www.inc.com

SEPTEMBER 24, 2011

Sales & Marketing | Wednesdays. SALES & MARKETING. Online Marketing. Bringing Innovation to Market. Will Work for Equity. Why Arizona Bay started taking stock from its customers instead of cash. Dave Graham Business Venture Capital Private Equity GlobalLogic Inc. Finance | Tuesdays. Tools & Research.

Arizona 40

Arizona Equity Iowa Venture Capital 40

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).

Valuation 48

Valuation Common Stock Cap Table Software Review 48

Startup Professionals Musings

JANUARY 15, 2021

When an entrepreneur first incorporates a business, they may find themselves the proud owner of 10 million shares of common stock, commonly called founder’s shares. This is called stock dilution control. Otherwise, people with no ongoing effort (“free riders”) will own the value growth that you are adding after their departure.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Both Sides of the Table

MAY 27, 2013

In this period (less than 2 years) he has brought on incredibly talented senior execs is sales, marketing, product management, client services, finance, vp engineering and more. In addition to helping manage the board Chris also helps represent the interests of the angel investors / common stock holders. Always seek input.

Advisory Board 365

Advisory Board CTO Hire Fractional CTO Los Angeles 365

Eric Friedman

JUNE 27, 2016

Bigger/better advisors who get more equity have things like; excellent domain expertise to help you avoid pitfalls, deep connections within the industry to help with the intros, partnerships, and more. As a potential advisor looking to get involved with the company; MORE EQUITY! Setting The Option Strike Price Above Fair Market Value.

Equity 98

Equity Vesting Cap Table Common Stock 98

Austin Startup

JULY 6, 2018

The below outlines how I would approach the decision: Cash and Equity. Very simply, what are you giving and what are you getting in return in terms of cash and equity for joining the program? More traditional and comprehensive programs often require 5–8% of common stock, but often provide between $20K and $100K up-front as well.

Dilution 48

Dilution Startup Technical Review Equity 48

Steve Blank

APRIL 26, 2022

Some even insisted that all prior preferred stock had to be converted to common stock. For the common shareholders (employees, advisors, and previous investors), a cram down is a big middle finger, as it comes with reverse split – meaning your common shares are now worth 1/10th, 1/100th or even 1/1000th of their previous value.

Cram Down 414

Cram Down Founder Venture Capital Recapitalization 414

Agile VC

APRIL 17, 2011

Last week ZipCar began trading and has a market cap of about $1 billion. Only 7% of the search queries are performed by users referred by search engines, meaning Kayak’s brand is very strong and they continue to build it ($39M spent in 2010 on brand advertising, nearly $92M in total marketing spend). Quinstreet priced at $15.00/sh

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Growthink Blog

MAY 10, 2012

When seeking equity investments, the source of capital is, for the most part, tied to the stage of capital being raised. You see, equity capital is raised in stages or rounds. Mezzanine Financing Most companies that raise equity capital and are eventually acquired or go public receive multiple rounds of financing first.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 5 Stock vs Options. 6 Founders / Restricted Stock. 7 Salary vs Equity. Important disclaimer: Ive got experience negotiating stock compensation packages from both sides of the table. Stock Classes: Common and Preferred.

Equity 56

Equity Employee Vesting Preferred Stock 56

Startup Professionals Musings

JANUARY 29, 2018

I’ll never forget that great sense of excitement I felt when I incorporated my first business, and realized that I was now the proud owner of 10 million shares of common stock. Even though initial stock has no market value today, it is extremely valuable in dividing equity ownership between co-founders, investors, and early partners.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

Both Sides of the Table

SEPTEMBER 18, 2014

It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. Stock Option plans.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

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 if the CEO says, “Salaries will be adjusted to market value soon,” that’s probably a best-case scenario. These were the best resources I found: Equity for Early Employees in Early Stage Startups.

Salary 50

Salary Equity Startup San Francisco 50

Startup Professionals Musings

MAY 18, 2015

When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. This is called stock dilution control. Minimize your own loss of ownership as major investors contribute.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Haystack

JULY 8, 2018

The private markets have ballooned, and the VC model is based on building a portfolio of companies such that the best ones can be acquired or go public. For employees at early-stage companies… the equity you’ve been granted is likely common stock, just like the founders. All of this activity is at-will.

Early Stage 95

Early Stage Dilution Private Equity Common Stock 95

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. It also gets the new investor concerned that management (common stock holders) will not be incentivized because they realize that the investors will take most of the money unless there is a big upside scenario.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

Gust

MAY 24, 2012

Some commentators have suggested this is the wave of the future, signifying a shift in the balance of power from investors to founders of the relatively small, elite group of growth companies that make it to public markets. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

venturehacks.com

MARCH 21, 2008

Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options. Finally, there is a beauty to paying in equity rather than an equivalent amount of cash. If you pay in equity, you pay once and keep getting served ad infinitum.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Up and Running

AUGUST 17, 2015

Between my experiences as a management consultant, as well as my product and marketing roles at multiple tech companies, I felt that I had enough operational experience to make that leap sooner than later. C Corp versus LLC, non-competes, liquidation preferences, preferred versus common stock, and so on).

Entrepreneur 60

Entrepreneur Cofounder Angel Investor eCommerce 60

K9 Ventures

NOVEMBER 21, 2011

3) Setting a precedent for the price of the Common Stock : This is the biggest issue with founder liquidity. Founders typically hold Common Stock in the company, but they (obviously) want to sell the Common Stock at the same price as the Preferred price or close to it.

