Berkonomics

JANUARY 7, 2021

So, co-management is the second group to share in the bounty upon a liquidity event. Email readers, continue here…] Often, if not co-founders, this group is rewarded through issuance of stock options from a pool of available options that usually totals 15-20% of the total company’s equity divided among all employees.

Liquidity Event 96

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 96

Up and Running

SEPTEMBER 19, 2017

By contrast, obtaining a pre-money valuation of $5 million for a business with a new viable product and even very minimal sales is somewhat reasonable. practice in mid-sized or large organizations and act more as employees than owners of the medical practice. They set prices, wages, staffing levels, the scope of services, and so on.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Startup Professionals Musings

AUGUST 10, 2019

The right motivated employees dilemma. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. No one wants to put in money until you have a product, and you need money to build the product. The control and growth dilemma.

Hockey Stick 243

Hockey Stick Cofounder Liquidity Event Startup 243

Berkonomics

AUGUST 6, 2020

Some of us build our businesses to be lifestyle creations, destined to provide for our families but not necessarily as creators of great equity upon an eventual sale. But most of us dream of selling the business someday for lots of money and building our wealth upon that event. Your skilled employees?

Liquidity Event 62

Liquidity Event Intellectual Property IPO Equity 62

Gust

DECEMBER 1, 2011

Notice what is missing from this list of priorities: The company itself – that is, a business entity, most often a corporation , that will own the entire business (however defined), issue equity to founders, take investment capital , enter into contracts, make sales, pay employees and contractors, and so forth.

IP 114

IP Intellectual Property Equity Liquidity Event 114

Berkonomics

AUGUST 27, 2020

Well-maintained deal rooms enhance a company’s image with a buyer, quicken the pace of the deal, help maintain secrecy from employees while due diligence is in process, and lower the stress levels of all parties during the process. When to start a data room?

Software Review 62

Software Review Due Diligence Intellectual Property IPO 62

Hunter Walker

SEPTEMBER 29, 2022

So for the most part a venture investor holds their equity until the company exits via an acquisition, IPO, or some sort of other liquidity event (management buyout, whatever). And I’d say, it does even if it sucks for other investors and the employee common shareholders. You might think, “Hunter!

Venture Capital 122

Venture Capital Cap Table LP Equity 122

Berkonomics

NOVEMBER 1, 2018

Some companies, especially those financed by angel or VC investors, have good, formal stock option plans with properly priced options set to reward all employees and managers in the event of a corporate sale. I found myself in such a situation upon a sale of my computer software company. And a lack of plans for others.

Stock Options 192

Stock Options Stock Distribution Programming 192

Gust

JUNE 7, 2014

Every investment round in a company is made on the basis of extensivepaperwork (often upwards of 100 pages in total) specifying *precisely* what happens when it comes time to pay out the proceeds (if any) from the sale or dissolution of the company. So, here is the typical payout order, from first to last: 1) Salaries owed to employees.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Startup Professionals Musings

DECEMBER 14, 2014

The right motivated employees dilemma. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. No one wants to put in money until you have a product, and you need money to build the product. The control and growth dilemma.

Hockey Stick 268

Hockey Stick Cofounder Entrepreneur Liquidity Event 268

Berkonomics

SEPTEMBER 12, 2013

Some of us build our businesses to be lifestyle creations, destined to provide for our families but not necessarily as creators of great equity upon an eventual sale. But most of us dream of selling the business someday for lots of money and building our wealth upon that event. Your skilled employees?

Liquidity Event 76

Liquidity Event Intellectual Property IPO Equity 76

Berkonomics

JUNE 12, 2014

So co-management is the second group to share in the bounty upon a liquidity event. Often, if not co-founders, this group is rewarded through issuance of stock options from a pool of available options that usually totals 15-20% of the total company’s equity divided among all employees.

Liquidity Event 85

Liquidity Event Pre-Money Valuation Cofounder Initial Public Offering 85

Startup Professionals Musings

AUGUST 19, 2017

The right motivated employees dilemma. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. No one wants to put in money until you have a product, and you need money to build the product. The control and growth dilemma.

Hockey Stick 144

Hockey Stick Cofounder Entrepreneur Liquidity Event 144

Berkonomics

APRIL 3, 2014

If you are starting a virtual company with your employees working from home locations, as many startups do, it should be the location of the founder. Second, there is a rather new term for those large, individual investors who are usually former entrepreneurs made rich through sale of their previous ventures.

Equity 92

Equity Finance Liquidity Event Angel Groups 92

Startup Professionals Musings

JULY 19, 2013

The right motivated employees dilemma. If you take investor money, expect a push for hockey-stick growth and a liquidity event, like going public (IPO) or sale (M&A), to get the payback. No one wants to put in money until you have a product, and you need money to build the product. The control and growth dilemma.

