Startup Professionals Musings

MARCH 29, 2015

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. It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.”

Stock Options 120

Stock Options Stock Advisory Board Startup 120

Feld Thoughts

JANUARY 17, 2013

I’ve never really understood why the majority of stock option refresh grants are stacked grants mid-way through the granting process. Assume you hire someone and grant them 10,000 options with monthly vesting of four years with a one year cliff. options / month, or 2,500 / year.) Let me give an example.

Stock Options 134

Stock Options Stock Vesting Retention 134

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

Feld Thoughts

SEPTEMBER 2, 2011

The founders each have common shares that will vest over four years. The vesting schedule protects each of the co-founders in case one gets hit by a bus or decides to drop the project after a short period of time. They come up with two options: Hire Praveena as an employee and offer her stock options.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

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. It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.”

Equity 237

Equity Stock Options Advisory Board Stock 237

Startup Professionals Musings

APRIL 10, 2016

Calculate employee stock option values and vesting times, as well as salary. Since nine out of ten startups fail completely, serious investors look for a 10X return on their investment within five years. Look for examples of similar companies and revenue multiples achieved from acquirers.

Sweat Equity 120

Sweat Equity Burn Rate Technical Review Intellectual Property 120

Startup Professionals Musings

MAY 8, 2022

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. 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. The right investors and right time dilemma.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Startup Professionals Musings

APRIL 8, 2015

Calculate employee stock option values and vesting times, as well as salary. Since nine out of ten startups fail completely, serious investors look for a 10X return on their investment within five years. Look for examples of similar companies and revenue multiples achieved from acquirers.

Technical Review 120

Technical Review Due Diligence Sweat Equity Burn Rate 120

Berkonomics

OCTOBER 26, 2010

Give one percent equity to each outside board member vesting over four years of service. Pay early stage board members of companies that are not lifestyle businesses one percent of the fully diluted equity in the form of an option that vests over four years of service. Email readers continue here.]

Stock Options 66

Stock Options Early Stage Stock Vesting 66

Berkonomics

MARCH 8, 2018

Give one percent equity to each outside board member vesting over four years of service. Pay early stage board members of companies that are not lifestyle businesses one percent of the fully diluted equity in the form of an option that vests over four years of service.

Early Stage 102

Early Stage Vesting Stock Options Preferred Stock 102

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. It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.”

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. 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. The right investors and right time dilemma.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Business Plan Blog

OCTOBER 2, 2012

Favorable conditions, such as a short vesting schedule and an extended post-termination exercise period, promotes director and advisor interest and keeps them driven. Ultimately, equity-based compensation should motivate independent directors and advisors by offering them a favorable, but fair, vehicle through which they can profit.

Stock Options 40

Stock Options Stock Vesting Equity 40

Berkonomics

JANUARY 25, 2024

Board members or lead investors as coaches If you take smart money from a good angel or venture organization, the lead investor usually becomes your board member and has a vested interest in your success. And some will willingly work for stock options, an amount to be negotiated based upon time spent and stage of corporate development.

SBA 62

SBA Warrant Stock Options Vesting 62

Hunter Walker

JUNE 7, 2022

Extend Your Stock Option Exercise Period. The ‘average’ startup offers a 90 day period post employment where you have to exercise any vested stock options before forfeiting them back to the company.

Stock Options 94

Stock Options Vesting Stock Valuation 94

Business Plan Blog

SEPTEMBER 25, 2012

Subject Director And Advisor Shares To A Two-Year Vesting Schedule. Gradually vesting a director’s and advisor’s options align their compensation with their actual service while protecting the company in the event that they are prematurely removed from the board. Vesting should be accelerated in the event of a change of control.

Stock Options 40

Stock Options Vesting Stock Acquisition 40

Up and Running

OCTOBER 13, 2022

You need to decide what kind of plan you want, how much stock you want to buy, how many employees will be included in the plan, and what kind of vesting schedule there will be. For example, plan to set aside 10-15% of the total ownership into an ESOP pool, and allocate the options over a 3 to 4-year vesting period.

Vesting 88

Vesting Stock Valuation Stock Options 88

Business Plan Blog

SEPTEMBER 23, 2012

3: Subject Director And Advisor Shares To A Two-Year Vesting Schedule. In each case, the company’s needs and the qualities of the prospective director or advisor drive the analysis. Check back Wednesday, September 26, for Rule of Thumb No.3: Comments comments Powered by Facebook Comments. Legal & Taxes Funding Legal Startup Phase'

Stock Options 45

Stock Options Stock Vesting Search 45

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

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. It never hurts to ask in a job interview what stock options are available, and don’t accept an offer which promises to “work out the equity terms later.”

