Gust

APRIL 9, 2014

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. Uncategorized company equity dilution founder investors startup'

Dilution 150

Dilution Equity Startup Vesting 150

Startup Professionals Musings

JANUARY 30, 2022

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. The first chasm is getting the customer requirements right, product or service, to satisfy a real need that a large number of customers will pay real money to satisfy.

Startup 380

Startup Technical Review Dilution Early Stage 380

Startup Professionals Musings

JANUARY 6, 2021

In reality, too many choices actually dilutes customer interest in your existing market, and makes your job of production, marketing, and support much more complex. Fight the urge do more things, to attract more customers in a broader market. Focus first on finding more of the right customers. Focus on the mainstream customer majority.

Technical Review 405

Technical Review Startup Technical Cofounder Advisory Board 405

Startup Professionals Musings

SEPTEMBER 27, 2023

This is called stock dilution control. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions. Otherwise, people with no ongoing effort (“free riders”) will own the value growth that you are adding after their departure.

Stock 253

Stock Vesting .Net Cofounder 253

YoungUpstarts

AUGUST 3, 2019

Non-dilutive grants are a great way to fund your research, provided you’re working on a project that directly benefits the government according to current needs. Many companies pursue non-dilutive government grants because they don’t require giving away ownership in the company. . If so, you’re pursuing funds from a reliable source.

Dilution 100

Dilution Government SBIR Salary 100

Both Sides of the Table

JULY 17, 2018

Hire when it feels like you're bursting at the seems or missing a critical skill on existing team or have figured out how to scale growth  —  @msuster 6/ Raising capital at very high prices helps avoid short-term dilution. But if you raise at too high a price you make it harder to raise next round.

Founder 242

Founder Dilution Venture Capital Later Stage 242

Startup Professionals Musings

SEPTEMBER 10, 2018

Of course, all co-founders need to remember that allocated percentages will be diluted as angel and VC investors are brought in. Keep your wits about you to make sure that dilution is done equitably and evenly. The CFO may have a major financial background, but might be a minority owner.

Equity 239

Equity Cofounder Technical Cofounder Founder 239

Startup Professionals Musings

AUGUST 21, 2019

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale.

Dilution 228

Dilution Startup Entrepreneur Merger 228

Gust

OCTOBER 18, 2014

What this investor is seeking is called “permanent, full-ratchet, anti-dilution protection”, and that is neither (a) in line with the market, nor (b) practical. That’s why anti-dilution provisions are typically only applicable to the next financing. So, no , you simply can’t give him what he wants.

Dilution 137

Dilution Ratchet Finance Equity 137

View from Seed

JANUARY 13, 2021

And yes, a seed fund may have a tougher time holding on to their ownership down the road, and thus get diluted down. We’ve had multiple companies in our early funds that hit bumps and had to raise flat rounds, which hurts from a dilution standpoint but doesn’t wipe out our position. So yes, seed funds will own less. But guess what?

Dilution 399

Dilution Later Stage Portfolio Founder 399

Startup Professionals Musings

JUNE 28, 2021

Thus every serious investor reserves a certain amount of his investment capital for follow-on rounds, which allows them to stay to course to success, even with dilution. They will need more money. If you subscribe to truths one to five, startup investing can be lucrative.

Angel Investor 374

Angel Investor Angel Groups Accredited Investor IRR 374

Gust

APRIL 11, 2014

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. That is not economic dilution, but rather its opposite ( accretion ).

Dilution 162

Dilution Equity Startup Pre-Money Valuation 162

ithacaVC

OCTOBER 10, 2017

Here is the big problem with investors – they dilute the founders’ ownership in the company. Let’s cover some basics: It is impossible to issue stock to investors without existing shareholders (founders, employees and prior investors) being diluted. Is this actually a big problem?

Dilution 53

Dilution Valuation Founder Stock 53

Startup Professionals Musings

AUGUST 4, 2014

Of course, all co-founders need to remember that allocated percentages will be diluted as angel and venture capital investors are brought in. Keep your wits about you to make sure that dilution is done equitably and evenly. The CFO may have a major financial background, but might be a minority owner.

Cofounder 263

Cofounder Founder Stock Technical Cofounder 263

Both Sides of the Table

SEPTEMBER 15, 2022

But here’s the magic few people ever talk about … We’ve created more than $1.5 billion in value to Upfront from just 6 deals that WERE NOT immediately up and to the right.

Technical Review 416

Technical Review Valuation Pre-Money Valuation Marketing 416

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. All of the estimates displayed above are figures prior to any dilution. As stated earlier, investors will dilute ownership upon nearly every round of financing. So, if o = initial ownership and y = total dilution, x = o * (1 – y). N: exit size.

Startup 129

Startup Engineer Dilution Vesting 129

Startup Professionals Musings

JANUARY 15, 2021

This is called stock dilution control. This allows the entrepreneur more influence in controlling dilution of his or her shares, investment terms and acquisition decisions. Otherwise, people with no ongoing effort (“free riders”) will own the value growth that you are adding after their departure.

Vesting 306

Vesting Dilution Cofounder Founder Vesting 306

David Teten

DECEMBER 2, 2019

I’m now researching non-dilutive funding for Action Tank , a startup I’m gestating to “Make America Functional Again”. I worked with outsourced research firm Wonder * to identify all of the institutions we could who support tech impact startups with cash and community, and in many cases without dilution.

Technical Review 60

Technical Review Startup Silicon Valley Dilution 60

The Startup Lawyer

MARCH 1, 2011

I hate non-dilution rights and if you are an entrepreneur you should, too. I’m not talking about price-based anti-dilution protection that is typical in an angel or VC round. But the fact that the startup’s founders are being diluted by such an issuance should provide enough protection.

