Gust

NOVEMBER 28, 2023

The principal roles of the lead investor was to negotiate the terms of an investment with the founder of the startup. When a corporation is established, its ownership is divided into pieces called shares of common stock. That’s what you as a founder will have, which is why it’s also known as founders’ stock.

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Due Diligence Term Sheet Common Stock Preferred Stock 91

The Startup Lawyer

DECEMBER 10, 2015

A startup founder’s desire to hold equity better than plain-vanilla common stock isn’t new. Several years ago, Series FF stock for founders was all the rage when it came to founder liquidity at subsequent financing rounds. In the past couple years, we’ve … Continue reading →

Common Stock 40

Common Stock Stock Founder Equity 40

Both Sides of the Table

FEBRUARY 20, 2019

One of the things that founders have the most angst about is whom they should have on their board and at what stage of the business. Why you should set up a board at the seed round of funding I know these days with SAFE documents and rolling convertible notes many founders prefer not to set up a board early on.

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Venture Capital Startup Angel Investor Silicon Valley 236

Agile VC

DECEMBER 4, 2014

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder. But not all co-founders are equal in terms of title, ownership, responsibilities, and so forth. Sometimes co-founders put off the equity split question for some time.

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Cofounder Equity Founder Sweat Equity 173

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. Key founder vesting should have no cliff. Retain the right to reclaim stock from anyone leaving the startup.

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Vesting Dilution Stock Founder Vesting 298

Gust

NOVEMBER 28, 2023

Over the past 20 years, the typical structure for seed/angel deals has shifted from common stock (in the mid-1990s) to convertible notes (late 1990s through early 2000s) to full Series A convertible preferred (mid-2000s) to convertible notes with a cap (late 2000s) to Series Seed convertible preferred or similar (present).

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Due Diligence Term Sheet Common Stock Stock 91

Feld Thoughts

OCTOBER 7, 2013

The picture to the left is of Ryan Martens, Rally’s founder and CTO, giving Josie Health, the CEO of The Community Foundation Serving Boulder County , a check for $676,000.

Community 182

Community Colorado Common Stock Equity 182

Steve Blank

OCTOBER 24, 2017

Why do these founders get to stay around? Because the balance of power has dramatically shifted from investors to founders. VCs competing for unicorn investments have given founders control of the board. A pre-IPO board usually had two founders, two VCs and one “independent” member. Technology Cycles Measured in Years.

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Founder Technical Review CTO Hire IPO 245

Austin Startup

JULY 22, 2021

Any software, hardware, or CPG startup in Texas with a female founder or co-founder can apply to participate. We’ve helped winners connect with customers, mentors, and secure millions of dollars in capital from partners like Google Black Founders Fund, Revolution’s Rise of the Rest Fund, Backstage Capital, and many other VC investors.

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San Antonio Dallas Houston Founder 107

ithacaVC

APRIL 5, 2011

One rule of simple cap tables is to issue “normal” stock to founders (common stock only) and investors (typically preferred stock, but sometimes common stock to early friends and family).

Common Stock 45

Common Stock Stock Cap Table Preferred Stock 45

Both Sides of the Table

MAY 27, 2013

But the thing I am most proud of about Rob is that he has taken a company with a uniquely talented founder & CTO – Nick Halstead – and managed to build a very tight working relationship with Nick where we drive world-class product development without having the usual founder / CEO conflicts.

Advisory Board 365

Advisory Board CTO Hire Fractional CTO Los Angeles 365

K9 Ventures

NOVEMBER 21, 2011

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

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Founder Common Stock Preferred Stock Stock 87

OnlyOnce

FEBRUARY 1, 2024

Here’s one to keep in mind – we did this a few times at Return Path, and I was just reminded of it when I was coaching another founder who is doing the same thing right now. But think of it as a tool in the M&A/financing tool belt.

Cap Table 71

Cap Table Common Stock Acquisition Stock 71

Agile VC

APRIL 17, 2011

Kayak was started here in my backyard of Boston… co-founder & CTO Paul English and the product/engineering team is based here in Concord MA. Co-founder & CEO Steve Hafner and the business team are based in Norwalk, CT. Led by General Catalyst with participation by co-founders Steve Hafner & Paul English.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

K9 Ventures

NOVEMBER 21, 2011

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

Founder 84

Founder Common Stock Preferred Stock Stock 84

Feld Thoughts

DECEMBER 28, 2011

If accepted, each company will receive an equity investment of $20,000 in exchange for six percent of the company in common stock, which will be held by TechStars. Some of the mentors, in addition to me, include: Jeff Powers, Founder, Occipital, Andrew Tschesnok, Founder, Organic Motion.

Intellectual Property 134

Intellectual Property Common Stock Seattle Cofounder 134

Startup Company Lawyer

MAY 4, 2009

Adeo Ressi , the founding member of TheFunded , recently announced the establishment of TheFunded Founder Institute. The Founder Institute helps founders launch innovative companies by providing training, services, and company-building assignments, such as incorporating the business, filing provision patents, and setting up books and records.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Scott Edward Walker

SEPTEMBER 28, 2011

Question My co-founders and I are working on a cool new site, and we’ll be ready to launch in a few weeks. Otherwise, if one of the founders quits after a few months, he would take all of his shares with him. In short, this is a nightmare scenario – particularly if there is bad blood with the other co-founders. IP Ownership.

