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 Pre-Money Valuation Prospectus 162

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 Employee Cap Table Stock 53

Both Sides of the Table

AUGUST 14, 2017

As a starting point the board is intended to have legal and financial responsibilities to a few key constituencies: shareholders, debt holders, creditors, employees, government and major parties with whom the business operates. Often we are asked to get involved in executive-level recruiting. ICOs certainly have a place in startup financing.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

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 Stock Options Stock Valuation 53

YoungUpstarts

APRIL 19, 2012

When not approached carefully, growth can destroy value as it outstrips a company’s managerial capacity, processes, quality, and financial controls, or substantially dilutes customer value propositions. The right processes and controls must be put in place and taught to employees. Processes are like recipes for baking a cake.

Dilution 209

Dilution Virginia Management Washington 209

VC Adventure

AUGUST 16, 2020

Despite how much time companies talk about the importance of their employees and, in many cases, how every employee is also an “owner” of their business through their option program, most companies are pretty ad hoc (or down right sloppy) about how they plan for and execute their option program.

Programming 149

Programming Vesting Equity Software Review 149

Startup Professionals Musings

NOVEMBER 5, 2022

In addition, strategic functions involve working ON your business, whereas tactical work, done by most employees, is working IN your business. The proper use of rewards can make or break any business and employee relationship. Outside contracts and freelancing rapidly dilute everyone’s focus on the higher company mission and purpose.

Management 333

Management Dilution Forecast Leadership 333

Both Sides of the Table

FEBRUARY 6, 2013

it’s the most expensive dilution you’ll ever face. But not anal if one founder who shares equity graciously with early employees who are treated as “co-founders” My idea startup team is heaving on tech personnel but also has strong product management. Quick summary: Be careful not to have too many co-founders.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

Startup Professionals Musings

JULY 23, 2021

Yet every change can cause brand dilution or competition you don’t need. Recognize that employee morale impacts your brand. If employee morale is down, your brand will be negatively impacted. Ask employees for feedback, and commit to fix problems before you feel brand impact.

Leadership 426

Leadership Management Brazil Differentiation 426

Startup Professionals Musings

JULY 31, 2012

If you can clearly define the specifications for your technical project, and you are willing and able to manage the efforts closely, then outsourcing it to a local or remote technical group beats hiring technical employees. Focus on finding the right partner to double your strength rather than dilute it. Marty Zwilling.

Technical Review 230

Technical Review Technology Founder Management 230

Up and Running

JULY 1, 2020

While it’s called a business plan, it can be written and utilized to successfully enter a new market, launch a product, or weigh the potential of adding an employee. Executive summary: This short summary quickly informs your employees, lenders, and investors about the nature and benefits of the expansion.

Business Plan 152

Business Plan Forecast Operations Dilution 152

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%

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

Feld Thoughts

SEPTEMBER 2, 2011

As first time entrepreneurs they did not create an employee options pool; we’ll fix that in a little while. They come up with two options: Hire Praveena as an employee and offer her stock options. If the full pool were to be given out, the dilution is fairly significant to the founders.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

The Next Web

NOVEMBER 20, 2013

So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. The calculation comes as follows: original 50/50 diluted down 20 percent to 40/40 for the financing, and then the one funding founder gets that 20 percent. How important is this person’s role? Is this person taking a salary or not?

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Startup Professionals Musings

MAY 11, 2011

If you can clearly define the specifications for your technical project, and you are willing and able to manage the efforts closely, then outsourcing it to a local or remote technical group beats hiring technical employees. Focus on finding the right partner to double your strength rather than dilute it. Marty Zwilling.

Technical Review 236

Technical Review Partner Entrepreneur Architecture 236

Startup Professionals Musings

JULY 1, 2022

Many employees forget that there isn’t even a market for startup stock, until after the company has gone public, which hasn’t happened positively to many companies in the last few years. Any offers of equity compensation before the first round of institutional capital should be considered purely speculative.

Stock Options 343

Stock Options Advisory Board Stock Startup 343

Hearpreneur

JANUARY 30, 2022

6- Recruit and retain employees. So many people are starting their own businesses that employees are becoming scarce. You may find that a previous employee has started his or her own business and created exactly what you need. Cross-training existing employees will help cover staffing shortages in the interim.

Entrepreneur 124

Entrepreneur Green Technical Review Social Media 124

Startup Professionals Musings

JANUARY 31, 2020

They worry about the infrastructure needed to attract and support customers, including investors, employees, organization, marketplace coverage, manufacturing, and delivery. In fact, they may fear team leadership as a burden, or a potential dilution of their ownership. Skilled and motivated by building a multi-disciplined team.

Founder 312

Founder Intellectual Property Dilution Startup 312

Startup Professionals Musings

DECEMBER 11, 2022

Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Due diligence also normally involves onsite visits and employee discussions, so the entire team needs to be fully aware of expectations. Naïve expectations on funding terms and process.

Due Diligence 271

Due Diligence Intellectual Property Entrepreneur Preferred Stock 271

Startup Professionals Musings

DECEMBER 29, 2021

Don’t confuse and dilute your potential customer base by weakly trying to appeal to all. This also works well in getting a greater level of engagement and productivity from your own employees. I now use them exclusively. Target most relevant customer segments first.

Restful 336

Restful Differentiation Social Media Dilution 336

www.instigatorblog.com

OCTOBER 23, 2010

Changing Equity Structures for Early Startup Employees Tweet Recently someone asked me for advice on how much equity they should give to their early employees. His company had just closed an early round of funding and he wanted to cement the employee relationships. Those first employees will take 0.5-1%

Equity 41

Equity Employee Startup Vesting 41

Startup Professionals Musings

MAY 8, 2022

The downside is loss of control and financial dilution. The right motivated employees dilemma. Should you start a company solo or find co-founders to help you? With one or more co-founders, you gain complementary skills, spread the workload and responsibilities, and reduce the risk. In my view, two heads are always better than one.

