stage Equity Stock Options Vesting 102

Berkonomics

MAY 12, 2010

Equity is divided between the founders and the business begun. 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. Inducing a new CEO to come aboard usually means creation of a stock option package of 5-8%.

Early Stage 85

Early Stage Equity Stock Options Vesting 85

www.paulgraham.com

APRIL 28, 2010

The reason is that employees are investors too—oftheir time—and they want just as much to be able to cash out. Ifyour competitors offer employees stock options that might make themrich, while you make it clear you plan to stay private, yourcompetitors will get the best people. Theres only common stock at this stage.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

venturehacks.com

FEBRUARY 24, 2010

The best sellers can sell to customers, partners, investors, and employees. Breakups are hard If you’re going to fall out with your co-founder, do it early, recover the equity into the option pool to keep the company going, and recruit someone else great to fill the missing slot. Build in founder vesting (a.k.a.

Cofounder 101

Cofounder Founder Technical Cofounder Technical Review 101

venturehacks.com

MARCH 21, 2008

Or they bring you a handful of great employees. If your company hasn’t raised a Series A, increase the advisor’s equity by roughly 30%-50% to account for dilution from seed investors, Series A investors, option pools, swimming pools, and the like. Equity is the gift that keeps on giving.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

www.paulgraham.com

OCTOBER 23, 2010

Angels are individualrich people who invest small amounts of their own money, while VCsare employees of funds that invest large amounts of other peoples. Founders never really likedgiving up as much equity as VCs wanted. There used to be two sharply differentiated typesof investors: angels and venture capitalists.

Valuation 92

Valuation Stock Partner Founder 92

crowdSPRING Blog

NOVEMBER 15, 2013

Model Equity Calculator for Founders with Option Pool Expansion – crowdspring.co/1fwUdsA. It’s time to rethink startup equity – GigaOM – crowdspring.co/1apRjnm. Good to see Microsoft axe its controversial employee-ranking system | The Verge – crowdspring.co/1eIX1Fn.

Social Media 93

Social Media Small Business Design Media 93