Trending Sources

Founder Dilution

A VC : Venture Capital and Technology

I’ve written a bunch on this topic and here are two posts that address this exact issue: Founder Dilution – How Much Is “Normal”? Employee Equity: Dilution. I saw a blog post this weekend that looked at the IPO filings of 79 tech companies and calculated the ownerships of the founders and the VCs at IPO. The result of that analysis is that the average founder ownership at IPO was 17% and the average VC ownership at IPO was 56%.

How does equity dilution work for startups?

Gust

Equity dilution works when the same pie is divided among more people. Because the total percentage of equity will always equal exactly 100%, every time anyone gets another piece, by definition it “dilutes” all of the previous equity holders.

Understanding How Dilution Affects You at a Startup

Both Sides of the Table

Dilution. million pre-money valuation, which is a $10 million post-money) you get diluted by 25% (2.5m / 10m). But understanding how you’re likely to get diluted over time is a more difficult concept. So here is our crack at explaining the world of dilution to you.

Mathematical vs. Economic Dilution of Startup Equity: Thinner Slices of an Extra-Large Pizza

Gust

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. That’s the concept of what some call mathematical dilution.

Brisbourne: The Math Behind Anti-Dilution (With Examples)

Ask The VC

Today’s post of the day is from Nic Brisbourne (DFJ Esprit) and it titled What is anti-dilution/downround protection? Nic covers narrow-based, broad-based, and full ratchet anti-dilution with real examples using real math. Fundraising anti-dilution brisbourne broad-based anti-dilution full ratchet fundraising narrow-based anti-dilution vc post of the dayWell – I fell off that particular horse.

Dilution and Investment - An Answer You May Not Expect

Taffy Williams

The companies with low prices either had to dilute investors in a financing, had enough to survive, or went out of business. So when you consider the Dilution Effects of a financing, remember the following advice delivered by many old timers; “ It is Better to Have 10% of a Lot of Money, than Have 100% of Nothing.” You don’t want to dilute the investors too much, but you want enough funds to ensure you can weather any storm and that you will not run out of money.

Maker's Mark Dabbles in Diluting Its Brand

Inc Startups

But now there's a new wave of comments, this time from customers angry that the company would dilute the product they have come to expect. The bourbon distillery offers a perfect case study in how to anger your biggest fans: Take the product they love and water it down--literally.

The Dilution Concern for Founders

Recent Buzzes - VC Experts, Inc.

There are three phenomena that trivialize even the best of investment strategies: Dilution, Dilution, Dilution.". The problem is, of course, dilution. Dilution - Dilution - Dilution. By Joseph W.

Your Business Grew, Your Brand Got Diluted, Here's How To Avoid It

Inc Startups

Do you even know the voice and tone of your company's communications these days? Maybe it's time to have a 2nd look

Anatomy of a Term Sheet: Conversion and Anti-dilution

VC Ready Blog

Anti-dilution Provisions. While the timing of conversion is not a very hot topic in negotiating a term sheet, the anti-dilution provision can be if the investors decide to play hardball. Other adjustments, however, are intended to protect the investor against dilution caused when the company issues shares at an effective price-per-share lower than the price-per-share paid by the investors (a future financing at a lower price is called a “down-round”).

Legal Basics: Fully-Diluted Capital

VC Ready Blog

When discussing a company’s capital structure, investors typically talk in terms of “fully-diluted capital” (a/k/a capitalization on a “fully-diluted basis”), rather than authorized or issued capital , because fully-diluted capital provides a more accurate picture of the company’s overall capitalization. There are two other important things to note about the way fully-diluted capital is calculated.

Finland's Tekes Re-Launches Tempo With 75% Non-Dilutive Funding

ArcticStartup

In 2011, Tekes Tempo launched with an idea to provide 50% non-dilutive funding to companies that would be building market-oriented services.

Co-founder dilution

StartupCFO

When entrepreneurs talk about dilution to their share ownership, most of the time they’re talking about dilution from outside investors. Yet, more dilution, especially early on, can come from adding co-founders which is something no one seems to talk about. I am in favour of having a co-founder. It gives you someone to bounce ideas off, energize you when you’re down, etc. Investors generally like them too.

Anti-Dilution Provisions - An Example

Recent Buzzes - VC Experts, Inc.

