Agile VC

DECEMBER 4, 2014

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder. But not all co-founders are equal in terms of title, ownership, responsibilities, and so forth. Sometimes co-founders put off the equity split question for some time.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Both Sides of the Table

JULY 29, 2010

Mark Jeffrey - Q: “Is it more traditional to do your ESOP (employee stock option plan) before or after your angel or Series A funding?&# I talked about the need to have a restricted stock plan for your earliest employees. You’re not screwing me – you’re screwing your fellow employees.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

David Teten

MARCH 14, 2018

Managers of VC funds typically want to grow their business aggressively, just like the founders we back. Among the sites we have found most helpful with practical guides for founders: Biztree , First Search , Foundersuite , Goodwin Founders Workbench , Guides.co , Inc.com , and StartupRocket. .

Private Equity 60

Private Equity Venture Capital Equity Cofounder 60

Startup Professionals Musings

FEBRUARY 8, 2019

File founder stock election so no taxes are due until exit. Even though the initial stock has no value or market, it is imperative that you document the division of ownership immediately between co-founders commensurate with their investment, contribution, and role. Set up a separate records system for your new business.

LLC 210

LLC Limited Liability Company Cofounder Preferred Stock 210

Agile VC

APRIL 17, 2011

Kayak was started here in my backyard of Boston… co-founder & CTO Paul English and the product/engineering team is based here in Concord MA. Co-founder & CEO Steve Hafner and the business team are based in Norwalk, CT. 5) High Productivity: Kayak had 148 employees at the end of 2010. Series A Preferred.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

K9 Ventures

NOVEMBER 21, 2011

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

Founder 87

Founder Common Stock Preferred Stock Stock 87

K9 Ventures

NOVEMBER 21, 2011

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

Founder 84

Founder Common Stock Preferred Stock Stock 84

Gust

JUNE 7, 2014

So, here is the typical payout order, from first to last: 1) Salaries owed to employees. 5) Senior Preferred Stock and warrants. 6) Any preference multiple on (5). 7) Junior Preferred Stock and warrants. 8) Any preference multiple on (7). 5) Senior Preferred Stock and warrants.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Steve Blank

APRIL 10, 2019

VC’s have just changed the ~50-year old social contract with startup employees. For most startup employee’s startup stock options are now a bad deal. As Venture Capital emerged as an industry in the mid 1970’s, investors in venture-funded startups began to give stock options to all their employees.

Stock Options 333

Stock Options Stock Vesting Common Stock 333

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 5 Stock vs Options. 6 Founders / Restricted Stock. UPDATE: If youre a founder or near-founder, your equity terms are likely defined by the funding terms negotiated with the investors. From Payne.org Wiki. 3 Dilution.

Equity 56

Equity Employee Vesting Preferred Stock 56

Startup Company Lawyer

MARCH 12, 2009

C corps, LLCs, and S corps differ significantly in the areas of taxation, ownership, fundraising, governance and structure, and employee compensation. Any company that raises venture financing will need to be a C corp in order to issue preferred stock. Employee Compensation. such as incentive stock options.

LLC 61

LLC Stock Options Preferred Stock Stock 61

Startup Professionals Musings

AUGUST 1, 2016

Experienced entrepreneurs understand investor expectations of Board representation, preferred stock, and payments based on interim milestones. Founder insistence on non-dilute clauses, arms-length relationships, and quick closure without due diligence will short-circuit active interest. Ask only for the money you can justify.

Due Diligence 120

Due Diligence Intellectual Property Preferred Stock Seed Stage 120

www.mattbartus.com

SEPTEMBER 24, 2011

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. People tend to underestimate how much record keeping is involved with managing employees and consultants, and this just adds an unacceptable extra burden. A View from the Valley. Blog blog archive. Quora Answers.

Equity 40

Equity Vesting Silicon Valley Intellectual Property 40

ithacaVC

JUNE 29, 2018

Our portfolio companies routinely adopt carve out plans when the founders/employees equity values are not likely to provide enough incentive to get a company to an exit. There is just no way to get a good exit without a motivated management team and employee base. It can also result from straight forward dilution.

Management 40

Management Liquidation Preference Preferred Stock Dilution 40

Gust

JULY 18, 2012

Yet I’ve rarely seen entrepreneurs more fired up than when recounting war stories of startups whose founders had control of the company wrested from them, were forced to take financing or compensation deals on outrageously onerous terms , or worst of all, fired from their own companies.

Stock Options 188

Stock Options SEC Stock Government 188

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

K9 Ventures

MAY 14, 2011

They are generally high net worth (accredited) individuals who have done well in their career, either as entrepreneurs or as executives and early employees at some of the companies that have done well (in the Valley that usually means Paypal, Google, Facebook etc). Common Stock. Convertible Note or Preferred Stock.

Preferred Stock 125

Preferred Stock Seed Stage Incubator Early Stage 125

Ben's Blog

JULY 16, 2013

First, if you did not understand how radically the fundraising environment might change, then there is no chance that your employees would have understood it. In fact, if you are like most companies, your managers probably implied to your employees that your stock price would only rise as long as you were private. Silly them.

