Startup Professionals Musings

NOVEMBER 8, 2010

One of the first tough decisions that startup founders have to make is how to allocate or split the equity among co-founders. In many cases, one founder has started earlier and brings an important completed piece of work to the table, and that can have great value. Pre-existing intellectual property.

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Equity Intellectual Property Cofounder CTO Hire 228

View from Seed

SEPTEMBER 9, 2014

This is a guest post from Stephano Kim , former co-founder of Web 1.0 Many startup CEOs hire COOs or launch companies with a co-founder carrying the title. When should founders hire one? For most of my career, I’ve served startups and early-stage companies as an operating executive or advisor.

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Hiring Cofounder Startup Technical Cofounder 336

David Teten

JANUARY 19, 2021

(co-written with Jamie Finney, Founding Partner at Greater Colorado Venture Fund. From RBI, Flexible VCs borrow the ability to reap meaningful returns without demanding founders build for an exit. By tying payments to actual revenues, founders and investors remain aligned around the company’s real-time performance, good or bad.

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Cofounder Technical Review Equity Dividend 78

Both Sides of the Table

MAY 9, 2011

I covered what I call “the co-founder mythology.&# Either you’re not technical and you think you need a technical co-founder or vice-versa. Conventional wisdom says that you gain far more in working as a team than you lose by diluted by half before you start. Hire your co-founder.

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Cofounder Founder Vesting Founder Vesting 393

David Teten

DECEMBER 2, 2019

Now the bad news: some venture capitallists have a bias against startups with an explicit positive social impact, on the grounds that they have a smaller addressable market, and that the founders are not sufficiently focused on creating shareholder wealth. If you think I’ve missed any, please contact me. J.M.Kaplan Innovation Prize. “The

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Technical Review SBIR Dilution Silicon Valley 60

Both Sides of the Table

AUGUST 3, 2010

years ago and told me, “I just got offered the chance to buy this company because the founder doesn’t want to continue. How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. My recommendation to our lead partner looking at the deal, “Pass.

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Merger Technical Review Early Stage Dilution 276

blog.nahurst.com

JULY 19, 2010

The graphic below balances the risks cofounders take with their relative contributions to help answer this question. This covers one of the most common situations I encounter: For a pre-funding web startup whose team includes only a non-technical cofounder, how much equity should an incoming technical cofounder get?

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Technical Cofounder Cofounder Equity Salary 43

Agile VC

JULY 11, 2012

Some disgruntled younger partners left to go start a new firm in 1965 called Greylock. Some disgruntled younger partners left in the 90s to form what is now Redpoint Ventures (IT team) and Versant Ventures (healthcare team). Big success was Digital Equipment Corporation (DEC), in which ARD invested about $2.1M

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Silicon Valley Carried Interest Cofounder Boston 240

David Teten

OCTOBER 1, 2015

Should you co-found your company with a software development shop? I’ve talked with a number of software development shops who are eager to get into the business of cofounding companies, i.e., getting product revenue and equity instead of just consulting revenue. What are the terms of their relationship with the founder?

Software Developers 60

Software Developers Software Development Software Review Technical Cofounder 60

David Teten

AUGUST 19, 2019

RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance. For background, see Revenue-Based Investing: A New Option for Founders who Care About Control. Bigfoot Capital.

Revenue 60

Revenue Technical Review Software Review Equity 60

The Next Web

OCTOBER 3, 2012

Andrew is the co-founder and CTO of Parse.ly , a technology startup that provides big data insights to the web’s best publishers. He wrote: When startups die, the official cause of death is always either running out of money or a critical founder bailing. Editor’s note: This is a guest post by Andrew Montalenti.

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Cofounder Technical Cofounder Technical Review Software Review 155

View from Seed

APRIL 30, 2015

What is it, and how should founders think about it? note: We’d like to be extra clear that founders should not take on venture debt if they don’t have 100% visibility into repaying the loan, as banks that need to recoup their loan my force the company or you as the guarantor into liquidation or bankruptcy.

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Term Sheet Equity Startup Seed Stage 120

Both Sides of the Table

FEBRUARY 25, 2010

We were trying to optimize around a few criteria: price, size of round, number of syndicate partners and, of course, terms. But we weren’t optimizing for dilution – we were building a $1 billion+ company and we wanted the runway to succeed. You need your key negotiating partner and both sets of lawyers. Yes, this was stupid.

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Technical Review Term Sheet Due Diligence Venture Capital 301

Both Sides of the Table

APRIL 27, 2014

Seed investors are aplenty and of course they need downstream money to fuel their early-stage bets. Co-founder discontent. Reference checking is to confirm or disprove a strong, positive intuition you already have about founders that could lead to an investment or a pass. You have to deal with CEOs who resign.

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Cofounder Syndicate Syndication Early Stage 374

Startup Company Lawyer

MARCH 14, 2010

Founders Institute Plain Preferred Term Sheet (by WSGR – disclaimer, I represent the Founders Institute and was involved in drafting this document). If new investors get better rights in a future equity financings (such as registration rights, price-based anti-dilution, redemption rights, etc.), “ . Future rights.

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Finance Software Review Term Sheet Liquidation Preference 70

Both Sides of the Table

DECEMBER 1, 2009

I was reading one of my favorite websites for entrepreneurs, VentureHacks, this weekend and noticed that they are running a long piece on how to pick a co-founder. Once it’s set up I recommend bringing in a co-founder and giving them 10-30% of the company depending upon when you bring them in. You’ll be fine.

