Berkonomics

FEBRUARY 27, 2020

To compound the problem, often stock is issued by the entrepreneur without filing any report of such issuance with the state of issue. The PPM does nothing to mitigate that problem when the investor is not accredited. Missed filing requirements. So, what is the problem?

Cap Table 62

Cap Table Private Placement SEC Accredited Investor 62

Eric Friedman

NOVEMBER 18, 2022

I have been on both sides of the cap table of advisors. Having them on your cap table, or even in your slide deck as an advisor would bring you credibility.] In cases where there are smaller outcomes, acquisitions for stock in another company, or buyouts from later stage investors the outcomes can vary.

Early Stage 103

Early Stage Equity Vesting Cap Table 103

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

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

OnlyOnce

JULY 30, 2020

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. Or maybe when you look two years out you realize that your company is at its highwater mark in valuation, so it becomes a timing issue.

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. Whatever gets reported is just the tip of the iceberg. As The Information proclaims, “ Unicorn Fire Sales Ahead.”

Portfolio 98

Portfolio Cap Table LP Valuation 98

Berkonomics

MARCH 8, 2012

To compound the problem, often stock is issued by the entrepreneur without filing any report of such issuance with the state of issue. The PPM does nothing to mitigate that problem when the investor is not accredited.

Cap Table 74

Cap Table Private Placement SEC Accredited Investor 74

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

Cap Table 346

Cap Table Cofounder Stock Acquisition 346

Hunter Walker

MAY 13, 2023

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. Cash is at a premium so it’s not going to cap tables (preferred or common walk away from the deals with no dinero). of the time my answer is no f **g way].

Early Stage 117

Early Stage Cap Table Acquisition Sales 117

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

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

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

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

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

Both Sides of the Table

JANUARY 21, 2010

Forget to get around to setting up that Employee Stock Option Plan and want to be able to give the early guys their options at a low strike price? They usually ask for warrants (basically like a stock option) in exchange for taking a deferred fee. Founded it as a California LLC but your potential VC wants a Delaware C-Corp?

Southern California 318

Southern California Silicon Valley IP Stock Options 318

Berkonomics

AUGUST 3, 2023

My experience with early valuations by founders for friends… I’ve arrived at a significant number of companies that were looking for additional growth capital after a “friends and family” round and had to “clean up” the cap table more than a few times over the years.

Private Equity 118

Private Equity Valuation Cap Table Accredited Investor 118

keen.io

FEBRUARY 5, 2013

For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. And they gave me a choice whether I’d want more stock or a higher salary.” We asked the founders to talk us through the financials, help us complete the detailed cap table, and discuss the offers together.

Salary 50

Salary Equity Startup San Francisco 50

View from Seed

AUGUST 6, 2015

To the uninformed, 25,000 shares or 150,000 shares or even 5,000 shares can seem like a lot when your only reference is the stock market. And so, questions that employees should ask (but that employers should proactively volunteer answers to in the first place): What’s the total number of issued stock and stock options to date?

Equity 120

Equity Employee Cap Table Stock Options 120

View from Seed

AUGUST 6, 2015

To the uninformed, 25,000 shares or 150,000 shares or even 5,000 shares can seem like a lot when your only reference is the stock market. And so, questions that employees should ask (but that employers should proactively volunteer answers to in the first place): What’s the total number of issued stock and stock options to date?

Equity 120

Equity Employee Cap Table Stock Options 120

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

Altgate

JUNE 25, 2012

Thanks to that one decision, he owns nearly four million shares of stock, worth in excess of $100 million. Instead, the dead equity languishes on the cap table, weighing down the startup and making it harder to attract and motivate the people who could impact its growth.

Equity 44

Equity Vesting Cap Table Technical Review 44

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 They might give them too much stock, and even have that stock not subject to vesting provisions. Solicit trusted advisors help with interviewing.

CTO Hire 40

CTO Hire Founder Cap Table Vesting 40

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. Startups often hand out shares, options, and warrants for employees and for contractors rendering needed services.

Technical Review 48

Technical Review Software Review Cap Table Securities and Exchange Commission 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

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

Genuine VC

SEPTEMBER 5, 2012

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. Hire a firm to conduct a 409a valuation to set a strike price for your employee stock options, which nees to be at or above “fair market” value.

Founder 156

Founder Cap Table Stock Options PR 156

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

View from Seed

OCTOBER 15, 2014

Examples of housekeeping include the following list, though not every item will appear every time: Finance: Cash out date, burn rate, 409A valuation, cap table, common/preferred stock dashboard. However, these are important updates for your board to know.

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. Instead, the dead equity languishes on the cap table, weighing down the startup and making it harder to attract and motivate the people who could impact its growth.

Equity 28

Equity Vesting Cap Table Technical Review 28

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

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

Feld Thoughts

AUGUST 26, 2011

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. Next week we will introduce the Cap Table, and show how it changes when adding a co-founder.

Balance Sheet 128

Balance Sheet Cofounder Cap Table Delaware 128

Business Plan Blog

NOVEMBER 13, 2013

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. 2) Giving equity in the company. About The Author. Arushi Bhandari, CPA, MBA blogs regularly at www.startuptaxaccounting.com.

Finance 93

Finance Accredited Investor Angel Investor Seed Capital 93

ithacaVC

APRIL 10, 2012

They have raised some money from 12 friends and family (let’s assume the friends and family have purchased common stock). So, talk to them about adjusting the cap table prior to our investment – have the board grant you stock options (to avoid a tax issue) prior to our investment to compensate you for the deferred comp.”

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

ithacaVC

FEBRUARY 1, 2018

It is highly typical for a startup to have small investors on its cap table. Or the economy tanks or stock market tanks moving valuations down at inopportune times for the startup. Founders often raise money from friends and family and other angels. That is all well and good… and 100% normal. So not very good odds.

Preemptive Right 45

Preemptive Right Cap Table Valuation Dilution 45