Both Sides of the Table

NOVEMBER 4, 2009

BTW, this ignores liquidation preferences which actually mean you’ll earn less. Stock vests for 4 years. In California that averages around 42.5% so in my state after tax you’d make an extra $18,000 / year and that’s in a positive scenario! So let’s go CRAZY! you won the lottery). Wait a second.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

ithacaVC

DECEMBER 13, 2013

That is fine, and should be in the form of option grants vesting over time. For the same reasons as expressed above, giving advisors actual stock (even if vesting restricted stock) will be taxable to the advisor if done when the company has a negotiated value.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

techcrunch.com

FEBRUARY 25, 2010

This is probably why investors’ case for a company to sell early f ocuses exclusively on the founder : in most early-stage acquisitions, the liquidation preferences and deal-sweeteners only work for investors and founders. There is no liquidation preference, severance payment or earn out.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

Startup Company Lawyer

FEBRUARY 21, 2010

Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless. If you can’t figure this out yourself, you should probably build a liquidation preference spreadsheet to model how liquidation preferences work depending on M&A transaction value.

Retention 31

Retention Liquidation Preference Employee Common Stock 31

Scott Edward Walker

AUGUST 31, 2011

Conclusion There is too much at stake for entrepreneurs not to be represented by a smart, unbiased lawyer, who has no vested interest in the closing of a proposed financing. This is not to suggest that there’s anything nefarious or unethical going on; it’s just common sense.

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

K9 Ventures

NOVEMBER 21, 2011

I firmly believe that if there are early employees who have been with the company long enough and have meaningful enough stakes in the company, they too should have the opportunity to sell some of their vested stock, or vested and exercised options. I believe this is something that needs to be determined on a company-by-company basis.

Founder 87

Founder Common Stock Preferred Stock Stock 87

K9 Ventures

NOVEMBER 21, 2011

I firmly believe that if there are early employees who have been with the company long enough and have meaningful enough stakes in the company, they too should have the opportunity to sell some of their vested stock, or vested and exercised options. I believe this is something that needs to be determined on a company-by-company basis.

Founder 84

Founder Common Stock Preferred Stock Stock 84

Pascal's View

DECEMBER 30, 2012

Many of these issues come to the foreground once entrepreneurs have raised money from VC’s.

Cofounder 34

Cofounder Liquidation Preference Vesting Equity 34

www.founderinstitute.com

MARCH 2, 2010

Participation" means that investors "double dip" by getting both their liquidation preference and their equity allocation. - A 1x liquidation preference , versus a 1x to 3x range in recent deals reported on TheFunded.com. Single trigger vesting , which allows founders to vest all of their equity and make money in an exit.

Term Sheet 40

Term Sheet Liquidation Preference Vesting San Diego 40

ithacaVC

NOVEMBER 1, 2011

I am a big fan of change of control option vesting acceleration, particularly for the executive team. Normally employee options vest over 4 years, with 25% vesting after year 1 and then the balance pro rata (monthly or quarterly) over the remaining 3 years.

Vesting 60

Vesting Pre-Money Valuation Liquidation Preference Stock Options 60

thestartuplawyer.com

FEBRUARY 24, 2010

Contact The Startup Lawyer: Home Page About Contact FAQs Glossary Ryan Roberts Law: Home Page Social Networks: Facebook Twitter LinkedIn Flickr Delicious Digg Last.FM He obviously never launched a startup and got shafted by a co-founder. He obviously never launched a startup and got shafted by a co-founder. Leave a Reply Click here to cancel reply.

Cofounder 40

Cofounder Founder Preferred Stock Startup 40

dondodge.typepad.com

JANUARY 15, 2011

i also think Leo Dirac's post & presentation on liquidation preferences at Gnomedex was very enlightening as well: [link] regards, - dave mcclure Posted by: Dave | August 12, 2007 at 02:45 AM Thanks Don. How often are you seeing immediate/accelerated vesting upon change of control?

Equity 40

Equity Employee Dilution Valuation 40

Both Sides of the Table

FEBRUARY 14, 2016

” “Mark has a vested interest in talking down valuations of startups.” Or down rounds might favor earlier-stage investors because the liquidation preferences of later stage investors get reduced. It pains me to see the typical (and predictable) responses on Twitter, “VCs want prices to drop!”

Valuation 150

Valuation Down Round Startup Later Stage 150