Both Sides of the Table

MARCH 21, 2010

A “warrant&# is a right, but not an obligation for a company to buy stock in your company at a future date and at a pre-agreed price. Think of it as similar to an employee stock option. In the early days of your company they can be an important way to motivate your partner to achieve objectives that are jointly agreed.

Warrant 298

Warrant Dilution Startup Stock Options 298

Gust

SEPTEMBER 17, 2014

Less than you’ll probably grant your most junior employees in stock options? And now I have to explain to team that they’re taking more dilution than they expected if we do a down round. Me: More dilution? But how do I offer cheaper prices to early investors?” Him: Not so good. Obviously he’d be pissed off.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Tim Keane

JANUARY 12, 2010

  A cumulative dividend can get to be very expensive and is not often a feature in early stage terms. These include: ·       Vesting of Founder Stock.   A cumulative dividend can get to be very expensive and is not often a feature in early stage terms.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

Up and Running

SEPTEMBER 20, 2021

Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors. Total share ownership is the sum of the common stock, stock options, preferred stock, and any other stock category for a single individual.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

www.paulgraham.com

APRIL 28, 2010

The reason is that employees are investors too—oftheir time—and they want just as much to be able to cash out. Ifyour competitors offer employees stock options that might make themrich, while you make it clear you plan to stay private, yourcompetitors will get the best people. Hell if they know.In

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Austin Startup

AUGUST 1, 2017

This is most clearly highlighted in the “unicorn” boom we all saw over the past few years, where founders raised very large rounds, with terms very onerous to the underlying common stock, hoping they could eventually justify billion dollar valuations to skeptical acquirers or public market investors.

Liquidation Preference 48

Liquidation Preference Common Stock Valuation Silicon Valley 48