Down Round 78

Down Round Marketing Preferred Stock Post-Money Valuation 78

ithacaVC

DECEMBER 13, 2013

They are typically pretty simple: (i) shares owned by founders and (ii) shares authorized for issuance in a stock option pool, some of which may be issued to employees already and some of which will be available for future issuance. times more equity than Founder X. times more equity than Founder X.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

Both Sides of the Table

APRIL 6, 2020

If your US-based business is adversely affected by Covid-19 such that you would need to lay off employees imminently and having access to capital would enable you to keep more employees on the payroll then you might be eligible. Am I eligible for the PPP Loan? One thing that is clear. shouldn’t I? The short answer is “no.”

Programming 279

Programming Affiliate SBA Government 279

ithacaVC

FEBRUARY 23, 2011

The MCOP can serve a critical role as founders and other management team members are diluted down by rounds of financing or if their equity is not in the money. As the investors’ aggregate liquidation preference (ALP) increases typically the need for a MCOP also increases. A few key points to consider: 1.

Liquidation Preference 55

Liquidation Preference Management Preferred Stock Dividend 55

ithacaVC

JUNE 20, 2011

Setting up a legal entity that will have multiple owners from inception (like 2 or more founders) requires good lawyer input. Lawyer time required (including vesting agreements for founders): 3 to 6 hours. And each award to a given employee requires a separate grant agreement laying out the terms of the grant.

Stock Options 58

Stock Options Vesting Subscription Agreement Founder Vesting 58

Growthink Blog

APRIL 7, 2010

The name "Series A" refers to the class of preferred stock that you sell to investors in return for their cash. Your Series A round is typically the first series of stock issued after common stock (which is typically issued and/or sold to company founders, employees, friends and family, and initial angel investors).

Angel Investor 54

Angel Investor Preferred Stock Venture Capital Common Stock 54

Startup Company Lawyer

JULY 20, 2009

I am giving a presentation to some of the founders in TheFunded Founder Institute on incorporating their companies, so I thought I would recycle some thoughts.]. Founders of startup companies often wait to incorporate a company until they are confident that their concept is viable or fundable. More than one founder.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

Ben's Blog

JULY 16, 2013

First, if you did not understand how radically the fundraising environment might change, then there is no chance that your employees would have understood it. In fact, if you are like most companies, your managers probably implied to your employees that your stock price would only rise as long as you were private. Silly them.

Marketing 46

Marketing Preferred Stock Post-Money Valuation Down Round 46

Tim Keane

JANUARY 12, 2010

Term-sheets for preferred stock offerings are designed to protect the investor in case things don’t go as well as planned. These include: ·       Vesting of Founder Stock. These include: ·       Vesting of Founder Stock.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Growthink Blog

MAY 10, 2012

Take the founder of Wrigley's chewing gum, who began selling baking powder and soap door-to-door and giving away gum as a bonus before discovering people wanted it a lot more than soap. The name is derived from the class of preferred stock investors receive in return for their capital.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

Professor VC

JANUARY 17, 2008

One of the panelists mentioned that they have gotten very valuation sensitive (nothing wrong with that) and like to purchase preferred stock rather than invest in convertible notes. There needs to be enough equity to go around for founders, early investors, later investors, and employees. for a total of $10.5M

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Up and Running

SEPTEMBER 20, 2021

Furthermore, there are various forms of equity, such as preferred stock, common stock, and convertible notes, which influence the present and potential future investors. Founders can apply the information to instantly ascertain what percentage of the startup they have to propose a new investor. Preference shares.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

Gust

MAY 24, 2012

Some commentators have suggested this is the wave of the future, signifying a shift in the balance of power from investors to founders of the relatively small, elite group of growth companies that make it to public markets. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

Hunter Walker

SEPTEMBER 29, 2022

As more growth and crossover investors came into the startup ecosystem they were often eager to put capital to work and happy to consolidate their positions with common or preferred shares from early employees, founders and previous investors. We’re aligned with the founders and the rest of the cap table until we aren’t.

Venture Capital 122

Venture Capital Cap Table LP Equity 122

www.mattbartus.com

DECEMBER 9, 2012

Perspectives on issues affecting founders, startups and investors from a veteran startup lawyer in Silicon Valley. If you are a company that is fundraising, keep in mind that there are a few different levers you can pull to change the amount of dilution that the founders will experience. How to pump up your VC valuation. Post-Money.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

ReadWriteStart

JANUARY 28, 2022

These characteristics, comparable to those found in the fixed income market, can convert into common stock, call clauses, and other features. Warrants are a kind of equity that are often attached to a corporate bond issuance or preferred stock to make the transaction more appealing to investors. Equity for Co-founders.

Valuation 108

Valuation Equity Warrant Common Stock 108

Up and Running

MAY 23, 2016

“If you can fix a problem for someone and do it better, quicker, and/or cheaper than your competitor, you’re off to a good start.” – Gabriel Kuperman, founder and CEO of CuePin. We created UpKeep to fill this void—a cloud-based solution that was affordable for any size business.” – Ryan Chan, founder of UpKeep.

Software Review 74

Software Review Software Delaware Forecast 74

www.paulgraham.com

APRIL 28, 2010

I think it would help founders to understand funding better—notjust the mechanics of it, but what investors are thinking. And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. Few startups get it quite right. Many are underfunded.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Scott Edward Walker

NOVEMBER 26, 2017

Accordingly, I thought it would be helpful to provide some basic fundraising advice to first-time founders based upon my 20+ years of legal experience. Instead, you typically need a “warm referral” (or introduction) from someone they respect and trust — preferably a successful founder whom they have backed. Cheers, Scott.

Term Sheet 63

Term Sheet San Francisco Founder Investment Bankers 63