Both Sides of the Table

AUGUST 3, 2010

I can save tons of development time and I think I can buy it for all equity. I think we had slightly different definitions of this saying but since he coined the term I have to credit him. If they raise a bunch of capital little ole you isn’t going to be around to have your option pool topped up.

Merger 276

Merger Technical Review Early Stage Dilution 276

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

Early Growth Financial Services

DECEMBER 4, 2014

But do you know what to do once you’re asked to sign a term sheet? And a good lawyer can be a real advocate for you: by keeping negotiations on track, explaining terms, and making sure any deal you sign doesn’t have problematic (and costly) clauses that could leave you at risk. Congratulations! Most investors will expect this.

Term Sheet 51

Term Sheet Liquidation Preference Vesting Option Pool 51

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

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. How much is in the option pool? If you have 8 senior managers in place and I don’t think you’ll need as many people I might accept an option pool of 8% unallocated.

Pre-Money Valuation 150

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

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

I have a long term view and thats how I will justify this years scoring. 4/ Streaming equity – venture funds + employee stock becomes more liquid. 7/ SaaS roll-ups and micro-private equity become huge. Yes, but it turns out physical spaces lost out this year and virtual spaces and communities won the day (year?).

Stock 120

Stock Private Equity Option Pool LP 120

Agile VC

APRIL 17, 2011

Obviously most of these employees are working hard primarily for equity upside compensation, but Kayak’s personnel costs are roughly $200K/head so the company is highly productive on a per employee basis. Sequoia & General Catalyst, same terms as Ser B. Led by Sequoia with participation by General Catalyst. as of 12/31/09).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

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. diluted) terms. From Payne.org Wiki. 3 Dilution.

Equity 56

Equity Employee Vesting Preferred Stock 56

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. Venture Hacks Good advice for startups.

Equity 40

Equity Cap Table Valuation RSS 40

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

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

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

www.paulgraham.com

OCTOBER 23, 2010

Angels In the big angel rounds that increasingly compete with series Arounds, the investors wont take as much equity as VCs do now. AndVCs who try to compete with angels by doing more, smaller dealswill probably find they have to take less equity to do it. The futureis simple deals with standard terms, done quickly.

Startup 93

Startup Valuation Non-Compete Deal Flow 93

The Equity Kicker

OCTOBER 8, 2014

We have taken their feedback and tweaked the termsheet as appropriate with the result that on all terms bar valuation, option pool and details of founder vesting our termsheet is now, in effect, very close to fully negotiated before we send it to companies.

Founder Vesting 92

Founder Vesting Vesting Option Pool Institutional Investors 92

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

The Next Web

OCTOBER 7, 2013

Layer on the opportunity cost of choosing not to pursue lucrative alternatives offered elsewhere, and it’s easy to see how, if not under the right terms, the engineer #1 position is less than appealing. Quite frankly, waiting provides more assurance around employment risk without the commensurate sacrifice in equity comp.

Engineer 129

Engineer Dilution Option Pool Vesting 129

The Equity Kicker

OCTOBER 8, 2014

We have taken their feedback and tweaked the termsheet as appropriate with the result that on all terms bar valuation, option pool and details of founder vesting our termsheet is now, in effect, very close to fully negotiated before we send it to companies.

Founder Vesting 68

Founder Vesting Vesting Option Pool Institutional Investors 68

Rob Go

AUGUST 29, 2016

Most term sheets talked about the valuation in these terms, and you added the dollars invested to get a post-money valuation. Founders also had to do a little math on the new option pool to really understand what their ownership would be post investment, since it was typically taken out of the company pre-money.

Post-Money Valuation 52

Post-Money Valuation Valuation Cap Table Term Sheet 52

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. There was no one waiting to sign on as soon as the term sheet was signed. Do You Know Who You’re Hiring? Won’t work out well.

Hiring 108

Hiring Option Pool Early Stage Term Sheet 108

www.mattbartus.com

DECEMBER 9, 2012

Let’s say you receive a term sheet for a $1 million investment at a $3 million fully diluted pre-money valuation, and you’re kind of disappointed. 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.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

techcrunch.com

FEBRUARY 25, 2010

You could make the same argument about acquisitions and option pools. The difference between $10 million and $20 million in practical terms — whom you can date, where you can go, what you drive — is zero. The remaining $36 million is divided according to equity ownership.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

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

Professor VC

JANUARY 17, 2008

Well, you can certainly peruse The Funded for some descriptive terms for investors. 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.paulgraham.com

APRIL 28, 2010

Deal terms with angels vary a lot. Sometimes angels deal terms are as fearsome as VCs.Other angels, particularly in the earliest stages, will invest basedon a two-page agreement. The startup didnthave enough money to pay a lawyer even to read it, let alone negotiatethe terms, so the deal fell through. Hell if they know.In

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

venturehacks.com

FEBRUARY 24, 2010

Pick “nice&# guys Avoid overly rational short-term thinkers. 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. If you’re compromising, keep looking.

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

www.paulgraham.com

OCTOBER 23, 2010

And those of us in thetechnology world know what usually happens when something comesalong that can be described in terms like that. And not just for the obvious reason thatmore competition for deals means better terms. Founders never really likedgiving up as much equity as VCs wanted. Usually its thereplacement. Will it be?

Valuation 92

Valuation Stock Partner Founder 92

The Next Web

AUGUST 14, 2013

The key ingredient to traction is a launched product, a few months of solid growth (5-7% weekly growth is pretty good early on – growth can be users, revenue, or whatever is valuable for your company), some short term pieces in play for continuing that growth, and a long term story about growing the business into a company with IPO potential.

Founder 142

Founder Incubator Cofounder Accredited Investor 142