Gust

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Founder’s Stock Is Gold, If You Know The Rules

Gust

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

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What is an effective “pre-incorporation-agreement” between possible founders of a startup?

Gust

Then sit down with your co-founders and divvy up the equity based on the contributions you all believe each of you will make…providing for reverse vesting, a large option pool, and a clear decision-making structure. original post can be found on Quora @ : [link] *.

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Do It Right The First Time: Avoiding “Janitorial” Legal Work

Gust

Notice what is missing from this list of priorities: The company itself – that is, a business entity, most often a corporation , that will own the entire business (however defined), issue equity to founders, take investment capital , enter into contracts, make sales, pay employees and contractors, and so forth.

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How does equity dilution work for startups?

Gust

The Founder of a company starts by owning all the shares representing ownership of the company. Rather more common is the practice of “evergreening” employee options, in which employees are given one or more additional option grants once their original grants have fully (or partially) vested.

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What do investors consider the most important aspect of a potential deal?

Gust

Valuation, Size of Raise, Amount of Investment, Form of Investment, Liquidation Waterfall, Option Pool, Board Composition, Anti-Dilution Rights, Protective Provisions, Founder Vesting, *original post can be found on Quora @ : [link] *.

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What tools can I use to manage relationships with investors?

Gust

…and for a discussion of the investor-side tools, see my answer to: What are some ways you keep track of startups you are evaluating/diligencing/in vesting in? Needless to say, the author of this post is completely biased, as I am the Founder & CEO of Gust ). original post can be found on Quora @ [link] *.

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Keep It Under Your Hat: Valuation Caps and the $650 Million Sale of MySpace for $125 Million

Gust

There were two distinct classes of employee equity (issued by Intermix and MySpace, respectively) with different valuation and vesting situations—and, most significantly, a $125 million valuation cap applied to the buyout of MySpace equity that was triggered by the acquisition of Intermix. Read on for a fuller explanation. by February 2006).