OnlyOnce

FEBRUARY 1, 2024

Sometimes when you’re doing a strategic acquisition and it’s an all-stock deal, you can insist as a term of the acquisition that the target company’s investors invest more capital into your company. Why would the cap table of the target company agree to this?

Cap Table 71

Cap Table Common Stock Acquisition Stock 71

Up and Running

JULY 2, 2014

Picking the right attorney in your startup is as important as picking the right business partner. My business partner and I made many mistakes in our first tech startup, and so many of them were the result of choosing a lawyer who was a terrible fit. Let me paint the picture for you: We were about two months into our startup idea.

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

Hunter Walker

MAY 13, 2023

“Worst case scenario we’ll sell to a larger startup or public company for about ~$1.5m I was on both sides of these transactions – buying startups for Google/YouTube and angel investing in high quality technical founders. per engineer.” of the time my answer is no f **g way]. Emotional I guess.

Early Stage 117

Early Stage Cap Table Acquisition Sales 117

VC Adventure

AUGUST 15, 2018

As is true today, there was a requirement that options be priced at or above the “fair market value” of the underlying stock (otherwise there would be tax consequences to the optionee and sometimes to the company as well). Back in the olden days of venture capital, company boards had wide discretion in pricing company options.

Valuation 48

Valuation Common Stock Cap Table Software Review 48

Both Sides of the Table

JULY 22, 2010

Things like “ participating preferred stock &# in legalese unsurprisingly never actually call out, “hey, this is the participating preferred language.&# We got a3x participating liquidation preference with interest (not participating with a 3x cap, but 3x participating. 4 * $4 million) and not $4 million.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

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

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. And fascinating new advances (and needs) in AI, climate, biology, etc are driving tech-IP driven startups.

Portfolio 98

Portfolio Cap Table LP Valuation 98

keen.io

FEBRUARY 5, 2013

How I negotiated my startup compensation. When I started thinking about joining Keen, I quickly realized there is a lot I don’t know about startups. For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. I knew enough to know I wanted to join a startup.

Salary 50

Salary Equity Startup San Francisco 50

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. Startup Lessons' It’s not an easy question even thought there are industry standards.

Cap Table 346

Cap Table Cofounder Stock Acquisition 346

Both Sides of the Table

JULY 25, 2011

When I first started as a startup CEO in 1999 there were no guides on raising venture capital. Founders don’t often think about “primary&# stock vs, “fully diluted&# stock in terms of voting rights. Or what “participating preferred&# stock is and how it can screw you. Drag along rights?

Liquidation Preference 304

Liquidation Preference Term Sheet Cap Table Participating Preferred 304

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. and then asking to take a brochure home with you.

Cap Table 336

Cap Table Due Diligence Forecast Churn Rate 336

View from Seed

AUGUST 6, 2015

When someone goes to work for an early startup, the compensation package general includes an annual salary, health insurance, and, instead of fixed-cost performance upside, a percentage of unvested options to purchase equity in the company. This is not an argument for circulating the entire cap table or compensation calendar.

Equity 120

Equity Employee Cap Table Stock Options 120

View from Seed

AUGUST 6, 2015

When someone goes to work for an early startup, the compensation package general includes an annual salary, health insurance, and, instead of fixed-cost performance upside, a percentage of unvested options to purchase equity in the company. This is not an argument for circulating the entire cap table or compensation calendar.

Equity 120

Equity Employee Cap Table Stock Options 120

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

Austin Startup

AUGUST 20, 2017

August 20, 2017: This is another in my series of posts all leading up to a book on Startup Decision Making. One of the most common mistakes I see in startups is making decisions that lose sight of the context , including the past, present, and future. Sooner or later everybody in a startup knows what everyone else is getting paid.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 48

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

Gust

NOVEMBER 15, 2012

Parts of the answer are that (a) there are enormous regulatory requirements relating to secondary markets, and (b) there are no analysts tracking private company stocks.

Seed Stage 131

Seed Stage Hockey Stick Cap Table Liquidation Preference 131

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). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

Altgate

JUNE 25, 2012

Thanks to that one decision, he owns nearly four million shares of stock, worth in excess of $100 million. Choe’s equity is a headline-grabbing example of “dead equity”: equity owned by people who are no longer actively working for the startup. Dead equity has always been a significant issue for startups.