Anti-Dilution provisions can be a key negotiating point when it comes to the Deal Terms of a new round of financing, especially in the presence of a. View an example of Anti-Dilution Provisions By VC Experts Analyst Team. Down Round. Broad Based Weighted Average can be a more friendly provision as compared to. Full Ratchet when it comes to the effects of equity % held by early investors and founders. See how these terms can differ when it comes to the structure of the.

Reminder: Entrepreneurs, use OwnYourVenture, an equity simulator to overcome your dilution fears or questions in no time!

Grade A Entrepreneurs

For most entrepreneurs, it’s hard to get funded, and then, when they receive a term-sheet, at the same time they are thrilled, they worry (for good or bad reasons) about dilution, often terrified at the idea that they might have been ripped off.

Strategy Roundtable For Entrepreneurs: Non-dilutive Financing Through Revenue Sharing

ReadWriteStart

I have discussed at length why revenue sharing channel deals may serve as perfectly fine alternatives to raising equity (or even complements) because of their non-dilutive nature.

Republican lawmakers dilute Democratic governor's powers

Winston-Salem Journal State/Region News

AP) — Republican legislators have for a second time voted to dilute the power of North Carolina's new Democratic governor to run elections RALEIGH, N.C. (AP)

Anatomy of a Term Sheet: Conversion and Anti-dilution

VC Ready Blog

Anti-dilution Provisions. While the timing of conversion is not a very hot topic in negotiating a term sheet, the anti-dilution provision can be if the investors decide to play hardball. Other adjustments, however, are intended to protect the investor against dilution caused when the company issues shares at an effective price-per-share lower than the price-per-share paid by the investors (a future financing at a lower price is called a “down-round”).

The 3 Rules of Successful Business as Taught By Seth Godin (and Your Mother)

Inc Startups

In a world desensitized and diluted by incessant noise, has standing out from the crowdbecome a privilege preserved for the select few

Convertible and SAFE Notes

A VC : Venture Capital and Technology

Here is why: They defer the issue of valuation and, more importantly, dilution, until a later date. I think dilution is way too important of an issue to defer, for even a second. They obfuscate the amount of dilution the founder(s) is taking. Sometimes we get blamed for leading such a dilutive round, but I don’t care so much about that, I care about the fact that we are allowing these young companies to finance themselves in a way that allows such a thing to happen.

Size of Pie, a.k.a. What Type of Entrepreneur Are You?

OnlyOnce

Although David is talking about taking in outside capital and founder dilution in pursuit of larger business growth and objectives, he is also getting to the same point about entrepreneur type. Business Entrepreneurship Venture Capitalists dilution entrepreneur equity Founders scalingSize of Pie, a.k.a. What Type of Entrepreneur Are You? Mmmm…pie.

Email 17

The Most Common Way Entrepreneurs Kill Their Business

Nick O'Neill

Entrepreneurship DilutionThe ruler of the world is always a master at one thing: ruling the world. Businesses are the same way: they exist to satisfy specific needs of their customers.

How Much Money To Raise

A VC : Venture Capital and Technology

It's too dilutive to you and your co-founders and angels. First, try to dilute in the 10-20% band whenever you raise money. You might have to do more, but try hard to keep your dilution below 20% each round. Image via Wikipedia.

Early Employee Dilution

ithacaVC

But here is one that I want to focus on in this post: “Can I ask for undiluted stock (non dilution clause)?” I am not even sure what “undiluted stock” is, but safe to say the person (I will call him Exec X) meant stock that his equity would not be dilutable in terms of ownership. It is legally possible to grant non-dilution via a contractual right. Those additional grants would prevent Exec X from being diluted.

This Is How Successful Brands Reach More Ideal Customers

YFS Magazine

Before you think about diluting your brand offering or price in order to serve everyone and anyone, here are five strategies you can use to attract the right customers.

8 Great Reasons to Bootstrap Your Startup

Early Growth Financial Services

Bootstrapping helps you to focus on your product in so much as … Continue reading → Financial Planning bootstrapping dilution enterpreneurship entrepreneurs equity fundraise profit margins self-fund small business financial planning startup startup financials vc venture capitalOriginally published in SoCalTech. To self-fund or to raise funds? That’s the big question that many founders ask themselves as they try to get their product and service to market.