Equity 234

Equity Advisory Board Stock Options Stock 234

Startup Professionals Musings

DECEMBER 14, 2014

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. 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. The right investors and right time dilemma.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

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. It never hurts to ask in a job interview what stock options are available, and don’t accept an offer which promises to “work out the equity terms later.”

Stock 144

Stock Stock Options Advisory Board Startup 144

Both Sides of the Table

SEPTEMBER 18, 2014

Less than you’ll probably grant your most junior employees in stock options? of the time I have no vested interest in having the debate. Stock Option plans. Him: Not so good. Obviously he’d be pissed off. I hadn’t really thought about it. Me: I know. You and everybody else. I’m bored of it.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Feld Thoughts

AUGUST 20, 2012

While their stock options will be worthless (as is all equity) they are often immediately offered new stock option packages. Usually the vesting clock resets completely; sometimes a new owner will be extra generous and offer a shorter vesting term.

Recapitalization 136

Recapitalization Stock Options Vesting Equity 136

Startup Professionals Musings

AUGUST 19, 2017

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. 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. The right investors and right time dilemma.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Startup Professionals Musings

JULY 19, 2013

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. 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. The right investors and right time dilemma.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Scott Edward Walker

NOVEMBER 2, 2011

Set-up vesting schedules for the founders (see post here ) and file 83(b) elections with the IRS (see #3 here ). Don’t issue stock options unless a proper option plan is in place and a valuation has been done in compliance with Section 409A of the Internal Revenue Code (see post here ).

Accredited Investor 111

Accredited Investor Stock Options Delaware Silicon Valley 111

Gust

NOVEMBER 4, 2011

This discussion expands on my Quora answer to a specific question: “ Why were the stock options of MySpace employees worthless even though the company was sold to News Corporation for hundreds of millions? ” The complete story includes a startup-within-a-startup, investments and exits by two VC firms, and some genuine corporate drama.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

ReadWriteStart

AUGUST 29, 2012

Shaw’s data included stock options vested as they were realized. When they look around and see their friends jumping from one startup to another for more stock options and cooler rooftop parties, it’s easy for them to do the same. Perhaps because they don’t waste so much time in orientation sessions.).

Silicon Valley 146

Silicon Valley Stock Options Startup Vesting 146

www.inc.com

SEPTEMBER 24, 2011

If youre offering the consultant stock options, youll also want to take into consideration what the exercise price is going to be and how long the options will be outstanding. If you give it to them up front, and they dont finish the work, you dont get [ the options] back," says Morse. Consult your lawyer for details.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Both Sides of the Table

MARCH 21, 2010

A “warrant&# is a right, but not an obligation for a company to buy stock in your company at a future date and at a pre-agreed price. Think of it as similar to an employee stock option. Make the warrants for common stock and not preferred stock. This is the same as with employee stock options.

Warrant 298

Warrant Dilution Startup Stock Options 298

Reid Hoffman

DECEMBER 10, 2020

To honor the Alliance it had made with those former employees, Airbnb waived the usual vesting cliff so that they could exercise their stock options, and provided generous severance packages. Even though the company had been on track for an IPO, it retrenched and laid off 25% of the team.

Hosting 69

Hosting Hockey Stick IPO Silicon Valley 69

Berkonomics

DECEMBER 7, 2017

If you take smart money from a good angel or venture organization, the lead investor usually becomes your board member and has a vested interest in your success. And some will willingly work for stock options, an amount to be negotiated based upon time spent and stage of corporate development.

Warrant 97

Warrant Stock Options Vesting Equity 97

Both Sides of the Table

NOVEMBER 4, 2009

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.&#. In California that averages around 42.5% you won the lottery).

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Both Sides of the Table

MAY 19, 2018

Your historical trading information including financials and a “customer file” which shows the history of your transactions so that investors can run “cohort” analyses Customer reference, personal references, key team members, compensation, cap table, stock option plan, etc. They aren’t doing this viciously?—?they

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

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. Founder vesting. Make sure you own your IP. Start building your team early.

Founder Vesting 365

Founder Vesting Intellectual Property Stock Options IP 365

Berkonomics

APRIL 4, 2024

As soon as any outside money is ingested into the corporation, others have a vested and legal interest in the behavior of officers entrusted with the best use of funds. Start-ups with one founder rarely have or need a board of directors. In fact, such a board would seem out of place in a one-person company.

Covenant 48

Covenant Software Review Stock Options Vesting 48