Founder 87

Founder Common Stock Preferred Stock Stock 87

K9 Ventures

NOVEMBER 21, 2011

3) Setting a precedent for the price of the Common Stock : This is the biggest issue with founder liquidity. Founders typically hold Common Stock in the company, but they (obviously) want to sell the Common Stock at the same price as the Preferred price or close to it.

Founder 84

Founder Common Stock Preferred Stock Stock 84

Scott Edward Walker

APRIL 9, 2012

Part 3 will cover certain special issues, such as (i) what happens if the startup is acquired prior to the note’s conversion to equity? (ii) ii) what happens if the maturity date is reached prior to the note’s conversion to equity? A convertible note is short-term debt that converts into equity. What is a Convertible Note?

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Startup Company Lawyer

MAY 4, 2009

Startup companies consume resources intelligently, put people to work in efficient ways, and produce market driven products at lower costs. Does it involve intellectual property, model innovation, speed to market, market positioning? Description: Know your market, your competitors, and your idea. Basic Research.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Both Sides of the Table

SEPTEMBER 5, 2012

This time by the efforts of Adeo Ressi to introduce a new kind of structure called “ convertible equity.” My initial reaction to Adeo when we spoke was that while it may have solved some issues (debt versus equity) it didn’t solve the ones that I’ve been warning entrepreneurs about most loudly.

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

The Equity Kicker

NOVEMBER 9, 2016

Additionally, they introduce a small amount of complexity and an element of misalignment between the investor and the common stock holder (usually the founder). This trade off is now so entrenched that it’s become a market standard that most investors and founders make unconsciously, but they are all aware of the implications.

Liquidation Preference 122

Liquidation Preference Silicon Valley Participating Preferred Common Stock 122

YoungUpstarts

JUNE 23, 2015

Who is competing in this market? If the company succeeds, when do you get to sell your equity? Do you have common stock (or membership units)? If preferred, what are the differences between common and preferred? Why haven’t the big private equity firms snapped up this deal? What does the company sell?

Private Equity 100

Private Equity Common Stock Equity Reputation 100

Gust

SEPTEMBER 17, 2014

It’s simply what a market is willing to pay based on a future belief that your company will grow and non-linear rates and be worth much more in the future. If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. Stock Option plans.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Early Growth Financial Services

DECEMBER 17, 2012

Sean’s practice focuses on corporate transactions, mergers and acquisitions, private equity transactions, and general corporate matters for both public and private clients, focusing on middle-market, emerging growth and development stage companies. What is founder restricted stock?

Stock 35

Stock Founder Common Stock Private Equity 35

Startup Company Lawyer

JANUARY 9, 2011

“ Seth points out that “the convert cap reflects a premium to the current fair market value of the business. One super-angel I talked to told me that while a year ago these caps “approximated what I’d pay in equity” that they’re now “33% higher than what I’d normally agree to pay now.”.

Liquidation Preference 57

Liquidation Preference Finance Preferred Stock Common Stock 57

Both Sides of the Table

MARCH 21, 2010

As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. I’ve already made clear that I think raising equity from “strategic money&# is an oxymoron. Common Mistakes.

Warrant 298

Warrant Dilution Startup Stock Options 298

Scott Edward Walker

MAY 15, 2012

The second approach is the most investor-friendly, and it is a provision that permits the noteholders to convert the notes into equity (or otherwise grants them a certain percentage of the sale proceeds), based on an agreed-upon valuation of the startup. 2) Conversion Right (Investor-Friendly). 3) Premium (Intermediate Approach).

Finance 64

Finance Founder Accredited Investor Preferred Stock 64

Austin Startup

MAY 17, 2017

Given that the time from formation to Series A has stretched out significantly for many companies in the market — due to pre-seed, seed, seed plus, seed premium, series seed, seed platinum diamond, whatever-you-want-to-call-not-Series A rounds. While not the norm, it’s also not terribly off market if a large check is being written.

Seed Stage 48

Seed Stage Startup Cap Table Angel Investor 48

The Startup Lawyer

FEBRUARY 4, 2011

If an incubator offers your startup $25,000 in exchange for 6% equity, the pre-money valuation is a whopping $391,667. Rather than assign a monetary value to the intangibles, a startup should instead assign an equity percentage value to intangibles like mentorship. Other incubators may want to set up an option pool.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Tim Keane

JANUARY 12, 2010

Bottom Up Market Sizing » January 12, 2010. Good investors use the valuation discussions to gauge the business savvy of the management team and to understand their ability to appreciate and deal with economic market forces that set values. Startups and angels: Along the way to success. times at 5 years and 11.39

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Company Lawyer

JANUARY 31, 2011

Automatic conversion: on a $1M equity financing with no conversion discount and no price cap , provided that the transaction documents provide for a right to purchase a pro rata share of future financings. (I (This also seems to be fairly company favorable as most convertible debt seems to have a one year term.).

Preferred Stock 60

Preferred Stock Liquidation Preference IPO Common Stock 60

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

Lightspeed Venture Partners

OCTOBER 1, 2012

Cuban passed because he noted that despite the entrepreneur being the innovator and first to market, she had been unable to outcompete the followers. Barbara passed on market size. He asked for 30% equity plus a $5 royalty until he got his capital back, and for the founder to quit his job to work on Posture Now full time.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158