Startup Professionals Musings

MARCH 29, 2015

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” Thus, options don’t “pay the mortgage” today, so to speak. CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% It’s a huge gamble.

Stock Options 120

Stock Options Stock Advisory Board Startup 120

Feld Thoughts

SEPTEMBER 2, 2011

The founders each have common shares that will vest over four years. The vesting schedule protects each of the co-founders in case one gets hit by a bus or decides to drop the project after a short period of time. They come up with two options: Hire Praveena as an employee and offer her stock options.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

Startup Professionals Musings

APRIL 10, 2016

Every startup founder loves to prompt for questions from investors and potential key team members about their vision, and the huge opportunity that can be had with their disruptive technology. Most founders like to talk about their many months or years of sweat-equity , but cash invested is a stronger commitment.

Sweat Equity 120

Sweat Equity Burn Rate Technical Review Intellectual Property 120

Startup Professionals Musings

APRIL 8, 2015

Every startup founder loves to prompt for questions from investors and potential key team members about their vision, and the huge opportunity that can be had with their disruptive technology. Most founders like to talk about their many months or years of sweat-equity , but cash invested is a stronger commitment.

Technical Review 120

Technical Review Due Diligence Sweat Equity Burn Rate 120

Up and Running

DECEMBER 1, 2015

If however you are giving a “normal employee” an incentive stock option plan (more on that later), that’s entirely different. Make sure you understand all of your options before making any decisions. When business owners decide to go down the route of equity compensation, there are two primary options to choose between.

Equity 60

Equity Employee Stock Options Vesting 60

Startup Professionals Musings

SEPTEMBER 25, 2019

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” Thus, options don’t “pay the mortgage” today, so to speak. CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5%

Equity 237

Equity Stock Options Advisory Board Stock 237

Startup Professionals Musings

JULY 19, 2013

Most entrepreneurs struggle with many startup Founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-Founders to help you? The co-Founder relationship dilemma.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Startup Professionals Musings

AUGUST 10, 2019

Most entrepreneurs struggle with many startup founders quandaries in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-founders to help you? The co-founder relationship dilemma.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Startup Professionals Musings

OCTOBER 21, 2017

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” Thus, options don’t “pay the mortgage” today, so to speak. CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5%

Stock 140

Stock Stock Options Advisory Board Startup 140

Hunter Walker

JUNE 7, 2022

In these moments there tends to be a lot of content to help CEOs and founders manage through a downturn, but not as much for those team members impacted. Obviously this can be a bit tricky but in small companies when you have kind founders and you’ve been a great team member, it’s ok to ask. Extend Your Stock Option Exercise Period.

Stock Options 94

Stock Options Vesting Stock Valuation 94

Both Sides of the Table

AUGUST 18, 2009

Yesterday I wrote a blog post ( here ) in which I urged people to not have too many founders. These situations are only compounded if you have 3 or more founders. I know that many people reading this will be in companies with 3+ founders and aren’t having any friction. They agreed to all be co-founders.

Founder 251

Founder Cofounder Equity Stock Options 251

Startup Professionals Musings

DECEMBER 14, 2014

Most entrepreneurs struggle with many startup Founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-Founders to help you? The co-Founder relationship dilemma.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Gust

APRIL 9, 2014

The Founder of a company starts by owning all the shares representing ownership of the company. 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.). original post can be found on Quora @ [link] *.

Dilution 150

Dilution Equity Vesting Stock Options 150

Startup Professionals Musings

AUGUST 19, 2017

Most entrepreneurs struggle with many startup founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-founders to help you? The co-founder relationship dilemma.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Reid Hoffman

DECEMBER 10, 2020

These are really good founders and I think this is an interesting space.” Further, when additional people kept mentioning Airbnb to me and praising the founders, I should have asked myself how a smart, capable person would refine the idea.). Those two minutes showed me that Airbnb’s founders wanted to play in the big leagues.

Hosting 69

Hosting Hockey Stick IPO Silicon Valley 69

Both Sides of the Table

SEPTEMBER 18, 2014

Less than you’ll probably grant your most junior employees in stock options? I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Startup Professionals Musings

JULY 24, 2011

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” Thus, stock doesn’t “pay the mortgage” today, so to speak. CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5%

Equity 234

Equity Advisory Board Stock Options Stock 234

Business Plan Blog

SEPTEMBER 23, 2012

Compensation also depends on the prospects of the company, how far along the company is, and the track record of the founders. 3: Subject Director And Advisor Shares To A Two-Year Vesting Schedule. As far as advisors are concerned, the same technique is used with a lower payout. Comments comments Powered by Facebook Comments.

Stock Options 45

Stock Options Stock Vesting Search 45

Feld Thoughts

AUGUST 20, 2012

The first articles were weirdly hostile with a focus on how OnLive just laid all their employees off in preparation for a sale in order to enrich the founders/investors at the expense of the employees. The founders equity, the investors equity, and the employees equity. Companies fail – all the time.

Recapitalization 136

Recapitalization Stock Options Vesting Equity 136

Startup Professionals Musings

JUNE 20, 2010

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” Thus, stock doesn’t “pay the mortgage” today, so to speak. CEO brought in to replace the founder, 5 - 10% CTO, CFO, VP of Marketing or Sales, 1.5 - 3% Chief Engineer or Architect, 1 - 1.5% Marty Zwilling.