Founder 325

Founder Hockey Stick Cofounder Liquidity Event 325

YoungUpstarts

DECEMBER 18, 2014

Steeped in the “command and control” paradigm of operational excellence, leaders (and employees) see learning as a high-risk activity. Read on to learn how you and your employees can energize your lazy brains and revitalize your culture in the process: 1. Teach employees to work around their weaknesses.

Employee 162

Employee Operations Global Dilution 162

David Teten

NOVEMBER 17, 2011

In particular, this model is designed to help all team members understand the impact of dilution on their options. Such a model is particularly helpful for those founders looking for a co-founder or key employee. I couldn’t find one online, so I built it. Download the Startup Options Valuation model here.

Employee 155

Employee IRR Startup Mexico 155

Berkonomics

OCTOBER 12, 2017

In a previous insight, we explored the common percentage of a company’s fully diluted stock that is often granted in the form of options for new employees. (See Many skilled, experienced executives have jumped from mature companies to more risky positions in smaller, fast growing enterprises primarily for the options.

Employee 97

Employee Stock Options Dilution Salary 97

ReadWriteStart

JANUARY 13, 2024

Additionally, these down rounds can decrease employee morale, as they may dilute shares or pay cuts, affecting the overall work environment. Startups must navigate through these financial challenges carefully and strategically to maintain a positive image and continue their growth trajectory.

Down Round 154

Down Round Marketing Artificial Inteligence Startup 154

Startup Professionals Musings

FEBRUARY 3, 2012

Every startup and every big business wishes that all their employees were star performers, but wishing doesn’t make it happen. Experts say it takes five positive interactions to dilute one negative, if we want the relationship to thrive. Some coaches and leaders seem to have the magic for bringing out the best in everyone.

Employee 241

Employee Dilution Conversion Developer 241

YoungUpstarts

MAY 9, 2017

In doing so, they learn how to better align employees and their talents and skills to optimize the flow of value to their customers. This results in employees who are more fulfilled and efficient, and in customers who are happier and more engaged. individuals dilute their focus and slow their productivity.

Lean 124

Lean Agile Technical Review Dilution 124

The Startup Magazine

AUGUST 9, 2022

One of the most underrated jobs of a leader in a scaling organization is making sure the culture doesn’t get diluted. Employees hold each other accountable and take responsibility for keeping a strong culture as opposed to it falling solely on the shoulders of the leader.

Cofounder 148

Cofounder Founder Miami Marketing 148

Both Sides of the Table

NOVEMBER 14, 2017

Sam also had a vision as early as 2012 about how MakeSpace would be a large employer of middle-income jobs: The company would hire employees rather than just have contractors and he would lead the effort to ensure they had opportunities for growth and benefits for their families.

Operations 286

Operations New York City Technical Review Startup 286

Both Sides of the Table

FEBRUARY 20, 2019

The board also needs to be mindful of the interests of other “stakeholders” including debt holders, employees, customers and suppliers. For starters, the incoming CEO will demand between 4–6% of the company so shareholders will immediately face dilution. The legal duty of the board is to the company and all of its shareholders.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

A Smart Bear: Startups and Marketing for Geeks

FEBRUARY 26, 2019

Being focussed on SaaS metrics is not incompatible with valuing employee fulfillment and customer happiness. Telling the truth to customers and employees, especially when it’s difficult, is how you earn trust and loyalty. Find and focus on one reliable distribution mechanism before diluting your time diversifying.

Restful 202

Restful Founder Revenue Acquisition 202

Startup Professionals Musings

MARCH 14, 2020

Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Due diligence also normally involves onsite visits and employee discussions, so the entire team needs to be fully aware of expectations. Naïve expectations on funding terms and process.

Due Diligence 308

Due Diligence Intellectual Property Preferred Stock Seed Stage 308

Berkonomics

DECEMBER 7, 2023

What if employee candidates ask for the moon? In a previous insight, we explored the common percentage of a company’s fully diluted stock that is often granted in the form of options for new employees. In 1981, Herb Cohen wrote and published “ You Can Negotiate Anything ”, an excellent guide to great negotiating.

Stock Options 62

Stock Options Stock Salary Dilution 62

Both Sides of the Table

JANUARY 4, 2014

The lack of team cohesion and respect for individuals has probably been one of the biggest weaknesses of Zynga – at least from nearly EVERY employee I’ve ever talked to who worked there. The company hadn’t performed well financially and need to make changes. We sat down the three of us.

Founder 340

Founder Sacramento Cofounder Technical Review 340

David Teten

AUGUST 19, 2019

Benefits: Non-dilutive, flexible credit offerings that fit SMB or enterprise SaaS. The mode purpose for funding is (in order of frequency) Sales, Marketing, Market Expansion, Product Development, and Hiring Employees. Jared Weitz, Founder & CEO, said, “[Our] typical RBF client is $120K-$20M in annual revenue, with 4-200 employees.

Revenue 60

Revenue Technical Review Software Review Equity 60

The Startup Magazine

JULY 15, 2023

We look at various techniques and methods you can use to ensure your firm remains right at the forefront of the industry and continues to please employees and clients. Clients are happier because they get a more robust and effective response, and employees enjoy feeling effective in their roles. Well, this post is for you.

Security 138

Security Artificial Inteligence Differentiation Dilution 138