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

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

Startup Professionals Musings

AUGUST 10, 2019

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Offer low cash early, with bonuses or stock options for milestones, to people in your personal network. You have very little money, and you don’t want to give away your equity.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Gust

APRIL 9, 2014

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.). The Founder of a company starts by owning all the shares representing ownership of the company.

Dilution 150

Dilution Equity Vesting Stock Options 150

Startup Professionals Musings

DECEMBER 14, 2014

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Offer low cash early, with bonuses or stock options for milestones, to people in your personal network. You have very little money, and you don’t want to give away your equity.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

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

Startup Professionals Musings

AUGUST 19, 2017

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Offer low cash early, with bonuses or stock options for milestones, to people in your personal network. You have very little money, and you don’t want to give away your equity.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

www.inc.com

SEPTEMBER 24, 2011

Leadership & Managing | Tuesdays. Sales & Marketing | Wednesdays. LEADERSHIP & MANAGING. SALES & MARKETING. Managing Creativity. I advise my clients that you offer stock only after youve searched your heart and soul and cant come up with a way to pay with anything else," says Thomas H. Finance | Tuesdays.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

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. While their stock options will be worthless (as is all equity) they are often immediately offered new stock option packages.

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

Startup Professionals Musings

JULY 19, 2013

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. Later you need specialists and managers. Offer low cash early, with bonuses or stock options for milestones, to people in your personal network. You have very little money, and you don’t want to give away your equity.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Gust

DECEMBER 8, 2011

Determine the allocation of equity among co-founders, early employees or other service providers, and future contributors as applicable, as well as the vesting schedule , if any, that will apply. Make escrow arrangements for restricted stock (i.e., Sales contracts accounting for significant revenue. Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Tim Keane

JANUARY 12, 2010

Good investors use the valuation discussions to gauge the business savvy of the management team and to understand their ability to appreciate and deal with economic market forces that set values.   For individual angels and others investing their own money, this may be more fluid than for someone with responsibility for a managed fund.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Berkonomics

NOVEMBER 23, 2023

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 there is no interest, to outside investors. How about multiple classes of stock? How about “vesting” shares over time ?

Equity 62

Equity Stock Options Vesting Early Stage 62

Seeing Both Sides

MAY 26, 2010

Although I know this risks being an unpopular post with entrepreneurs, I confess that I no longer get why we have four year vesting schedules for stock option grants at start-ups. Vesting is known as the time period during which you unconditionally own the stock options that are issued to you by your company.

Vesting 31

Vesting Stock Options Stock Venture Capital 31

www.payne.org

SEPTEMBER 22, 2011

2 Stock Classes: Common and Preferred. 4 Vesting. 5 Stock vs Options. 6 Founders / Restricted Stock. 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. 3 Dilution.

Equity 56

Equity Employee Vesting Preferred Stock 56

infochachkie.com

SEPTEMBER 24, 2011

Beware The Consultant John Greathouse – Posted in: Cash Flow Management , Launching Venture , Strategic Planning. If a consultant claims they can enhance your marketing efforts, pay them based on their direct impact on your incremental sales. Thanks for visiting! Once you obtain funding, it will be worse than hitting the Lottery.

Equity 40

Equity Silicon Valley Cofounder Technical Review 40

Berkonomics

SEPTEMBER 28, 2017

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. In other words, you cannot create bargain options at below “market rates.” There are some rules.

Early Stage 102

Early Stage Equity Stock Options Vesting 102

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. No acceleration on going public.

Vesting 60

Vesting Pre-Money Valuation Liquidation Preference Stock Options 60

www.paulgraham.com

APRIL 28, 2010

And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. 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.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Berkonomics

MAY 12, 2010

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. In other words, you cannot create bargain options at below “market rates.” There are some rules.

Early Stage 85

Early Stage Equity Stock Options Vesting 85

Ben's Blog

APRIL 28, 2010

joined as a General Manager of the Computing Tabulating Recording Company, but renamed the company International Business Machines and turned it into the IBM we recognize today. In the 80s, the invention of the CD completely revitalized the industry and led to (literally) record-breaking sales. Thomas Watson, Sr. How was that possible?

Technical Review 78

Technical Review Cofounder Technical Cofounder Software Review 78

Small Business Force

JULY 26, 2013

With employee ownership as part of the overall compensation package, this should enable you to keep early salaries at or below market, helping better manage early cash flow. The most straightforward plan is a stock option plan, where the company issues options for employees to purchase stock at a certain price at some future date.

Employee 37

Employee Stock Options Vesting Stock 37

Diego Basch

SEPTEMBER 25, 2012

In the words of Fred Wilson: VCs are professional money managers. Typical first-time SV entrepreneurs are not millionaires, so let’s say you have 100k in the bank (maybe you’ve made some money from stock options). The rational thing to do is to oppose the sale. I’ll try to explain why.

Silicon Valley 73

Silicon Valley Entrepreneur Stock Options Vesting 73