Startup Professionals Musings

JUNE 11, 2014

Being the leader doesn’t mean more equity, nor does it mean the leader will necessarily be CEO. The sales professional. A sales fanatic on the founder team helps to contain that risk. The combination of technical insight, founder authority, and sales experience is a hard-to-beat advantage in a competitive market.

Technical Cofounder 245

Technical Cofounder Cofounder Advisory Board Startup 245

Startup Professionals Musings

SEPTEMBER 13, 2015

Being the leader doesn’t mean more equity, nor does it mean the leader will necessarily be CEO. The sales professional. A sales fanatic on the founder team helps to contain that risk. The combination of technical insight, founder authority, and sales experience is a hard-to-beat advantage in a competitive market.

Technical Cofounder 120

Technical Cofounder Cofounder Advisory Board Stock Options 120

View from Seed

AUGUST 6, 2015

When someone goes to work for an early startup, the compensation package general includes an annual salary, health insurance, and, instead of fixed-cost performance upside, a percentage of unvested options to purchase equity in the company. It falls on the hiring company to thoroughly explain equity options to their new employees.

Equity 120

Equity Employee Cap Table Stock Options 120

www.inc.com

SEPTEMBER 24, 2011

Sales & Marketing | Wednesdays. SALES & MARKETING. 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.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

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

View from Seed

AUGUST 6, 2015

When someone goes to work for an early startup, the compensation package general includes an annual salary, health insurance, and, instead of fixed-cost performance upside, a percentage of unvested options to purchase equity in the company. It falls on the hiring company to thoroughly explain equity options to their new employees.

Equity 120

Equity Employee Cap Table Stock Options 120

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. First you must create a stock option plan using your attorney, which must be registered in many states as a security offering. There are some rules.

Early Stage 102

Early Stage Equity Stock Options Vesting 102

Both Sides of the Table

APRIL 19, 2011

o Early on they hired 3 people from ACT software at once (more team hiring) on staff and supplement it with Agency (in LA worked with First Communications – good). Mark: 10% warrant coverage is like stock options. o Everything is for sale but it’s the price that moves the timing. And he said ok got it.

Acquisition 304

Acquisition Warrant Customer Term Sheet 304

Both Sides of the Table

FEBRUARY 23, 2015

He wants a chance at changing life’s circumstances with building equity value that might free him and his family from the rat-race of 529 accounts, property taxes, summer-school tuitions and even spending some cash on aging parents. the standard 4-6% for a hired-gun CEO). He still has the dream. He has the hunger.

Technical Review 150

Technical Review Liquidation Preference Silicon Valley IP 150

Both Sides of the Table

JANUARY 21, 2010

You never got around to agreeing exact equity splits but you had many conversations about it. Forget to get around to setting up that Employee Stock Option Plan and want to be able to give the early guys their options at a low strike price? Consider it a sales & marketing expense for them.

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Berkonomics

JANUARY 7, 2021

How many of them, particularly in technology, were able to start a company, supply all the funding, and share no management tasks or equity with others, and still grow the company to any significant size, worthy of a multi-million-dollar opportunity to cash out at exit? Dividing equity among those that fill the management gap.

Liquidity Event 96

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 96

Up and Running

SEPTEMBER 10, 2014

I’m a mom, a full-time sales manager, and recruiter. Entrepreneurs need to find a way to get traction (sales) without funding. It’s because pitching is making a sale and all sales are made emotionally and followed up with logic. Wait, you didn’t want to be a sales person? Stock Option.

Angel Investor 159

Angel Investor Technical Review Software Review Accredited Investor 159

The Next Web

AUGUST 12, 2013

Finding co-founders is hard, and I would never recommend to hire a co-founder – usually you start a business with people you know for years (as there is already an existing level of trust there and you also know they are capable of fulfilling their duties). They should be able to hire great designers to help build a better product.

Cofounder 119

Cofounder CTO Hire Startup Europe 119

Both Sides of the Table

MAY 19, 2018

Your historical trading information including financials and a “customer file” which shows the history of your transactions so that investors can run “cohort” analyses Customer reference, personal references, key team members, compensation, cap table, stock option plan, etc. and then asking to take a brochure home with you.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Berkonomics

MAY 12, 2010

Equity is divided between the founders and the business begun. The document should also contain clear buy-sell clauses, forcing any sale of shares to first be offered to the corporate treasury, then to the other founders in proportion to their holdings, and then if no interest, to outside investors. There are some rules.

Early Stage 85

Early Stage Equity Stock Options Vesting 85

Startup Company Lawyer

MAY 1, 2009

CompStudy publishes an annual report of equity and cash compensation that provides compensation data on top management positions and Boards of Directors at private companies in technology and life sciences. For example, below are the 2008 results for average equity granted at time of hire in IT companies: CEO 5.40%.

