Trending Sources

The Option Pool Shuffle

venturehacks.com

Use a hiring plan to justify a small option pool, increase your share price, and increase your effective valuation. Thanks!

Option Pools and VC Negotiations

Rob Go

In my last post about raising seed vs. jumping straight to A, I received a good comment from Chris Woods that my analysis neglected to include the impact of option pools that are created at each financing round. Essentially, the new investor wants there to be a certain % of options available to employees after they invest.

Sizing Option Pools In Connection With Financings

A VC : Venture Capital and Technology

Investors like to require that an unissued option pool is in the pre-money valuation calculation when they put money into early stage companies. This post is about how to size the option pool. And the investors want the option pool to be in the pre-money valuation. It is bullshit. It annoys me.

Comparing valuations between rounds

The Equity Kicker

This is best explained with a fictitious example. ACME Hot Food co first raises a round of £2m at £6m pre-money and hence £8m post-money.

Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

This starts with understanding how VCs and entrepreneurs often see valuation differently. The VC assumes you’ll have an option pool.

Equity for Early Employees in Early Stage Startups

SoCal CTO

If the company's valuation is $2 million, $90k is 4.5%. I'll get to service providers in a later post. Which means n = (i - 1)/i. million.

Raising Capital: 4 Things You Must Do

Fresh Inc.: The Staff Blog

Don''t spend all of your energy negotiating valuation when you could be talking about the options pool. Here are his tips: 1.

Should I Use My Investor’s Lawyer?

Scott Edward Walker

At what valuation and on what terms? Angel Issues VC Issues anti-dilution provisions convertible note drag-along rights exploding term sheets investor lawyer liquidation preference New York option pool protective provisions redemption rights Series A term sheet series seed silicon valley startup lawyer

Standart termsheets

The Equity Kicker

The thing with standard termsheets is that they go straight to the position where you would normally expect to end up after negotiation.

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] *. Characteristics of the Entrepreneur. Characteristics of the Venture.

How to Evaluate an Offer from a Startup Incubator

The Startup Lawyer

The following are some issues to consider and actions to take before accepting an incubator’s offer: (1) Calculate Valuation and Determine Value. Pre-money valuations startups receive from incubators are typically low…really low. Other incubators may want to set up an option pool. Do they know your space?

Term Sheet Negotiation Tells

Permanent Record

The investor who spends hours browbeating you to avoid a tiny reduction in the option pool will also be tying up board meetings for an hour to talk about an assumption on line 18 of the revenue model submitted for discussion.   Is she too-clever-by-half, developing complex financial structures that even your lawyer can’t understand? 

What to expect before accepting the offer to become Engineer #1 at a startup

The Next Web

In exchange, the engineer is likely offered the promise that his or her option shares will one day turn into big money. Engineer #1?

Is it Time for You to Earn or to Learn?

Both Sides of the Table

Stock options are the icing on the cake. Don’t join for the options.&#. This is part of my Startup Advice series. That’s Ok. 

Using warrants to pump up your VC valuation

www.mattbartus.com

How to pump up your VC valuation. Option Pool. Option Pool. Home About Matt Client references Contact. Post-Money.

Viva La Revolucion! AngelList goes into Hyperdrive

Fred Destin

Some VentureHacks posts are today mentioned like religious scriptures by entrepreneurs, such as Nivi''s 2007 Option Pool Shuffle.

In VC deals, Price Doesn't Matter - But The "Promote" Does

Seeing Both Sides

Entrepreneurs often mistakenly focus solely on the pre-money valuation while VCs look at multiple knobs in the negotiation to drive to a set of terms that, in total, they find acceptable.  The first, and most focused on, is something called the pre-money valuation. Another term that impacts the price is the size of the option pool

Building Convertible Debt into the Premoney Valuation

ithacaVC

One interesting point that comes up a lot is how to factor the convertible debt into the premoney valuation of the Series A round. 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). 7692 per share.

Term-sheets and Valuations: Thinking about Negotiations - Startups.

Tim Keane

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.

Angel Investing at Today's Market Rates is a Losing Proposition

Dshen

Then we melded that with data from PitchbookVC’s latest 1H 2015 Venture Capital Valuations & Trends Report. The model is just a model.

10 Steps to Success With Angel Investors

Business Plan Blog

Pre-money valuation. 10 Steps to Success With Angel Investors. Nominate one lead angel to lead the group. Amount to be invested.

