Startup Professionals Musings

AUGUST 4, 2014

Even with an agreed initial equity split, it’s smart to have founder’s stock actually issued or vested over a period of at least two years, on a month-by-month basis. Obviously it should be amended later, as roles are more clearly defined, and execution proceeds.

Cofounder 261

Cofounder Stock Founder Technical Cofounder 261

Startup Professionals Musings

APRIL 23, 2012

Even still, regardless of the initial equity split, you should seriously consider vesting your founders shares over at least two years. If you and your potential partners can’t get through this discussion in a timely fashion and come to agreement, then it’s unlikely that your startup can ultimately survive anyway.

Intellectual Property 252

Intellectual Property Equity Cofounder CTO Hire 252

Startup Professionals Musings

JANUARY 22, 2013

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Startup Professionals Musings

JULY 1, 2022

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Stock Options 343

Stock Options Advisory Board Stock Startup 343

Startup Professionals Musings

MARCH 23, 2014

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Startup Professionals Musings

AUGUST 24, 2016

Even with an agreed initial equity split, it’s smart to have Founder’s stock actually issue or vest over a period of at least two years, on a month-by-month basis. Obviously it should be amended later, as roles are more clearly defined, and execution proceeds.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

Startup Professionals Musings

NOVEMBER 8, 2010

Even still, regardless of the initial equity split, you should seriously consider vesting your founders shares over at least two years. If you and your potential partners can’t get through this discussion in a timely fashion and come to agreement, then it’s unlikely that your startup can ultimately survive anyway.

Equity 228

Equity Intellectual Property Cofounder CTO Hire 228

Startup Professionals Musings

APRIL 11, 2021

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the Founders, with normal vesting and other participation rules. Later, when your venture is trying to close on financing, or even going public, that forgotten partner surfaces, demanding their original share.

Cost 363

Cost Non-Compete Accredited Investor Cofounder 363

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. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. The right investors and right time dilemma.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

Startup Professionals Musings

FEBRUARY 27, 2016

Keep all IP details close to the vest. Crowdfunding platforms don’t have the facilities to handle non-disclosure agreements that you might expect from every professional investor. With a large number of unknown investors demanding details, you are highly exposed to potential competitors.

Non-disclosure Agreement 120

Non-disclosure Agreement Intellectual Property Technical Review Vesting 120

Startup Professionals Musings

JANUARY 29, 2018

Always specify a vesting period for new partners. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent vesting only after a participant has satisfied commitments for at least 12 months (one year cliff). Maximize your own vesting if the business is acquired early.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

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

Startup Professionals Musings

MAY 18, 2015

This is the purpose of a vesting schedule, which issues allocated stock over time. Typically, vesting in startups occurs monthly over four years, starting with the first 25 percent of shares vesting only after an owner has remained active for at least 12 months (one year cliff ). Key founder vesting should have no cliff.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Startup Professionals Musings

OCTOBER 7, 2010

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting starts now.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

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.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Equity 237

Equity Stock Options Advisory Board Stock 237

Startup Professionals Musings

AUGUST 10, 2019

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. The right investors and right time dilemma.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

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.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Stock 140

Stock Stock Options Advisory Board Startup 140

Startup Professionals Musings

DECEMBER 14, 2014

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. The right investors and right time dilemma.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Startup Professionals Musings

AUGUST 7, 2013

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the Founders, with normal vesting and other participation rules. Later, when your venture is trying to close on financing, or even going public, that forgotten partner surfaces, demanding their original share.

Non-Compete 235

Non-Compete Accredited Investor Startup Cofounder 235

Startup Professionals Musings

OCTOBER 17, 2013

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Stock Options 224

Stock Options Stock Advisory Board Startup 224

Startup Professionals Musings

AUGUST 19, 2017

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. The right investors and right time dilemma.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Startup Professionals Musings

JULY 10, 2012

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the founders, with normal vesting and other participation rules. Later, when your venture is trying to close on financing, or even going public, that forgotten partner surfaces, demanding their original share.

Non-Compete 249

Non-Compete Accredited Investor Cofounder Startup 249

Startup Professionals Musings

JULY 19, 2013

Giving equity is realistic, but base it on contribution and role, with vesting after time and milestones. You have very little money, and you don’t want to give away your equity. Recognize that the best people don’t work for free. The right investors and right time dilemma.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Startup Professionals Musings

SEPTEMBER 22, 2012

By the way, you will normally only be offered “options,” which vest over a 4-year period after a 1-year “cliff.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Stock Options 230

Stock Options Stock Advisory Board Startup 230

Startup Professionals Musings

JANUARY 23, 2017

Most procrastinators keep their failures and slippages close to the vest, to minimize their embarrassment. On the other hand, some people find that the home distractions of children, pets, and chores are worse than the office. Know yourself. Enlist a confidant to keep you accountable.

Vesting 120

Vesting Partner Restful Naming 120

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.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Equity 234

Equity Advisory Board Stock Options Stock 234

Startup Professionals Musings

MAY 2, 2011

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the founders, with normal vesting and other participation rules. Later, when your venture is trying to close on financing, or even going public, that forgotten partner surfaces, demanding their original share.

Non-Compete 246

Non-Compete Accredited Investor Entrepreneur Cofounder 246

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.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Stock Options 120

Stock Options Stock Advisory Board Startup 120

Startup Professionals Musings

SEPTEMBER 11, 2010

You and funding partners have a vested interest in the success of your startup. In addition, you should ensure that the entire senior management team is fully supporting your recommendations. This may seem like a burden, but it’s really a good reality check. Closely monitor plan execution.

Vesting 225

Vesting Operations Partner Cost 225

Startup Professionals Musings

AUGUST 3, 2015

For new entrepreneurs looking for seed-stage help, concentrate on investors who know you or organizations with a vested interest. If your startup has a proven revenue model, real customers and is ready to scale, approach the best investors even if it costs you more money.

Cost 120

Cost Angel Groups Due Diligence Silicon Valley 120

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.” For example, 200,000 shares may sound like a lot, but if the startup has issued 20 million (a common starting point), that’s just 1% of the company.

Stock 144

Stock Stock Options Advisory Board Startup 144

Startup Professionals Musings

APRIL 19, 2010

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the founders, with normal vesting and other participation rules. Later, when your venture is trying to close on financing, or even going public, that forgotten partner surfaces, demanding equity.

Non-Compete 125

Non-Compete Accredited Investor Startup Cofounder 125