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.

Vesting 89

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

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

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.

Stock Options 334

Stock Options Stock Vesting Common Stock 334

Both Sides of the Table

JULY 29, 2010

People buy companies for 3 primary reasons: 1) they want the management team / talent 2) they want the technology or 3) they want the market traction (revenue, customer base, profits, etc). The downside is that people need to buy their stock. In fact, far better if you haven’t raised venture capital. Do it early.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

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

Both Sides of the Table

SEPTEMBER 18, 2014

Revenue multiple? I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies. How will you price the next round? Your A round? ” Simple.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

www.inc.com

SEPTEMBER 24, 2011

Last spring, Dave Graham , founder of software consulting firm Arizona Bay, learned that a major client, Jumpstart Automotive Media, had been acquired for more than $80 million. Because many of these businesses dont yet have revenue, valuation discussions arent very scientific, and the process requires some haggling.

Arizona 40

Arizona Equity Iowa Venture Capital 40

YoungUpstarts

JUNE 26, 2020

When a VC’s website says they do “early stage” – to a VC that means a product has already been built and generating some revenue, while to an entrepreneur it means “just an idea.”. Setting aside the issues of valuation of common stock vs. preferred stock, what I really didn’t understand was that a valuation is a set of expectations.

Finance 205

Finance Silicon Valley Valuation Startup 205

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. management, founders, angel investors) get any money. And it sometimes it creates “ flat spots &# where some investors become indifferent to the ultimate price you sell your company between wide ranges of outcomes.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

Gust

SEPTEMBER 17, 2014

Revenue multiple? I know how to structure around that to protect the founders from getting screwed on a multiple liquidation preference. But most VCs don’t bother so many convertible note founders get screwed and never know it until they sell their companies. How will you price the next round? Your A round? Him: On metrics.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

blog.simeonov.com

FEBRUARY 22, 2010

Simeon, can you tell us how you structure ownership and control so you can fire your co-founders if necessary? The first part will dispel some myths, address the lifecycle of founder agreements and the key compensation and control parameters in them. Let’s start by dispelling some myths: There is a standard founder agreement.

Founder 44

Founder Vesting Agile Startup 44

Gust

DECEMBER 8, 2011

Likewise, founders can benefit from understanding basic characteristics of the overall legal structure, formation and governance documents, rights and responsibilities of team members, etc. Determine who will serve on the Board of Directors and in executive officer positions (usually founders). Newco, Inc.”)

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Gust

OCTOBER 12, 2011

In my experience, a term of 12 to 24 months is common, with 12 months being on the short end. There are as many variations on this scenario as there are startups, but here are some common scenarios upon maturity: The startup negotiates with the bridge lenders to extend the maturity date. First, a word about the maturity date.

Finance 107

Finance Term Sheet Pre-Money Valuation Early Stage 107

Tim Keane

JANUARY 12, 2010

3]   However, if they are built bottom up, they demonstrate and make explicit a range of business model assumptions the entrepreneur is using to think about his business and its revenue model. These include: ·       Vesting of Founder Stock. This is why a bottom up approach is more credible.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

ReadWriteStart

JANUARY 28, 2022

The market regards equity as an ownership “share” in a corporation’s income revenue stream. Common stock. The holding of common stock in a company indicates ownership in the corporation. Investors of common stock are eligible for : The choice of the Board of Directors.

Valuation 108

Valuation Equity Warrant Common Stock 108

Lightspeed Venture Partners

OCTOBER 1, 2012

Many VCs won’t even consider an investment in a company where the founders are expressly looking to exit early. On the other hand, a 7% royalty means that Kevin and Barbara got to keep 93% of future revenues. The founders were seeking $100k for 15% of the company, implying a $567k valuation.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

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

Growthink Blog

MAY 10, 2012

Put everything else on your "wish list" to buy with revenues from sales or additional financing. Take the founder of Wrigley's chewing gum, who began selling baking powder and soap door-to-door and giving away gum as a bonus before discovering people wanted it a lot more than soap.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

Ben's Blog

JULY 16, 2013

Perhaps you are caught in the “Series A crunch” or perhaps you are a consumer company and expected that you would be valued on users rather than revenue like the last time. They might have said something ridiculous like: “Based on the current price of the preferred stock, your offer is already worth $5M.” How could this be? Silly them.

Down Round 73

Down Round Marketing Preferred Stock Post-Money Valuation 73

Up and Running

NOVEMBER 23, 2010

But, tragically, 3 years after their apex, this firm sold for less than their annual revenue, laid off nearly the entire staff, and left common stock shareholders, my friends included, with nothing. At its height, the company employed more than 130 people and their products reached customers in dozens of countries.

Common Stock 63

Common Stock Stock Options Stock Cofounder 63

Ben's Blog

JULY 16, 2013

Perhaps you are caught in the “Series A crunch” or perhaps you are a consumer company and expected that you would be valued on users rather than revenue like the last time. They might have said something ridiculous like: “Based on the current price of the preferred stock, your offer is already worth $5M.” How could this be? Silly them.

Marketing 36

Marketing Preferred Stock Post-Money Valuation Down Round 36

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. Founders can apply the information to instantly ascertain what percentage of the startup they have to propose a new investor. Total share ownership.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

www.paulgraham.com

APRIL 28, 2010

I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. There never has to be atime when you have no revenues.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Startup Professionals Musings

JULY 8, 2011

Angels might be interested during “early stage” if you have a prototype, but VCs won’t bite until you have a product, customers, and revenue. The most common case is an equity investment, but there are many terms that can impact what request size is credible. Calculate what you need, and add a buffer. Single or staged delivery.

Entrepreneur 234

Entrepreneur Valuation Early Stage Warrant 234