Equity 44

Equity Vesting Cap Table Technical Review 44

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. Individual investors who provide financial funding to startups are called ‘Angel Investors.’ Among the most common methods of funding used by startups when raising seed capital is “Convertible Debt Financing.”

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

View from Seed

OCTOBER 15, 2014

Over the summer, based on feedback from our portfolio and the broader startup community, NextView created pre-formatted board deck templates for seed-stage startups — part of our Growth Guides series. A seed-stage mobile startup’s housekeeping section might look something like this: Section 3: Core Metrics.

Seed Stage 331

Seed Stage Cap Table Metrics Burn Rate 331

Altgate

AUGUST 25, 2012

Thanks to that one decision, he owns nearly four million shares of stock, worth in excess of $100 million. Choe’s equity is a headline-grabbing example of “dead equity”: equity owned by people who are no longer actively working for the startup. Dead equity has always been a significant issue for startups.

Equity 28

Equity Vesting Cap Table Technical Review 28

genylabs.typepad.com

SEPTEMBER 24, 2011

Planning, Startups, Stories. 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. Small Business Blogs.

Equity 40

Equity Technical Review San Jose Stock 40

Hippoland

APRIL 10, 2016

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. But, you definitely want everyone to earn his/her stock.

Cofounder 48

Cofounder Cap Table Equity Vesting 48

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

Austin Startup

OCTOBER 27, 2017

Out of State VCs When you’re not CEO Material Preferred Stock v. Common Stock Ask the Users Because we’re known as Startup/VC lawyers who don’t represent VCs (just companies), I often get asked about my thoughts on “founder friendliness.” Good entrepreneurs and advisors know that. Background reading: Local v.

Founder 48

Founder Cap Table Preferred Stock Common Stock 48

Both Sides of the Table

FEBRUARY 8, 2016

Much has changed in the past four months of the technology startup world and how outsiders value the business. 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. Why does this matter?

Burn Rate 150

Burn Rate Cap Table Balance Sheet Dilution 150

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. The treatment of the friends, family and angels (FFA) as the startup matures and raises larger rounds of financing over time is interesting. Startups often get stuck, restart, pivot/change/move, etc., So not very good odds.

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? It is part of the startup routine, prior to fund raising, to bootstrap and be super frugal. To me this makes perfect sense and is justified.

Cap Table 49

Cap Table Pre-Money Valuation Stock Options Due Diligence 49

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. The funny thing about these moves is that it ends up being bad all around, even though the advisor thinks they are getting a great deal.

Equity 98

Equity Vesting Cap Table Common Stock 98

ithacaVC

SEPTEMBER 10, 2012

I recently got a question from a person in a large company who is thinking about joining a startup that expects to raise venture capital. But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” Actually, I got many questions. But, the problems with doing so are numerous.

Dilution 53

Dilution Employee Cap Table Stock 53

Hunter Walker

AUGUST 26, 2022

Hunter Walk: Ok, so we first met when you were leading comms at enterprise software company Box, a startup you joined when they were still pretty early and stayed at until post-IPO. But for the first time since abandoning my law school plan A, my mandate was clear: I needed to work at a startup. First, congrats! Enter Box.

IPO 91

IPO Cofounder Early Stage Portfolio 91

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 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.

Equity 56

Equity Employee Vesting Preferred Stock 56

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). And even with the significant cost of credit card debt, many entrepreneurs aggressively use existing cards to finance a startup.

Private Equity 106

Private Equity Valuation Cap Table Accredited Investor 106

The Next Web

OCTOBER 7, 2013

That’s what a couple of my friends – engineers at Google and Bloomberg who have been following the rise of startup culture with intrigue – told me recently. Cap tables sound intimidating. Startup employees are granted common shares out of something called an option pool. “It kinda sucks to be engineer #1.”.

Engineer 129

Engineer Dilution Option Pool Vesting 129

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. Few startups get it quite right. 1 ] A startups life will be more complicated, legally, if any of theinvestors arent accredited.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

David Teten

DECEMBER 3, 2019

See Bessemer Venture Partners’ A comprehensive guide to security for startups. Data companies focused on early-stage startups include Aingel , fundsUP , Preseries , PredictLeads , and Sploda. For more on gathering data and using it to assess companies, see How to Assess Startups Using Machine Learning. 2) Market . 8) Monitor .

Technical Review 78

Technical Review Software Review Analytics Private Equity 78