Dilution 89

Dilution Startup Equity Entrepreneur 89

Startup Professionals Musings

APRIL 27, 2019

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. The first chasm is getting the customer requirements right, product or service, to satisfy a real need that a large number of customers will pay real money to satisfy.

Technical Review 258

Technical Review Dilution Startup Early Stage 258

Gust

OCTOBER 17, 2022

Janelle van Deventer breaks down the options for raising capital through bootstrapping, dilutive investors, government subsides and various forms of debt. Between COVID, the evolution of the API economy, and a increase in second, third & fourth time founders who are seeking funding.

Bootstrapping 184

Bootstrapping Dilution API Founder 184

Gust

NOVEMBER 1, 2011

in the case of one investment round, no subsequent investment and therefore no dilution). I have seen some complex methods for accommodating anticipated dilution, but here is an easy way to adjust the pre-money valuation of the current round. Then: Post-money Valuation = Terminal Value ÷ Anticipated ROI.

Venture Capital 161

Venture Capital Valuation Pre-Money Valuation Post-Money Valuation 161

Startup Professionals Musings

SEPTEMBER 2, 2017

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale.

Dilution 136

Dilution Startup Entrepreneur Merger 136

ithacaVC

SEPTEMBER 10, 2012

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. Actually, I got many questions.

Dilution 53

Dilution Cap Table Employee Equity 53

Startup Professionals Musings

AUGUST 24, 2016

Of course, all co-founders need to remember that allocated percentages will be diluted as Angel and VC investors are brought in. Keep your wits about you to make sure that dilution is done equitably and evenly. The CFO may have a major financial background, but might be a minority owner. But don’t get greedy.

Equity 120

Equity Cofounder Startup Technical Cofounder 120

This is going to be BIG.

MARCH 28, 2021

Still, a lot of founders are worried about early dilution and how it affects their eventual outcome when the company is sold. That’s because dilution isn’t subtraction. If I get diluted another 23%, I own 77% x (1-23%), which is 59.29%. If I get diluted another 23%, I own 77% x (1-23%), which is 59.29%.

Founder 138

Founder Post-Money Valuation Dilution Valuation 138

Startup Professionals Musings

OCTOBER 14, 2013

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale.

Dilution 197

Dilution Entrepreneur Startup Internet 197

Startup Professionals Musings

OCTOBER 13, 2021

It’s easy to say “yes” to one more feature request after another, until the potential for real impact gets diluted. Otherwise, your most innovative and disruptive product thinking will be diluted and lost, killing your dream of a better world. While the idea was great, they failed on execution.

Dilution 343

Dilution Entrepreneur Metrics Startup 343

YoungUpstarts

JANUARY 19, 2015

Don’t dilute your content. Many website owners make the mistake of diluting their content. They will ensure that what gets written is not diluted. And there are plenty of online tools to help you test and check your site’s accessibility. Remember: just because a person is disabled doesn’t mean they don’t want to buy from you!

Dilution 100

Dilution Web Web Development Design 100

Up and Running

JULY 2, 2014

of our company in exchange for the $300K, and my business partner and I each diluted from 50% ownership down to 33.3% ownership and never dilute. When fundraising for a startup, all investors dilute as additional investors join in on the deal. The deal we made with him was he’d get 33.3%

Startup 118

Startup Angel Investor Technical Review Dilution 118

Business Plan Blog

JANUARY 9, 2014

Fear of Dilution. Understand the difference between dilution and economic dilution, which occurs when the value of the business doesn’t change but the number of shares increases. Top 10 Reasons Why Startups Fail. Taking Money From The Wrong Investors. Look for local investors with strong character and domain experience.

San Diego 74

San Diego Startup Dilution Technical Review 74

The Startup Magazine

MARCH 14, 2022

The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. At this stage, the founder mainly raises funding from their sources or family and friends. If you are one of the fortunate early-stage investors to be presented with such an opportunity, it could lead to rewarding returns.

Technical Review 140

Technical Review Startup Due Diligence India 140

VC Cafe

JUNE 10, 2022

As a result, founders are accepting increased dilution of the stakes they hold in their own companies. According to Michael Kim, of Cendana Capital: Last year, the typical best-in-class Series A deal was raising around $20 million at a post-money valuation of $120 million, according to Kim.

Venture Capital 151

Venture Capital Valuation Marketing Startup 151

Startup Professionals Musings

FEBRUARY 27, 2023

Every startup needs to start their funding search looking for grants, with no equity dilution, as well as contests and foundations. Other project and research reports in their library are a rich source of new ideas, if you are still looking for a place to start. Get help with grant funding and incubator resources.

Entrepreneur 290

Entrepreneur Accredited Investor Intellectual Property Angel Investor 290

Austin Startup

JULY 6, 2018

Re: cash, the more “unbundled” types of accelerators (less formalized, less equity) tend to not provide any cash upfront, but also typically “cost” less in equity, often just 1–2% of your fully diluted capitalization. Anti-Dilution. See: Startup Accelerator Anti-Dilution Provisions; The Fine Print.

Startup 48

Startup Dilution Technical Review Equity 48

Feld Thoughts

SEPTEMBER 2, 2011

If the full pool were to be given out, the dilution is fairly significant to the founders. They would own from 55% and 45% down to 36% and 29%, but until options are exercised they are not diluted.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

Startup Professionals Musings

JANUARY 31, 2020

In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Good entrepreneurs are often diluted in their potential by trying to attack too many new market opportunities or customer requests concurrently. Certainly interfacing to the outside world may not be an inventor forte.

Startup 313

Startup Founder Entrepreneur Dilution 313