View from Seed

DECEMBER 4, 2014

Additionally, you should put whatever agreement you reach to paper , even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

Equity 315

Equity Founder Sweat Equity Cofounder 315

Business Plan Blog

SEPTEMBER 18, 2012

Reserve 10-20% Of Your Company’s Outstanding Equity For A Stock Option Plan. It is critical for a start-up to consider this reality and reserve 10-20% of its outstanding equity for a stock option plan. Equity incentives are a major form of compensation for most emerging growth and technology companies.

Stock Options 61

Stock Options Stock Option Pool Dilution 61

Agile VC

DECEMBER 4, 2014

Additionally, you should put whatever agreement you reach to paper, even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

The Next Web

SEPTEMBER 30, 2014

In one instance, I told a CEO that we typically recommend a 15 percent stock options pool at seed/Series A stage. During the first conversation with a given founder about employee equity, it is not uncommon for the CEO to fire back with the following question: Why would I give any equity to my employees?

Equity 154

Equity Employee Option Pool Stock Options 154

Berkonomics

DECEMBER 6, 2010

Use stock options and warrants to pay for service only rarely. Earlier, I stated that stock options are the currency of early stage business. There are times when services of others are available for stock instead of – or in addition to cash. This truth is obvious when a start-up has no cash.

Stock Options 61

Stock Options Stock Warrant Common Stock 61

Eric Friedman

DECEMBER 30, 2020

With the stock price off since IPO and the need to “rollup” enterprise chat + video MSFT takes a swing at solving a huge b2b problem with a startup friendly platform. 4/ Streaming equity – venture funds + employee stock becomes more liquid. cash + stock vs. FTEs. I had high hopes for this but perhaps the next 9 years.

Stock 120

Stock Private Equity Option Pool LP 120

Agile VC

DECEMBER 4, 2014

Additionally, you should put whatever agreement you reach to paper, even if you have not yet incorporated or had your legal counsel draw up the founder stock paperwork. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

www.inc.com

SEPTEMBER 24, 2011

Before Roving Software could receive its first round of financing from professional investors, in early 1999, he had to put all the stock arrangements in writing. 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.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Both Sides of the Table

NOVEMBER 4, 2009

OK, you would own 0.25% of the stock. 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.&#. you won the lottery).

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

ithacaVC

DECEMBER 13, 2013

They are typically pretty simple: (i) shares owned by founders and (ii) shares authorized for issuance in a stock option pool, some of which may be issued to employees already and some of which will be available for future issuance. And don’t forget that the options granted would come out of the available option pool.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Early Growth Financial Services

JUNE 26, 2014

Valuation — Know what these terms mean: Fully-diluted — This includes all issued stock and anything that could be converted into common stock (typically after an acquisition or IPO), such as your stock option pool.

Pre-Money Valuation 51

Pre-Money Valuation Option Pool Dilution Common Stock 51

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

Hippoland

APRIL 10, 2016

But, Ada wants to split the equity 50% her, 20% Bob and 20% me with a 10% option pool. This means that you earn your stock ownership linearly over the period of 4 years. After 1 year, you earn 25% and thereafter, you earn the remaining stock on a monthly basis. But, you definitely want everyone to earn his/her stock.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

The Startup Lawyer

FEBRUARY 4, 2011

Most incubators take common stock and sit “side-by-side&# with the founders, but some may want some (weak) preferred stock and/or dilution protection. Other incubators may want to set up an option pool. If so, the startup’s founders need to know this option pool lowers your pre-money valuation.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

ithacaVC

JANUARY 24, 2013

Let’s assume the following: Common Stock outstanding: 3,400,000 shares owned by the founders. Option pool: 500,000 shares (some issued, some reserved, but that is typically irrelevant as the whole pool is normally factored into the premoney share price calculation). So, $3mm/(3,400,000+500,000) = $.7692

Valuation 53

Valuation Balance Sheet Option Pool Dilution 53

ithacaVC

SEPTEMBER 4, 2011

Note how the new CTO Praveena implicitly negotiated to get her 15% founders shares after creation of the stock option pool. This is significant because Jane and Dick took all the dilution from the option pool creation. Each type and series of stock (Common, Series A, Series B, etc.)

Cap Table 49

Cap Table Finance Option Pool Warrant 49

Tim Keane

JANUARY 12, 2010

Term-sheets for preferred stock offerings are designed to protect the investor in case things don’t go as well as planned.   Say I invest $1MM in a company and receive 40% of the stock. These include: ·       Vesting of Founder Stock.   Why is this fair?

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

www.paulgraham.com

OCTOBER 23, 2010

In a traditional series A round, before the VCs invest theymake the company set aside a block of stock for future hires—usuallybetween 10 and 30% of the company. 13 ] The final thing founders want is to be able to sell some oftheir own stock in later rounds. 13 ]Im not saying option pools themselves will go away.

Startup 93

Startup Valuation Non-Compete Deal Flow 93

Seeing Both Sides

JULY 15, 2009

Another term that impacts the price is the size of the option pool. These new hires typically receive stock options, and the issuance of those stock options dilute the other investors. We put forward a “6 on 7” deal with a 20% option pool. I was competing with another firm.