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Vesting Software Review IP Intellectual Property 89

Up and Running

SEPTEMBER 19, 2017

That’s because obtaining a pre-money valuation for a concept level technology company in excess of $1 million is difficult, particularly for a startup founder without a proven track record. Under that scenario, the same $500,000 is only worth a 10-ish percent stake in the business, and the founder can retain far more control in the entity.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. I have interacted with a lot of founders who funded their initial business expenses through credit cards. Point number 1: You must understand that funding is a business transaction between the investors and the startup founders.

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Startup Entrepreneur Elevator Pitch Seed Stage 150

Startup Professionals Musings

MARCH 23, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms and considerations for Founder’s stock: Negligible real value.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Austin Startup

OCTOBER 27, 2017

TL;DR : “Founder friendliness” should mean not being hostile, but also not being submissive, to founders. Out of State VCs When you’re not CEO Material Preferred Stock v. Occasionally it’s someone inexperienced expecting me to say something totally one-sided, as if “founder friendly” means always giving founders what they want.

Founder 48

Founder Cap Table Preferred Stock Common Stock 48

The Startup Lawyer

JANUARY 2, 2014

I typically advise issuing 50% to 80% of the authorized shares of Common Stock to the initial founders upon incorporation. Thus, if the certificate of incorporation authorizes 10,000,000 shares of Common Stock, an aggregate of 5,000,000 to 8,000,000 share should be issued at incorporation. Incorporation'

Common Stock 84

Common Stock Founder Aggregator Stock 84

Steve Blank

APRIL 10, 2019

For most startup employee’s startup stock options are now a bad deal. Why Startups Offer Stock Options. In tech startups stock options were here almost from the beginning, first offered to the founders in 1957 at Fairchild Semiconductor , the first chip startup in Silicon Valley. Not everyone got the same amount of stock.

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Stock Options Stock Vesting Common Stock 333

Startup Professionals Musings

JANUARY 22, 2013

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms and considerations for founder’s stock: Negligible real value.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Startup Company Lawyer

APRIL 23, 2009

Adeo Ressi , the founding member of The Funded , recently announced the establishment of The Funded Founder Institute. The program participants, the Founders, receive extensive training in weekly sessions overseen by three Mentors – two seasoned CEOs and one domain expert for each topic. Protective provisions.

Common Stock 33

Common Stock Stock Dividend Delaware 33

YoungUpstarts

AUGUST 25, 2015

Typically, investors will be interested in “preferred” stock, which comes with special (aka “preferred”) rights, such as receiving a certain payout before anyone who holds “common” stock. The ownership structure of an LLC is a blank slate. Typically, that means you’ll be a corporation or a limited liability company (“LLC”).

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LLC Technical Review Software Review Limited Liability Company 100

ReadWriteStart

NOVEMBER 15, 2010

Called Founder's Workbench , the site includes a variety of free, self-service tools for generating basic legal documents. Documents that can be created include a Certificate of Incorporation, Bylaws, Consent of Board of Directors, and Common Stock Certificates.

Founder 117

Founder Common Stock IP Startup 117

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. Key founder vesting should have no cliff. Retain the right to reclaim stock from anyone leaving the startup.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Gust

DECEMBER 18, 2013

Assuming the company is able to make effective use of the seed money to greatly increase the value of the enterprise, all of that value therefore accrues to the founder, rather than the investor.

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Valuation Founder Seed Money Common Stock 150

Gust

MARCH 16, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Here are some typical special terms and considerations for Founder’s stock: Negligible real value.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

Scott Edward Walker

NOVEMBER 22, 2015

Below are the three most common IP-related mistakes that startups make — the first of which I discuss in this brief video with Jason Calacanis. Startups must ensure that none of the founders’ prior employers have any rights to the venture’s IP because a founder was working on the venture while previously employed.

IP 40

IP Software Review Due Diligence Intellectual Property 40

Gust

MAY 31, 2014

So before a startup receives outside funding, the board is “elected” by—and usually consists of—the founders (although it may exist in name only.). Invested Interests board of directors business entrepreneur founders startup' A company’s board of directors is technically elected by the company’s shareholders.

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Common Stock Startup Stock Founder 159

Austin Startup

JULY 6, 2018

More traditional and comprehensive programs often require 5–8% of common stock, but often provide between $20K and $100K up-front as well. But 95% of founders I’ve worked with have viewed “cutting in line” to speak with investors as the main reason for entering an accelerator. Ask specific founders, off the record.

Dilution 48

Dilution Startup Technical Review Equity 48

Both Sides of the Table

JULY 29, 2010

The downside is that people need to buy their stock. I talked also about 409a valuations and why common stock purchases cost less than preferred stock purchases. But most importantly I lectured founders that you can’t avoid the admin of setting up your ESOP. Do it early.

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Venture Capital Term Sheet Valuation Stock Options 282

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. Of course, initially these founder’s shares were worth essentially nothing, but it doesn’t take much of an imagination to grasp the possibilities.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

Scott Edward Walker

MAY 15, 2012

Part 2, entitled “ Convertible Note Seed Financings: Econ 101 for Founders ,” addressed the economics. What Happens If a Startup is Acquired Prior to the Note’s Conversion to Shares of Preferred Stock? There are generally three different approaches: 1) Money Back, Plus Interest (Founder-Friendly). This is another tricky issue.

Finance 64

Finance Founder Accredited Investor Preferred Stock 64