Stock Options 31

Stock Options CTO Hire Equity 31

Gust

NOVEMBER 4, 2011

In brief, a cap acts to place a limit on the conversion price of a convertible note such that investors are guaranteed a minimum number of shares for their bridge loans if the startup does a priced equity round at a high pre-money valuation – “high” meaning above the cap, which is often a heavily negotiated term. (The of MySpace, Inc.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 5 Stock vs Options. 6 Founders / Restricted Stock. 7 Salary vs Equity. Important disclaimer: Ive got experience negotiating stock compensation packages from both sides of the table. From Payne.org Wiki. 3 Dilution. 4 Vesting.

Equity 56

Equity Employee Vesting Preferred Stock 56

infochachkie.com

SEPTEMBER 24, 2011

Instead of hearing from your long lost third-cousin, you will be inundated with an avalanche of ‘congratulatory’ emails, calls and letters from people who want to relieve you of the burden of your hard-earned equity round. Such positions include: PR, Sales, Product Development, Lead Generation, Strategic Planning, Fund Raising, etc.

Equity 40

Equity Silicon Valley Cofounder Technical Review 40

The Next Web

MARCH 2, 2014

Should we finance with debt or equity? This is the ultimate question to consider when weighing funding options. For us, because we chose to finance with debt, we gave up almost no equity in the company, and therefore almost no dilution of stock options. Take your time.

Liquidity Event 139

Liquidity Event Equity Finance Stock Options 139

Berkonomics

JUNE 12, 2014

It is rare when one person starts a company, supplies all the funding, and shares no management tasks or equity with others, and still grows the company to any significant size, worthy of a multi-million dollar opportunity to cash out at exit. So co-management is the second group to share in the bounty upon a liquidity event.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Austin Startup

SEPTEMBER 19, 2017

A strong advisor can walk you in the door to the same number of companies as 2–3 new sales hires. I think of this as an early test of the founding team’s sales ability. As founders, your job includes selling product to customers, stock to investors, and opportunity to employees. Never discount the power of a warm intro.

Advisory Board 48

Advisory Board Sweat Equity Marketing Vertical 48

The Next Web

SEPTEMBER 16, 2012

For example, if you work for an ecommerce startup in a sales/business development role and are doing deals that bring in money for the company, you are probably in Bucket Y. What about company stock options? That being said, one of the perks of working for a startup is receiving equity in the company.

Stock Options 141

Stock Options Startup Stock Salary 141

Ben's Blog

APRIL 28, 2010

Salmon points out that “not a single one of the 12 [candidates] is a CEO who was hired to run a company by its board of directors.”. This knowledge becomes the foundation on top of which a gigantic knowledge pyramid gets built which includes: Knowledge of every employee who gets hired and why. If you do, hire him!

Technical Review 78

Technical Review Cofounder Technical Cofounder Software Review 78

Startup Company Lawyer

JULY 20, 2009

If there is more than one founder, the likelihood of an argument about how the equity should be split in the new company increases dramatically. Incorporating a company and issuing stock to the founders will help prevent misunderstandings among the founders about equity splits. Hiring employees or third party contractors.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

Berkonomics

AUGUST 27, 2015

Flippers financed by venture capitalists are more likely to hire executives having high level profiles and previous exit experience. The Flipper’s executives usually have significant equity holdings, either actually owned or reflected in stock options.

Intellectual Property 48

Intellectual Property Balance Sheet Stock Options Valuation 48

A Smart Bear: Startups and Marketing for Geeks

MARCH 11, 2014

And I really believe I can do, on the sales part, so much more if I have additional people. Jason: That’s true in engineering; it’s true in sales; it’s true in marketing. So hiring more people and being around more people and getting more things done is not actually one of the reasons. How do you split equity?

Technical Cofounder 220

Technical Cofounder Cofounder Software Review Management 220

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

www.startupnorth.ca

OCTOBER 23, 2010

Being an early hire at a startup gives an individual the ability to make tremendous impact on an organization as it grows – and both the founders and those hires should know it.” This should force companies to think about building value with each early hire, and not just filling a position. It’s just unfeasible.

Employee 41

Employee Founder Salary Equity 41

Ben's Blog

APRIL 21, 2010

The board encourages you to bring in some “been there done that” executives who will provide the right financial, sales and marketing expertise to help you transition from a world-class product to a world-class business. So you aim high and bring in a super accomplished head of sales. Beware of equity being the primary motivation.

Stock Options 78

Stock Options Restful Hiring Sales 78

Austin Startup

SEPTEMBER 9, 2018

My private-company updates included new client wins, major client launches, big client up-sells, new executive hires, new marketing campaigns, challenges that we needed help with (such as a client contract renewal or a blocker at a client that was preventing them from properly adopting our nascent solution), new product launches, etc.

Advisory Board 48

Advisory Board Balance Sheet Stock Options Email 48

www.paulgraham.com

APRIL 28, 2010

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. For example, VCs generally write it into the deal thatin any sale, they get their investment back first. Those that dont fail all seem to get boughtor go public.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

techcrunch.com

OCTOBER 23, 2010

Inevitably, the excuses begin: I need to hire people to build the product. In later posts I’m going to get into more detail on specific topics like hiring, raising money, what types of ideas have the potential to get big, finding your founders, and the like. In my neck of the woods programmers are hired guns at first year in college.

Technical Review 84

Technical Review Cofounder Technical Cofounder Software Review 84