Raising Funding From Family and Friends: Division of Equity

Business Plan Blog

You have looked at the advantages and disadvantages, and have decided it is the best option for your startup. Stage 1: Idea. You need funding.

5 Tips for Raising a Venture Round

www.readwriteweb.com

While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Sponsor. Discuss.

How to Divide Equity to Startup Founders, Advisors, and Employees

thinkspace.com

Percent of the outstanding option pool: meaningless. Strike price of options: meaningless. Ill DM you a couple options.

Cap Table Clean Up

ithacaVC

The share price is calculated by taking the pre-money valuation and dividing it by the number of shares outstanding pre-money. So Share Price (SP) = Pre-Money Valuation (PMV) / Shares Outstanding (SO). That is normal for a pre-money % as it will drop down to about 10% post money depending on size of round and valuation. 1.423).

How does funding work? Angel & VC investment in Nordic startups by the numbers

ArcticStartup

The reason for this is that giving a valuation to a startup at this stage is nearly impossible. How did they reach the € 2 million valuation?

The New Funding Landscape

www.paulgraham.com

And those who do raiseVC rounds will be able to get higher valuations when they do. Most founders doing series A deals wouldprefer to take half as much money for half as much stock, and thensee what valuation they could get for the second half of the stockafter using the first half of the money to increase its value. Will it be?

Some Takeaways From Stockholm & Helsinki's Term Sheet Battle

ArcticStartup

If a founder leaves, sometimes the VCs take the shares, but the normal situation is to divide it or put it back in the option pool.

Most Common Early Start-up Mistakes

Both Sides of the Table

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. They’ll happily join for 5% or less and they’ll have options and not stock. often talk with entrepreneurs who are kicking around their next idea. Not worth it.

IP 87

How to Fund a Startup

www.paulgraham.com

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. Another concept we need to introduce now is valuation. As a company gets more established,its valuation gets closer to an actual market value. No, not generally.A

Standard termsheets

The Equity Kicker

The thing with standard termsheets is that they go straight to the position where you would normally expect to end up after negotiation.

Anatomy of a Term Sheet: Conversion and Anti-dilution

VC Ready Blog

Optional Conversion and Mandatory Conversion. Weighted average anti-dilution may be either “broad” or “narrow” depending on whether certain derivative securities (such as options and warrants) are included in the calculation of the company’s existing capital, with a “broad” formula resulting in less dilution adjustment (i.e.,

How to Raise Money as a First Time Founder

The Next Web

The cap simply refers to the maximum valuation that the seed investor’s money will convert at when the company reaches a series A financing event.

Options

Chris Dixon

The most common types of derivatives are futures – the  obligation to buy a security at a future date at pre-agreed upon price – and options – the right to buy something at a future date at pre-agreed upon price. Valuing options was a mystery until 1973 when the  Black-Scholes model was invented. For example.

How to raise money with no lead

Venture Hacks

Here’s an outline and transcript: You can close an angel round with ‘mass syndication’ Start with terms and valuation below market. How do you set your valuation? The keys are that you have to set the terms and the valuation very, very reasonably. Start with terms and valuation below market. Another future.

The Future of Startup Funding

www.paulgraham.com

Youdnegotiate a round size and valuation with the lead, whod supplysome but not all of the money. Standardized paperwork will do away with the need tonegotiate anything except the valuation, and that will get easiertoo. Butthere may not have to be just one valuation. Want to start a startup? Get funded by Y Combinator.

5 Tips for Raising a Venture Round

ReadWriteStart

While certainly not every business needs to raise venture financing, it is the path for many high-growth technology startups. Sponsor. Discuss.

Startup Equity For Employees

www.payne.org

Stock vs Options. NOTE: If youre an attorney or tax accountant with experience helping startup employees with stock and option issues, drop me a note. The vesting terms are usually set by an "Incentive Stock Option (ISO) plan" approved by the companys Board of Directors, and are used for all employees. Stock vs Options.

Getting Funded: Step 5, The Legal Grind

Passionate Intensity

Don’t come in saying that your friend told you that the option pool should be smaller and so you want to change it.

Anatomy of a Term Sheet: Nature of a Term Sheet and Summary of Offering Terms

VC Ready Blog

Second, the employee option pool is typically set at 15-20% of a company’s fully-diluted post-money capitalization at the time of a Series A financing, though it is sometimes set as low as 10% or as high as 25%. The goal should be to establish a pool that is the right size to meet the company’s needs for the foreseeable future.