Hiring 289

Hiring Cofounder Dilution Startup 289

Both Sides of the Table

MAY 30, 2018

I know that some founders feel uncomfortable with this as though they might somehow be sharing something so confidential that it ultimately hurts you. Many VCs will have a distribution curve where they’ll do a small number of early-stage deals (say $1.5–3 Why shouldn’t most founders just name a price? After all?—?we

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Valuation Post-Money Valuation Pre-Money Valuation Cofounder 324

The Next Web

AUGUST 19, 2013

He is the co-­founder and CEO of Quote Roller and PandaDoc. It’s always better to be earn money, not just raise it, as money you earn doesn’t dilute your ownership and reassures your investors. It’s always better to be earn money, not just raise it, as money you earn doesn’t dilute your ownership and reassures your investors.

Belarus 137

Belarus Viral Channel Startup 137

View from Seed

APRIL 16, 2015

An easy way to think about it is that value over time doesn’t go up and to the right in a straight line like this: Instead, it’s more of a stair step like this: So, what are the value inflection points that create the stair steps, and how does one think about it at the earliest stages? These might include: Bring on a technical co-founder.

Seed Stage 120

Seed Stage Cofounder Early Stage Startup 120

Reid Hoffman

AUGUST 17, 2021

Greylock investor Sridhar Ramaswamy , who co-founded search engine startup Neeva , says it’s more important for startups to think about creating a product that is useful and resonates with people before worrying about whether a large incumbent is doing it. They’re both fruit, but they’re very different in terms of how they operate.

Cofounder 69

Cofounder Differentiation Search Advertising 69

Reid Hoffman

AUGUST 17, 2021

Greylock investor Sridhar Ramaswamy , who co-founded search engine startup Neeva , says it’s more important for startups to think about creating a product that is useful and resonates with people before worrying about whether a large incumbent is doing it. They’re both fruit, but they’re very different in terms of how they operate.

Cofounder 69

Cofounder Differentiation Search Advertising 69

David Teten

AUGUST 21, 2019

Most founders who are raising capital look first to traditional equity VCs. RBI normally requires founders to pay back their investors with a fixed percentage of revenue until they have finished providing the investor with a fixed return on capital, which they agree upon in advance. Less or no dilution. But should they?

Revenue 60

Revenue Liquidation Preference Equity Cofounder 60

David Teten

NOVEMBER 17, 2011

In particular, this model is designed to help all team members understand the impact of dilution on their options. Such a model is particularly helpful for those founders looking for a co-founder or key employee. Such a model is particularly helpful for those founders looking for a co-founder or key employee.

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Employee IRR Startup Mexico 155

Both Sides of the Table

FEBRUARY 22, 2011

Here’s the problem: Let’s say you have 5 VCs (plus angels but let’s ignore that for now) and each one owns 5% so you took 25% dilution to get the round done. Let’s say each of those 5 partners has at least 7 other investments each. The most common case is that the partner who did the deal left the firm.

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Dilution Cap Table Due Diligence Option Pool 314

Both Sides of the Table

APRIL 3, 2010

First, if the VC does 15-20 of these under one partner then it is certain he can’t spend any time with these investments. So if a VC wants to work with really talented early-stage entrepreneurs there are times where they have to be willing to seed fund them in order to be in the deal. And they don’t. is now a VC.

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Venture Capital Term Sheet Early Stage Silicon Valley 265

Austin Startup

MARCH 7, 2021

It seems like every day there is a new headline about an exceptional startup founder, investor, or corporate headquarters moving to Texas. These are all potential customers and strategic partners for startups. Startups and investors should treat Texas like one big city. Joe Lonsdale. Drew Houston. Jim Breyer. Charles Schwab.

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Texas San Antonio Houston Dallas 90

maplebutter.com

JANUARY 8, 2013

What is the best advice you can give for finding a business partner? Don’t quickly choose any business partner. Whats is the best way to find a co-founder for your startup? I’m part of an early startup made up of four friends, we’re all motivated and really dedicated to our startup.

Technical Review 44

Technical Review Startup Cofounder Software Review 44

aweissman.com

JANUARY 30, 2010

There is an amazing wealth of innovation around early stage venture financing, most of which developed in just the past few years. Then there are new economic models - Founders Collective being the most prominent now, ("None of us have ever been bankers. If not, the value of the exchange fund is diluted.

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Early Stage Entrepreneur Cofounder Framework 46

Up and Running

JULY 14, 2015

Read also: Q&A with Business Incubator Co-founder Joe Maruschak. Peter: Yeah, that’s a perfect question for a recent article we posted called Q&A with Business Incubator Co-founder Joe Maruschak. Send us an email: Bcast@Bplans.com. Listen to Episode 8: Show notes: Charlie’s Email – (:31).

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Incubator Email Startup Oregon 60

venturehacks.com

SEPTEMBER 22, 2011

When you evaluate a candidate, ask yourself whether she is likely to increase the next round’s share price (include the dilution of her market rate options). They don’t even try to get market price for their investment; they limit their holdings to leave the founders enough stock to feel the company is still theirs.”

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Equity Cap Table Valuation RSS 40