Equity for Early Employees in Early Stage Startups

SoCal CTO

I was asked by a reader how much equity he should give out to early employees and to service providers in a very early stage startup. Founders vs. Early Employees To help with this discussion, let me start with a definition of "early employee."

New Early Stage Financing Options for Entrepreneurs

Startup Professionals Musings

If you are new to the entrepreneurial world of startups, you are likely confused by the terminology of seed-stage, lean startups, micro-VCs, and Super Angels. The good news is that he is all about helping early-stage startups. Early-stage startup.

Trending Sources

New Early Stage Financing Options for Entrepreneurs

Gust

If you are new to the entrepreneurial world of startups, you are likely confused by the terminology of seed-stage, lean startups, micro-VCs, and Super Angels. The good news is that he is all about helping early-stage startups. Early-stage startup.

Do My Early Stage Investors Own Too Much Of The Company?

Ask The VC

Question: Most VCs commented that they can not fund current cap table where the CEO and COO would get 10% equity once fully vested while the current investors have 80%. More Context: I recently joined a very early stage company as their CEO. Also, I have been offered 10% equity with 4 year vesting and 1 year cliff. Most VCs in India say we are too early stage for them and we have just started looking at angel investment as an option.

Primer On Funding Trends for Early-Stage Startups

Startup Professionals Musings

If you are new to the entrepreneurial world of startups, you are likely confused by the terminology of seed-stage, lean startups, micro-VCs, and Super Angels. Seed-stage means promising companies that don’t yet have a revenue stream, and may not yet have a proof of concept.

7 Seed-Stage Funding Sources To Finance Your Startup

Startup Professionals Musings

I challenge any entrepreneur, for example, to define the difference between "seed-stage" and "early-stage" financing. Asking for early-stage money before you have customers and revenue will likely kill your credibility with real investors.

The Top 10 Sources of Early-Stage Money

Inc Startups

These investors are the most active financiers of early-stage startups. There are credit cards and home equity loans. Now for the question that''s probably on the mind of every young founder: Where can you get seed funding for your great startup idea?

What Is a SAFE? A Closer Look at The Simple Agreement for Future Equity

Early Growth Financial Services

Enter the SAFE, or Simple Agreement for Future Equity. SAFEs usually appear around the seed stage of funding, as it gives founders the chance to raise funding without having to begin the process of setting a valuation or issuing convertible notes. SAFEs are not debt instruments It’s right there in the name: Simple Agreement for Future Equity. Convertible debt is a staple in startup funding. But sometimes the complexity and costs outweigh the benefits.

8 Ways To Get Off The Ground With Angel Investors

Startup Professionals Musings

Angel investors are still the lifeblood of early-stage startups, despite the surge of activity in crowdfunding and an increasing early interest from venture capitalists. Simplicity is preferred at this stage. angel investor early-stage entrepreneur startup

CTO Salary and Equity Trends 2009-2011

SoCal CTO

Todd Gitlin of Safire Partners - a go to resource here in LA for recruiting C-level positions at startups - was nice enough to compile some data again this year (see last year's Startup CTO Salary and Equity Data ). You can also enter salary and equity data to see where you stand.

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How does equity dilution work for startups?

Gust

Equity dilution works when the same pie is divided among more people. Over time, other people receive pieces of equity in exchange for work (employee stock options), money (seed, angel and venture investors), services (attorneys, directors, etc.).

Are You Getting Your Fair Share Of Startup Equity?

Startup Professionals Musings

So the first question I usually get is what percent of the company or equity is that person worth? The next default of waiting until later is equally bad, since partners who bow out early will still expect an equal share of that first billion you make later.

Zachary Bogue And Matt Ocko Launch Data Collective, An Early Stage Fund For Big Data Startups

techcrunch.com

Zachary Bogue And Matt Ocko Launch Data Collective, An Early Stage Fund For Big Data Startups. Founders Den co-founder and angel investor Zachary Bogue has joined forces with seasoned big data VC Matt Ocko , Metamarkets founder Michael Driscoll and Prismatic CEO Bradford Cross to launch Data Collective , the world’s first Big Data-only early stage investment fund. Startups. Mobile. Gadgets. Europe. Video. Enterprise. Venture. Social. GreenTech. Gaming. Opinion.

