OnlyOnce

FEBRUARY 1, 2024

Here’s one to keep in mind – we did this a few times at Return Path, and I was just reminded of it when I was coaching another founder who is doing the same thing right now. Why would the cap table of the target company agree to this? Think of it as a contemporary corporate version of the dowry.

Cap Table 71

Cap Table Common Stock Acquisition Stock 71

OnlyOnce

JULY 30, 2020

If you’re a founder entrepreneur who has led your company for several years, the odds are you have a significant amount of emotional investment in your company, too. Sometimes you can have a major internal problem related to the cap table–a founder with a lot of stock needs liquidity or you need to push this person out of the company.

Cap Table 48

Cap Table Institutional Investors Startup Early Stage 48

Hunter Walker

AUGUST 8, 2023

At the time, this is last quarter and the stock market has trended upwards nicely since then (a potential leading indicator of private tech valuations), we all agreed venture portfolios were probably still 25-40% overvalued. Funds will get rightsized , which helps better align investors and founders in what defines a successful outcome.

Portfolio 99

Portfolio Cap Table LP Valuation 99

Both Sides of the Table

AUGUST 2, 2014

The acquiring company wants 100% of the proceeds to go to founders whatever the cap table says because buyers care way more about incentivizing and locking in founders than they do about VC returns or legal provisions to protect VCs. Every circumstance is different.

Cap Table 346

Cap Table Cofounder Stock Acquisition 346

Hunter Walker

MAY 13, 2023

I was on both sides of these transactions – buying startups for Google/YouTube and angel investing in high quality technical founders. Sometimes you’d even get lucky and receive stock in the acquirer, which was how I gained pre-IPO equity in high growth stars like Pinterest and Facebook.

Early Stage 118

Early Stage Cap Table Acquisition Sales 118

www.informationarbitrage.com

FEBRUARY 24, 2010

Read more » Recent Press The New York Times April 22, 2009 - A Company Plans to Market Illiquid Assets CNBC.com April 8, 2008 - Social Stock Picking Reuters April 6, 2009 - Bit.ly Main February 23, 2010 Advice for CTO Founders: Dont Let Business Kill the Business Founding a technology company is an amazing thing.

CTO Hire 40

CTO Hire Founder Cap Table Vesting 40

ithacaVC

SEPTEMBER 4, 2011

Here is the latest edition of Finance Fridays from Brad Feld called “Introducing the Cap Table and CTO” Every startup needs someone to be in charge of the Cap Table. When I was General Counsel at a tech company during the 1999 bubble times, I kept the company’s Cap Table.

Cap Table 49

Cap Table Finance Option Pool Warrant 49

Austin Startup

OCTOBER 27, 2017

TL;DR : “Founder friendliness” should mean not being hostile, but also not being submissive, to founders. Out of State VCs When you’re not CEO Material Preferred Stock v. Occasionally it’s someone inexperienced expecting me to say something totally one-sided, as if “founder friendly” means always giving founders what they want.

Founder 48

Founder Cap Table Preferred Stock Common Stock 48

Up and Running

JULY 2, 2014

This should be clearly spelled out in your Capitalization Table , or “Cap Table” as it’s commonly called. A Cap Table shows who owns the company, what the ownership shares are, and what the owners have invested in exchange for that share. Can they create and advise on a Capitalization Table?

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

Both Sides of the Table

JULY 25, 2011

Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. To this day I’m still surprised how few CEOs really understand the differences between 2x liquidation preference and a liquidation preference with a 2x cap. I never did.

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

Genuine VC

SEPTEMBER 5, 2012

The following is a first pass at a checklist of items for Founder CEOs to take care of in the first couple weeks after they’ve closed their initial round of seed funding. Communications with New Board & Investors Ensure all of your investors have all legal documentation of the round, including an electronic version of the final cap table.

Founder 156

Founder Cap Table Stock Options PR 156

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. So how does this work in practice? No problem.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

Berkonomics

AUGUST 3, 2023

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For those of you who fit that description, nice work. Taking this kind of money has several pitfalls you should be aware of.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

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. This is all incorporated into a document called a Cap Table. . A cap table will help you in the strategic management of business decisions. What is a cap table?

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

keen.io

FEBRUARY 5, 2013

For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. The founders had been dropping hints that they wanted me to join them. I knew this meant that the founders had come to some conclusion about what to offer, and now I was going to find out what it was.

Salary 50

Salary Equity Startup San Francisco 50

ithacaVC

APRIL 5, 2011

I am a huge fan of simple cap tables. A cap table is a written record (in Excel, for example) of who owns stock in your company. It lists every owner out by amount owned, type of stock (common or preferred), and date purchased. It also lists out option holders and warrant holders.

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Austin Startup

AUGUST 20, 2017

Your Cap Table is something that deserves constant care and attention. Messy cap tables can come back to haunt you when you do a financing or sell the company. Kalanick, former investor BFF turned highly disappointed by founder behavior. Keep the valuations consistent with company progress.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

Hippoland

APRIL 10, 2016

Dear elizy : I started a company in school with two co-founders. 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. If you leave before the completion of the first year, you own zero stock.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

Altgate

JUNE 25, 2012

—————– Dead equity — equity held by employees and founders no longer working at the company — is a large and growing problem. Thanks to that one decision, he owns nearly four million shares of stock, worth in excess of $100 million. Re-posted from post co-authored with Prof. million.

Equity 44

Equity Vesting Cap Table Technical Review 44

Altgate

AUGUST 25, 2012

—————– Dead equity — equity held by employees and founders no longer working at the company — is a large and growing problem. Thanks to that one decision, he owns nearly four million shares of stock, worth in excess of $100 million. Re-posted from post co-authored with Prof. million.

