Agile VC

DECEMBER 4, 2014

You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Early Growth Financial Services

DECEMBER 4, 2014

It could be the size of the option pool, or maybe the provisions around reverse vesting. Most investors will expect this. And a good lawyer can be a real advocate for you: by keeping negotiations on track, explaining terms, and making sure any deal you sign doesn’t have problematic (and costly) clauses that could leave you at risk.

Term Sheet 51

Term Sheet Liquidation Preference Vesting Option Pool 51

Austin Startup

JANUARY 25, 2020

Better safe than sorry, so I paid it, including the cost of emails and phone conversations, even if I had a simple question that took a minute or two over the phone to answer. The lawyer’s rate was crazy?—?$575 575 per hour?—?and and that’s with a discount. The regular rate, he told me, was $750 per hour.

Delaware 62

Delaware SEC New York City New York 62

www.inc.com

SEPTEMBER 24, 2011

That cost him accounting fees, legal fees, and time because the financing round couldnt close until the arrangements were formalized. If youre offering the consultant stock options, youll also want to take into consideration what the exercise price is going to be and how long the options will be outstanding.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

VC Cafe

OCTOBER 16, 2010

Instead of a 20% option pool, we created a 40% option pool, and gave out half of it to the first half-dozen hires who came on and were willing to work without salary for a period of time, forming the core team. How much should it cost for a bootstrapped, lean startup to incorporate (or form an LLC)?

Option Pool 88

Option Pool Analytics LLC Startup 88

The Next Web

OCTOBER 7, 2013

Layer on the opportunity cost of choosing not to pursue lucrative alternatives offered elsewhere, and it’s easy to see how, if not under the right terms, the engineer #1 position is less than appealing. Startup employees are granted common shares out of something called an option pool. That is your opportunity cost.

Engineer 129

Engineer Dilution Option Pool Vesting 129

The Startup Lawyer

FEBRUARY 4, 2011

Other incubators may want to set up an option pool. If so, the startup’s founders need to know this option pool lowers your pre-money valuation. 8) Determine the Opportunity Costs. A startup that is accepted by an incubator may have an alternative funding offer from an angel investor.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Tim Keane

JANUARY 12, 2010

  It is very expensive if you’re the entrepreneur since it doubles the cost to the company of paying dividends to the entrepreneur.   It is very expensive if you’re the entrepreneur since it doubles the cost to the company of paying dividends to the entrepreneur.   I’ve never seen it in practice.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Both Sides of the Table

AUGUST 17, 2009

Assuming normal valuations at fund raising rounds you’ll be down to 6-12% after you’ve created a stock-option pool and raised capital. But these people seldom make retirement money from the stock options on these companies. Ask them how much they think such a solution would cost them.

Founder Vesting 365

Founder Vesting Intellectual Property Stock Options IP 365

David Teten

DECEMBER 3, 2019

Some notable metrics are revenue growth rates, free cashflow, leverage ratios, historical financing amounts, returns on marketing spend, customer acquisition costs, lifetime value of customers, customer churn rates, and team social scores. Capital has built a free online tool for founders to calculate their cost of capital.

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

venturehacks.com

SEPTEMBER 22, 2011

Consider the opportunity cost of spending shares on employees and investors. Consider the opportunity cost of spending shares on employees and investors. ” You need to consider the opportunity cost when you spend equity. The Option Pool Shuffle. We have some additional thoughts. As usual. =). Summary: 1.

Equity 40

Equity Cap Table Valuation RSS 40

BeyondVC

MAY 20, 2004

Rather than go into a diatribe on the ineffectiveness of Black Scholes and the Binomial Pricing model, I want to focus my efforts on what happens when stock option expensing goes into effect. It will eliminate broad-based option pools for public companies and private companies.

Stock Options 60

Stock Options Stock Securities and Exchange Commission Option Pool 60

www.paulgraham.com

APRIL 28, 2010

It costs you a little more equity, but being able to play the two firms off each other (as well as ask one if the other is being out of line) is invaluable. Their main expenses are setting up thecompany, which costs a couple thousand dollars in legal work andregistration fees, and the living expenses of the founders.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

www.payne.org

SEPTEMBER 22, 2011

Buying your stock would cost $200,000! Companies allocate a pool of stock (usually called the Incentive Stock Option pool, or ISO pool) to grant to employees. Lets say youre being offered 2% of a company with a valuation of $10m after funding. Why cant the company just grant you the stock?

Equity 56

Equity Employee Vesting Preferred Stock 56

Both Sides of the Table

FEBRUARY 22, 2011

While all of this is true, it’s also true that nothing so perfect ever comes without a cost. When you consider that they’ll also want a 15-20% option pool in the company you’re talking about founders owning as little as 40% after just one round.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

Business Plan Blog

DECEMBER 26, 2013

This process may include the provision of various scenarios on revenues and costs as the investors validate forecasts initially presented. Professional fees and costs. A capitalization table showing the post-investment ownership structure of the business to include founders, option pool and investors in the current round.

Angel Investor 51

Angel Investor Due Diligence Pre-Money Valuation Angel Groups 51

venturehacks.com

MARCH 21, 2008

Many advisors want options they can exercise immediately —that’s fine. If your company hasn’t raised a Series A, increase the advisor’s equity by roughly 30%-50% to account for dilution from seed investors, Series A investors, option pools, swimming pools, and the like.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44