Does Crowdfunding Work for Early Stage Growth Companies?

VC Deal Lawyer

No offers of equity or shares of ownership. No equity investments. Although the average dollar amounts raised aren’t very high, they still might be sufficient enough to put towards some market research, early concept exploration, product samples and the like.

Should You Offer Equity Compensation to Employees?

Up and Running

Of course, not every equity compensation story is a David Choe Story. If you’re thinking about extending equity to an employee or a vendor (as in the example above), you should know that the topic is multi-faceted. In this article, I’m going to examine: What equity compensation is.

Bringing design thinking to early stage investment

The Equity Kicker

We offer a bundle of strategic advice, development services, marketing support, design advice, product management, office space and cash that are designed to dramatically increase the chances of an entrepreneur succeeding and we ask for an equity stake in his or her company in return.

Founder's Dilemmas: Equity Splits

Startup Lessons Learned

Having seen these dilemmas derail countless startups, I wish every entrepreneur and prospective founder would read this book." - Eric The following is an exclusive excerpt which sets up a common pitfall regarding equity splits.

Founder's Dilemmas: Equity Splits

www.startuplessonslearned.com

Founders Dilemmas: Equity Splits. The following is an exclusive excerpt which sets up a common pitfall regarding equity splits. Setting the early equity split in stone is one of the biggest mistakes founders can make. Founders Dilemmas: Equity Splits.

A VC Puts On His Equity Crowdfunding Hat

YoungUpstarts

It’s been about three months since equity crowdfunding was opened up to all Americans. This change means that virtually any individual, not just the wealthy, will have opportunities to make equity investments in early stage companies. By Tom Walker, CEO Rev1 Ventures.

Convertible Debt, Priced Equity Rounds and Deal Timing

Gust

An impromptu Twitter debate arose among Fred Wilson, Dave McClure, Mark Suster, Chris Dixon and others about convertible debt, priced equity rounds, and the nuances of early stage financing. Invested Interests angel investment convertible debt convertible note deal terms due diligence financials fundraising priced equity priced rounds tactics valuation valuations VCs venture capital

The Truth About Early Stage Pre-Money Valuations

Ask the Angels

I think there are three fundamental truths regarding the valuation of early stage businesses by potential investors: The first is that a pre-money valuation is ultimately an outcome of negotiation , rather than a mathematical calculation of discounted cash flow or any other metric of potential company performance. For an early stage investor, due diligence is undertaken to refine initial impressions of factors affecting investment risk and return. By Al Schneider.

Startups Should Be Responsible for Explaining Equity to New Employees

View from Seed

When someone goes to work for an early startup, the compensation package general includes an annual salary, health insurance, and, instead of fixed-cost performance upside, a percentage of unvested options to purchase equity in the company. Uncategorized equity VC

How to think about cash vs. equity compensation

A Smart Bear: Startups and Marketing for Geeks

It’s among the most-asked questions on startup forums, and an issue we’re dealing with right now at WPEngine as we bring on new employees: How do you decide how much equity (shares) to give a new employee or partner?

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Convertible Equity, A Better Alternative To Convertible Debt?

techcrunch.com

Convertible Equity, A Better Alternative To Convertible Debt? There has been no shortage of controversy and criticism around the convertible note, a popular investing vehicle that’s used by seed stage and angel investors. Startups. Mobile. Gadgets. Europe. Video. Enterprise.

Startup Equity Crowdfunding Grows in Europe (NESTA Report)

VC Cafe

Amongst the different types of crowdfunding: Donation, Reward, Lending and Equity, the latter is on the rise as a fundraising mechanism for European startups. investors can then, through the platform, buy small parts of this equity stake. Decision on how much equity.

Free Startup Docs: How Much Equity Should Advisors Get?

techcrunch.com

Free Startup Docs: How Much Equity Should Advisors Get? Entrepreneurs want to compensate their mentors and advisors for the time they dedicate to helping their businesses grow, but they have no idea how much equity to offer. Startups. Mobile. Gadgets. Europe. Video. Enterprise. Venture.

Early stage money: The problem with PPMs

Berkonomics

The sale of equity in private companies is regulated by the Securities Act of 1933, which requires that the company either register with the SEC or meet one of several exemptions (Regulation D). By Bill Payne.