Equity 28

Equity Vesting Cap Table Technical Review 28

View from Seed

OCTOBER 15, 2014

So, rather than try and fill time unnecessarily and create a lengthy deck just because you’re “supposed to,” Rob — and we’d guess many other VCs as well — will often suggest that a founder create a simple one-sheeter that might start small and build over time. However, these are important updates for your board to know.

Seed Stage 331

Seed Stage Cap Table Metrics Burn Rate 331

Board Effect

MAY 10, 2019

Capitalization tables—”cap tables” for those who don’t have time for extra syllables—map the balance of power in a company. If org charts are about people power , cap tables are about money power. In reality, however, cap tables are often far more complex. What is a cap table?

Cap Table 40

Cap Table Liquidation Preference Dilution Liquidity Event 40

genylabs.typepad.com

SEPTEMBER 24, 2011

I often take stock in lieu of cash. I have a file drawer full of worthless stock certificates and I continue to add to it. Not all start-up stock is created equally. what kind of stock you are getting. where your stock sits in the liquidity preference stack. what kind of stock you are getting.

Equity 40

Equity Technical Review San Jose Stock 40

Hunter Walker

AUGUST 26, 2022

I had gone to high school with the founders in the Seattle area, and we had recently reconnected. My boss, Jen Grant , was an incredible manager, and Aaron Levie, the co-founder and CEO, was a fantastic partner on all things communications. I tried to get hired at Better Place and failed. Enter Box. They gave me a shot.

IPO 91

IPO Cofounder Early Stage Portfolio 91

Feld Thoughts

AUGUST 26, 2011

The investments by the founders created two transactions. Since SayAhh is a C corporation that is incorporated in Delaware, they decided to have a very low non-zero par value for their shares, set at $0.00001, to prevent higher franchise stock taxes. Thus for the 10M shares issued to the them, Jane invests $55 and Dick invests $45.

Balance Sheet 128

Balance Sheet Cofounder Cap Table Delaware 128

Business Plan Blog

NOVEMBER 13, 2013

Most startup founders do not have enough capital to launch their companies and need to raise money at some point. 3) Giving non-voting stock. NOTE: Angel investors are typically allocated common stock, the same class of stock as owned by founders, as opposed to preferred stocks, which are offered to VCs.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. Founders often raise money from friends and family and other angels. And sometimes founders want to protect the financial interests of FFAs. Or the economy tanks or stock market tanks moving valuations down at inopportune times for the startup.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45

ithacaVC

APRIL 10, 2012

To put it bluntly, why should a founder, who knows that he/she will have little salary when they start their startup accrue the “lost” salary on the company’s books? Let’s suppose that Joe and Mary are the founders of Startup Z. After the stock option grant, Mary/Joe might own 65% of the pre-money cap table.

Cap Table 49

Cap Table Pre-Money Valuation Stock Options Due Diligence 49

ithacaVC

SEPTEMBER 10, 2012

But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” I am not even sure what “undiluted stock” is, but safe to say the person (I will call him Exec X) meant stock that his equity would not be dilutable in terms of ownership.

Dilution 53

Dilution Employee Cap Table Stock 53

Eric Friedman

JUNE 27, 2016

I have seen what I call “predatory advisors” come in and really mess up a cap table by promising big intros and sales contracts only to disappear after the first 6-12 months. Here are the questions I like to see founders ask potential advisors; 1. How many companies do you advise today? So why would you do this?

Equity 98

Equity Vesting Cap Table Common Stock 98

Berkonomics

JUNE 8, 2017

Some businesses require very little capital and the founder can self-finance the enterprise and retain 100% of its ownership and control from ignition through liquidity event (startup through sale). For you who fit that description, nice work. Taking this kind of money has a number of pitfalls you should be aware of.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

blog.simeonov.com

FEBRUARY 22, 2010

Simeon, can you tell us how you structure ownership and control so you can fire your co-founders if necessary? The first part will dispel some myths, address the lifecycle of founder agreements and the key compensation and control parameters in them. Let’s start by dispelling some myths: There is a standard founder agreement.

Founder 44

Founder Vesting Agile Startup 44

Feld Thoughts

JUNE 2, 2015

Or, if you just want the paragraph, it’s: “If this note converts at a price higher than the cap that you have been given you agree that in the conversion of the note into equity you agree to allow your stock to be converted such that you will receive no more than a 1x non-participating liquidation preference plus any agreed interest.”.

Liquidation Preference 70

Liquidation Preference Cap Table Angel Investor Post-Money Valuation 70

Both Sides of the Table

FEBRUARY 8, 2016

We do this in our consumer lives with everything ranging from housing purchases to public stocks. Employees hate them because it’s hard to reset expectations that their stock is worth less. Founders hate them because they’re dilutive. Why does this matter? In my mind this simply means. Start early.

Burn Rate 150

Burn Rate Cap Table Balance Sheet Dilution 150

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

David Teten

DECEMBER 3, 2019

Tim Friedman, Founder, PE Stack , said, “If I could offer one piece of advice to today’s managers, it would be to take the time to understand the demands of the modern institutional LP. Russell Rothstein, Founder and CEO, IT Central Station , a product review site, said, “We see VCs on our site very often. 3) Raise capital.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

The Next Web

OCTOBER 7, 2013

They were referring to non-founder engineers, most commonly the first hire for technology businesses. is frequently granted ownership significantly less than that of the founders. However, at the very early stage, they are taking as much risk with their future as the founders. Cap tables sound intimidating.

Engineer 129

Engineer Dilution Option Pool Vesting 129