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. 1% but they’re not going to be overwhelmed by it, or insanely incentivized by that equity alone. I do believe that early employees should trade salary for equity.

Equity 41

Equity Employee Startup Vesting 41

Both Sides of the Table

JUNE 5, 2015

” Today I want to talk about how a VC thinks about equity pricing on your round and particularly if you’re coming off of a convertible note. So how DOES a VC think about financings at early stages? How much is in the option pool? So you can see why this leads to a lot of tension and misunderstanding.

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

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. If no additional equity is ever granted to Founder X and Founder Y, then Founder Y will ALWAYS own 1.63

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

The Startup Lawyer

FEBRUARY 4, 2011

If an incubator offers your startup $25,000 in exchange for 6% equity, the pre-money valuation is a whopping $391,667. Rather than assign a monetary value to the intangibles, a startup should instead assign an equity percentage value to intangibles like mentorship. Other incubators may want to set up an option pool.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

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. Salary vs Equity. From Payne.org Wiki. 3 Dilution.

Equity 56

Equity Employee Vesting Preferred Stock 56

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

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. For angel groups, the distinction between groups and VCs on this issue is dwindling, especially as angel groups do bigger rounds of financing.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

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

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. (To see the video above, please click the image, and then click on the Play button.).

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

The Next Web

OCTOBER 7, 2013

Quite frankly, waiting provides more assurance around employment risk without the commensurate sacrifice in equity comp. Startup employees are granted common shares out of something called an option pool. As stated earlier, investors will dilute ownership upon nearly every round of financing.

Engineer 129

Engineer Dilution Option Pool Vesting 129

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. Building a senior team but pushing back on having a healthy employee option pool? Do You Know Who You’re Hiring?

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. The remaining $36 million is divided according to equity ownership. Now consider what would happen if the same company raises another $10 million, expands the employee option pool to hire more executives and to support 300 people.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

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. I just worked on a financing for a company that received a term sheet from a group of VCs at a $7 million pre-money valuation. Equity for Consultants - Keep.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

Professor VC

JANUARY 17, 2008

He then went on to say that this type of financing was good for the entrepreneur (vs taking VC money) because they got to keep more of the company. There needs to be enough equity to go around for founders, early investors, later investors, and employees. I also teach Entrepreneurial Finance at San Jose State.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

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

Gust

SEPTEMBER 13, 2012

In general, and in a more-or-less-ideal world, companies should be prepared to give up roughly 20%-40% of equity for each round of early financing, where the size of each round is enough for the company to increase its valuation significantly. …and like this based on giving up 40% for each financing round: After Founding: 100%.

Option Pool 160

Option Pool Equity Valuation Startup 160

venturehacks.com

FEBRUARY 24, 2010

Two founders works because unanimity is possible, there are no founder politics, interests can easily align, and founder stakes are high post-financing. As a corporate lawyer for 15+ years, I just wanted to echo your sound advice that co-founders should impose reasonable vesting restrictions on the equity issued them. Date first.

Cofounder 101

Cofounder Founder Technical Cofounder Technical Review 101

venturehacks.com

MARCH 21, 2008

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. Finally, there is a beauty to paying in equity rather than an equivalent amount of cash.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

The Next Web

AUGUST 14, 2013

You’ll hear terminology getting bandied about left and right about things like convertible notes, capped vs. uncapped, stock option pools, board observer rights, maturity dates, priced equity. This is certainly most confusing part about raising money – at least it was for me. Almost all of that was foreign to me.

Founder 142

Founder Incubator Cofounder Accredited Investor 142