Finance Fridays: Getting Started – Allocating Equity and Founder’s Investment

Feld Thoughts

Finance Friday’s gets off the ground with today’s post by introducing you to an imaginary startup, the entrepreneurs that we’ll being following throughout the series, and their first challenges: splitting up the founders’ equity and addressing the case where one of the founders provides the initial seed capital for the business. Jane and Dick each brings a similar level of skill and capability to the business, making it easy for them to agree to a 50/50 equity split.

What is Sweat Equity Worth?

www.entrepreneur.com

What is Sweat Equity Worth? Determining how to value sweat equity is key when negotiating with investors and employees. Entrepreneurs often ask me how to value the sweat equity invested in their startup. But over the years, I have come to realize that sweat equity isn't the same thing as market value for your startup. Investors have no idea how to value sweat equity, and I now believe it's a bad idea to let them tell you how to do it.

What is convertible equity (or a convertible security)?

Startup Company Lawyer

Quick answer: convertible equity (or a convertible security) is convertible debt without the repayment feature at maturity or interest. Over the past few years, convertible debt has emerged as a quick and inexpensive method for startup companies to raise money from angel investors and early stage venture funds. ” In response, Seth Levine wrote a very thoughtful post on convertible debt versus equity. Why convertible equity is better than convertible debt.

Startup Equity For Employees

www.payne.org

Startup Equity For Employees. 7 Salary vs Equity. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. UPDATE: If youre a founder or near-founder, your equity terms are likely defined by the funding terms negotiated with the investors. The total preference is less of an issue in early stage companies (e.g.

Fundraising? Be a Buyer, not a Seller

StartupCFO

Most founders raise (or try to) far too early. Here’s the thing: At the early stage there’s tons of demand for capital and fewer sources. At the late stage ($10M+ revenue) the reverse is true.

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Second-Class Investor Citizens: Facebook’s IPO and Dual-Class Equity Structures

Gust

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers.

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Equity Crowdfunding: Your Solution for Small Business Financing?

Duct Tape Marketing

Equity Crowdfunding: Your Solution for Small Business Financing? But unbeknownst to many, there are four different types of crowdfunding taking place on various platforms: Rewards, Donation, Lending, and Equity. Which is not to say that Equity crowdfunding is a sure thing.

The Greenshoe = how to repay all those that helped along the way.

Scalable Startup

Imagine if you’re in Silicon Valley right now with no equity in a tech startup, but associated with several people getting six figure “bonuses” because they somehow wound up with some stock in one. Often many these people don’t have any equity or upside from their advise or moral support or money lending, or even the spare couch they let you sleep on when you were in their town.

IPO 14

The Greenshoe = how to repay all those that helped along the way.

Scalable Startup

Imagine if you’re in Silicon Valley right now with no equity in a tech startup, but associated with several people getting six figure “bonuses” because they somehow wound up with some stock in one. Often many these people don’t have any equity or upside from their advise or moral support or money lending, or even the spare couch they let you sleep on when you were in their town.

IPO 14

Startup Game Changers: What to Focus On in Your Startup’s Early Days

Early Growth Financial Services

Discussion kicked off with what to focus on in the early days of your startup when so many things need attention. Panelists advised founders to concentrate on communication, equity, and creating first, with Steve Davis pointing out that it’s also critically important to “document stuff.” You should also set up your accounting, HR, and legal support systems … Continue reading → Business Planning Early Stages

Is Convertible Debt Preferable to Equity?

Both Sides of the Table

Convertible debt is an investment that “converts&# into equity in the future usually at a discount to your next funding round price and sometimes has a “cap&# (maximum price). Why many early-stage investors DO price rounds (e.g.

How Much Equity a Technical Cofounder Should Get - Nathan Hurst's Blog

Nathan Hurst

This covers one of the most common situations I encounter: For a pre-funding web startup whose team includes only a non-technical cofounder, how much equity should an incoming technical cofounder get? 6a] Salary upon funding -0%: No extra equity for getting a salary upon funding.

Can’t attract VC money? Buy a business with private equity

The Next Web

Venture capital investors are looking for different things than private equity investors. Venture capital firms are typically growth-oriented, early-stage investors looking for these proof-of-concept points before cutting a check.