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

BeyondVC

MAY 20, 2004

Jeff Nolan has a good overview of stock option expensing, and why we should get involved. While I agree for the need for complete transparency of stock options, I also do not believe that expensing all options at the grant date will get us closer to true economic reality.

Stock Options 60

Stock Options Stock Securities and Exchange Commission Option Pool 60

The Next Web

OCTOBER 7, 2013

Startup employees are granted common shares out of something called an option pool. It is typical for employees to vest their options over four years with a one year cliff, which means a new hire must stay on the company for at least one year to see any shares. Stock is naturally more speculative as to value, public or private.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Both Sides of the Table

AUGUST 17, 2009

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. I know that 6-12% is more than most senior executives who join start-ups get.

Founder Vesting 365

Founder Vesting Intellectual Property Stock Options IP 365

Genuine VC

FEBRUARY 28, 2011

Nearly all startup employees receive a number of options figure in their offer. ” The details surrounding stock options are often complex and confusing for non-financially-oriented individuals. On the equity side, each startup has a fixed option pool from which they’re drawing.

Startup 121

Startup Equity Vesting Salary 121

Scott Edward Walker

AUGUST 31, 2011

How should the founders divide the initial stock ownership? They are often dealing with people with very limited or no business experience. These people need help in defining and pursuing their business goals. Who should be on their board of directors? Which financing sources should they consider? At what valuation and on what terms?

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

Feld Thoughts

FEBRUARY 28, 2023

Employee option pool: The framework conditions for employee option pools remain a major problem in Germany. Even after the 2021 reform, employee option pools will continue to be structured via phantom stocks, as this is the only way to reliably avoid the dry-income problem.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

Up and Running

SEPTEMBER 20, 2021

And as the company grows, it brings on new people and may decide to issue stock options to attract new staff and funding from investors. Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors. Common shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

The Next Web

JUNE 15, 2012

And perhaps most importantly, equity is a business’ most precious resource, and the amount you give a contractor in stock can end up being worth many, many times more in a few years. For these reasons, experts often counsel startups to only give stock to contractors, vendors, and service providers as a last resort. Plan upfront.

Equity 116

Equity Stock Options Vesting Stock 116

Professor VC

JANUARY 17, 2008

One of the panelists mentioned that they have gotten very valuation sensitive (nothing wrong with that) and like to purchase preferred stock rather than invest in convertible notes. 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.payne.org

SEPTEMBER 22, 2011

2 Stock Classes: Common and Preferred. 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. Startup Equity For Employees.

Equity 56

Equity Employee Vesting Preferred Stock 56

Berkonomics

NOVEMBER 23, 2023

Some rules about stock options and phantom stock: [Email readers, continue here…] The real insight here is that stock options or phantom stock are the tools of early-stage businesses used to attract great talent when there is not enough cash to pay market rates. How about multiple classes of stock?

Equity 62

Equity Stock Options Vesting Early Stage 62

www.mattbartus.com

DECEMBER 9, 2012

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. an option to purchase shares in the future at a pre-determined price) to the investor to purchase preferred stock at the Series A price. Option Pool. Post-Money.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

www.paulgraham.com

APRIL 28, 2010

A lawyer I asked about it said: When the company goes public, the SEC will carefully study all prior issuances of stock by the company and demand that it take immediate action to cure any past violations of securities laws. In an IPO, it might not merely addexpense, but change the outcome. Startups valuations aresupposed to rise over time.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

www.instigatorblog.com

OCTOBER 23, 2010

You can’t have an option pool that takes up 50% of the company’s shares, and you have to leave room for future employees as well. Jason Penny Stocks stockexplosion I completely agree with you. Jason Penny Stocks stockexplosion I completely agree with you. stockexplosion I completely agree with you.

Equity 41

Equity Employee Startup Vesting 41

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

www.startupnorth.ca

OCTOBER 23, 2010

The Adventure of a Lifetime 17 Pithy Insights for Startup Founders 17 Pithy Insights for Startup Employees Venture Hacks > Hiring Venture Hacks > Employees Venture Hacks > The Option Pool Shuffle Paul Graham > The Equity Equation [link] boris It's important to note that those options grants are AFTER a Series A funding.

Employee 41

Employee Founder Salary Equity 41

venturehacks.com

SEPTEMBER 22, 2011

Paul says, “Whenever you’re trading stock in your company for anything, whether it’s money or an employee or a deal with another company, the test for whether to do it is the same. It’s a bit like the stock market – the equity equation calculates the intrinsic value of the hire and is the value investor tool.

Equity 40

Equity Cap Table Valuation RSS 40

Berkonomics

SEPTEMBER 28, 2017

And then there are options: [Email readers, continue here…] Stock options or phantom stock are the tools of early stage businesses used to attract great talent when there is not enough cash to pay market rates. a share, then options must be priced at that amount. There are some rules.

Early Stage 102

Early Stage Equity Stock Options Vesting 102