Stock 144

Stock Stock Options Advisory Board Startup 144

Gust

NOVEMBER 4, 2011

This discussion expands on my Quora answer to a specific question: “ Why were the stock options of MySpace employees worthless even though the company was sold to News Corporation for hundreds of millions? ” The complete story includes a startup-within-a-startup, investments and exits by two VC firms, and some genuine corporate drama.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Scott Edward Walker

NOVEMBER 2, 2011

Set-up vesting schedules for the founders (see post here ) and file 83(b) elections with the IRS (see #3 here ). Don’t issue stock options unless a proper option plan is in place and a valuation has been done in compliance with Section 409A of the Internal Revenue Code (see post here ).

Accredited Investor 111

Accredited Investor Stock Options Delaware Silicon Valley 111

Early Growth Financial Services

AUGUST 20, 2015

Employees who feel vested and part of the team are more committed to their companies. Annie Webber, Founder and CEO of LegalHero, and David Ehrenberg, Founder and CEO of EGFS, took us through the ins and out of Sharing the Pie. Restricted stock: an outright grant of shares that is issued subject to certain restrictions.

Equity 28

Equity Founder Stock Options Vesting 28

www.inc.com

SEPTEMBER 24, 2011

If youre offering the consultant stock options, youll also want to take into consideration what the exercise price is going to be and how long the options will be outstanding. If you give it to them up front, and they dont finish the work, you dont get [ the options] back," says Morse. Consult your lawyer for details.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Both Sides of the Table

AUGUST 17, 2009

These periods of time can leave a founder very vulnerable in the future. Assuming normal valuations at fund raising rounds you’ll be down to 6-12% after you’ve created a stock-option pool and raised capital. But these people seldom make retirement money from the stock options on these companies.

Founder Vesting 365

Founder Vesting Intellectual Property Stock Options IP 365

www.thedailymuse.com

SEPTEMBER 18, 2012

When multiple people form a company together, it’s best to establish the rights and expectations of the founders upfront in case there are disagreements down the line. Establishing the ownership and equity rights of the company if there are multiple founders. Each other. Hiring employees.

Hiring 56

Hiring LLC Intellectual Property Private Equity 56

Berkonomics

APRIL 4, 2024

Start-ups with one founder rarely have or need a board of directors. As soon as any outside money is ingested into the corporation, others have a vested and legal interest in the behavior of officers entrusted with the best use of funds. In fact, such a board would seem out of place in a one-person company.

Covenant 48

Covenant Software Review Stock Options Vesting 48

www.copelandfirm.com

OCTOBER 21, 2010

Home About Fee Arrangements Location Referrals Testimonials Business Law HUB Certification Mergers & Acquisitions Startup Advice Intellectual Property Copyrights Trademarks Securities Law Debt and Bridge Financing Series A Startup Law Entity Formation Corporation LLC Series LLC RSS Founders Shares: How do you split them up?

Intellectual Property 40

Intellectual Property Founder Vesting Bridge Financing 40

Gust

DECEMBER 8, 2011

Likewise, founders can benefit from understanding basic characteristics of the overall legal structure, formation and governance documents, rights and responsibilities of team members, etc. Determine who will serve on the Board of Directors and in executive officer positions (usually founders). Newco, Inc.”) Caveat entrepreneur !

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Both Sides of the Table

NOVEMBER 4, 2009

Now … these are stock options and not restricted stock so you’ll likely be taxed at a long-term capital gains rate. Stock vests for 4 years. Stock options are the icing on the cake. Don’t join for the options.&#. Best to be a founder. you won the lottery). Sorry bud.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

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. They aren’t doing this viciously?—?they

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Both Sides of the Table

APRIL 22, 2010

It’s still important advice for startup founders and something that I’m passionate about. You’re a startup founder. You start fighting with your co-founder whom you thought you understood. And he has already vested 75% of his stock options at your company. I’m sure of that.

Hiring 392

Hiring Employee Vesting Silicon Valley 392

Scott Edward Walker

OCTOBER 27, 2015

We charge a flat fee of $2,000, plus filing fees, for up to three co-founders and it includes unlimited phone calls and emails. Thus, founders never have to worry about picking-up the phone and asking their lawyers questions. Indeed, we have done more than 300 Startup Packages and the appeal is obvious: no billable hours.

Intellectual Property 40

Intellectual Property Accredited Investor Vesting Delaware 40

Austin Startup

SEPTEMBER 19, 2017

For startup founders, it’s never too early to start thinking about putting together a target market advisory board. As founders, your job includes selling product to customers, stock to investors, and opportunity to employees. As for compensation, stock options in the range of 0.1%

Advisory Board 48

Advisory Board Sweat Equity Marketing Vertical 48

ithacaVC

JUNE 20, 2011

Setting up a legal entity that will have multiple owners from inception (like 2 or more founders) requires good lawyer input. Setting up a legal entity that will have multiple owners from inception (like 2 or more founders) requires good lawyer input. Lawyer time required (including vesting agreements for founders): 3 to 6 hours.

Stock Options 58

Stock Options Vesting Subscription Agreement Founder Vesting 58

Gust

SEPTEMBER 17, 2014

Less than you’ll probably grant your most junior employees in stock options? I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

ithacaVC

APRIL 29, 2011

Hypo: 3 co-founders start a business with Joe initially owning 35%, Lisa initially owning 35% and Steve initially owning 30%. One of my biggest concerns in this incredibly common situation is protecting each founder from the other founders’ free riding. The typical vesting period would be 3 years.

Vesting 53

Vesting Cofounder Stock Options Stock 53