Founder Dilution Survey

Will Price

Sim over at Polaris Ventures is looking for founders to help him quantify dilution over the life of a company (financings, stock option refreshes, etc) and the impact of fund raising on the ultimate stakes founders enjoy in their companies. He will be sharing his findings on his blog. Take the survey here

Anti-Dilution Provisions - An Example

Recent Buzzes - VC Experts, Inc.

Anti-Dilution provisions can be a key negotiating point when it comes to the Deal Terms of a new round of financing, especially in the presence of a. Down Round

Is Dilution Considered When Talking About Equity Ranges?

Ask The VC

Model Cap Tables With VCHub

Ask The VC

In addition, he’s created a variety of interactive examples that help you understand things like: Anti Dilution – Broad-based Weighted Average. Anti Dilution – Narrow-based Weighted Average. Anti Dilution – Full Ratchet. A few days ago I answered a question on AsktheVC about modeling cap tables. After a quick email conversation with Jeff Boardman (founder of LearnVC ), I realize I had left his product off the list.

The Dilution Concern for Founders

Recent Buzzes - VC Experts, Inc.

There are three phenomena that trivialize even the best of investment strategies: Dilution, Dilution, Dilution.". If my students at Cornell University take away one thought from the entire semester of instruction, that thought is embedded in the following exposition: First, I draw on the blackboard an inverted bell shaped curve, the top of the curve heading downwards rather than up.

What is it Like to Negotiate a VC Round?

Both Sides of the Table

When you do, my 20% becomes 15% and thus my true price for your round is actually higher than it appears when I invested because I already know I’m going to face more dilution for options. Option pool (likely dilution in the future, which is a function of a higher price just not yet defined). Then you’ll willing to take more dilution for them. As I mentioned if you raise $2m on $8m pre-money you take 20% dilution.

Quick Post on Post-Money Valuations

Rob Go

If there is a fixed post money on say, a $5M series A round, if the founder decides that they want to take on a bit more new capital, the existing shareholders eat all of the additional dilution.

How to Raise Investor Funding for Your Startup

Early Growth Financial Services

Valuation — Know what these terms mean: Fully-diluted — This includes all issued stock and anything that could be converted into common stock (typically after an acquisition or IPO), such as your stock option pool.

LBO: Antidilution Protection For Investors

Recent Buzzes - VC Experts, Inc.

In the "modern era" of venture capital (1970 and beyond) the so–called anti–dilution provisions have become increasingly important. Like so many words in the glossary of venture capital, "dilution" has multiple meanings. The core concept, however, arises from a central fact: any new claimant to the assets and/or income of a firm reduces the percentage interests of the existing claimants

Reserves

A VC : Venture Capital and Technology

That means they will invest enough capital to avoid being diluted by the follow-on financing round. That hurts them because they get diluted by those rounds they can’t participate in. Reserves is the term VCs use to describe funds they “reserve” for follow-on financings of their portfolio companies.

Wenger: Presenting Option Grants to Boards

Ask The VC

Percentage size of grant fully diluted. Total size of option pool and remaining available pool (absolute numbers and percentages fully diluted). Today’s VC post of the day is from Albert Wenger (USV) and titled Presenting Option Grants to Boards. This is feedback I give to CEOs 98% of the time after my first board meeting. While there is no standard for how to present option grants, Albert lays out a very clear set of eight pieces of data he likes to see.

4 Chasms And 5 Customer Types That Kill Entrepreneurs

Startup Professionals Musings

It takes focus to resist adding a long list of features that seem to make the opportunity larger, but dilute to focus of both you and potential customers. Everyone in the business world has heard of the old bestseller by Geoffrey A.

The Resetting of the Startup Industry

Both Sides of the Table

Optimize for a W more than % dilution in these circumstances. Founders hate them because they’re dilutive. Much has changed in the past four months of the technology startup world and how outsiders value the business.

How Often Do Employees Of VC-backed Startups Get Stock Options?

Ask The VC

In the previous post I talked some about “re-up grants” In some cases, especially if there is a lot of dilution from a financing, there are occasionally broad grants across all employees post financing. However, in many cases, there aren’t, and employees should expect to take at least some of the dilution from subsequent financings, especially in up-round cases where the value of their underlying equity is increasing.