Founder 245

Founder Hockey Stick Cofounder Liquidity Event 245

Steve Blank

JULY 15, 2010

Number of Venture Backed Liquidity Events 1991-2000. Number of Venture Backed Liquidity Events 2000-2010. They’ve created virtual IPO’s for founders and employees via late-stage private financing. If you’re starting a software company, your exit is most likely a sale to a larger company. Source: NVCA.).

Venture Capital 297

Venture Capital IPO Liquidity Event Entrepreneur 297

Gust

NOVEMBER 4, 2011

This discussion expands on my Quora answer to a specific question: “ Why were the stock options of MySpace employees worthless even though the company was sold to News Corporation for hundreds of millions? ” The complete story includes a startup-within-a-startup, investments and exits by two VC firms, and some genuine corporate drama.

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Berkonomics

JUNE 2, 2010

How about incentives for employees all the way down the line and through the corporation? But how about awarding stock options to all employees? . Tech companies, particularly early stage and startups, still award options aggressively. Email readers continue here.]

Liquidity Event 86

Liquidity Event Stock Options IPO Stock 86

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. This makes for some head-rubbing when attempting to calculate the return on investment with a proposed sale. and there are those accumulated dividends. …and

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

Berkonomics

NOVEMBER 4, 2011

Certainly, sales contracts usually call for a basket or amount of findings below which the buyer will absorb the costs. Customer contracts that come up for renewal but are not renewed as expected, a customer bankruptcy after the closing, a group of employees that leave together to start a new business.

Sales 59

Sales Bankruptcy Cost Employee 59

Berkonomics

SEPTEMBER 8, 2022

Some potential buyers or strategic partners might want your intellectual property, or revenues, or profitability, geographic advantage, or sale force, or your employee base. “What would the candidate want from your company in a transaction?” Think carefully. We’ll come back to this column in a moment.

Partner 62

Partner Intellectual Property .Net Distribution 62

Seeing Both Sides

SEPTEMBER 15, 2015

We selected this benchmark because it reflects the phase in which companies have proven product viability, achieved initial product/market fit, and are now expanding sales and growing more complex operations. In the old model of Israeli startups, many Israeli executive teams would hire a vice president of sales in the U.S.

Cofounder 20

Cofounder Technical Review United States 20

Berkonomics

JANUARY 13, 2022

Not many founders or entrepreneurs do experience the success of a favorable sale of the business they dreamed would make them rich. Others are diluted by subsequent investors to the point where there was nothing for them to celebrate at all in a sale. Many fail multiple times. Some fail in the first year of the attempt. Write a book.

Dilution 62

Dilution .Net Sales Entrepreneur 62

Berkonomics

JANUARY 31, 2019

And because there was consideration paid to you in the sale, that clause is binding upon you and is effective almost everywhere. And there are gray areas for former key employees who signed a non-compete with a limited life as part of the sale but remained on with the buyer for some time thereafter.

Non-Compete 48

Non-Compete Bankruptcy Sales Employee 48

Berkonomics

JANUARY 31, 2019

And because there was consideration paid to you in the sale, that clause is binding upon you and is effective almost everywhere. And there are gray areas for former key employees who signed a non-compete with a limited life as part of the sale but remained on with the buyer for some time thereafter.

Non-Compete 48

Non-Compete Bankruptcy Sales Employee 48

abovethecrowd.com

APRIL 20, 2016

All Unicorn participants — founders, company employees, venture investors and their limited partners (LPs) — are seeing their fortunes put at risk from the very nature of the Unicorn phenomenon itself. We have already seen examples of founders and management obtaining liquidity in front of investors.

IPO 40

IPO Term Sheet Silicon Valley Valuation 40

The Next Web

SEPTEMBER 29, 2013

They feel the money can and should be spent on ways to grow the company, so they shift into growth mode by hiring more employees, paying themselves, hiring salespeople, running paid ad campaigns, and spending on overhead. You’re basically tinkering with everything at this stage – product, marketing, sales, partnerships, etc.

Metrics 136

Metrics Cofounder Cram Down Liquidity Event 136

Berkonomics

SEPTEMBER 6, 2018

Minor decisions, such as replacing employees who have left the company or replacing equipment needing updating, are usually considered operational in nature, and unless the business is changing direction, not relevant to this test. The alternative uses of your time and money.

Acquisition 48

Acquisition Distribution Channel Operations 48

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

Berkonomics

OCTOBER 21, 2011

Some companies have good, formal stock option plans with properly priced options set to reward all in the event of a corporate sale. If there has never been outside investors to organize such an option program, many CEOs never get around to creating a system for rewarding employees in a sale. .

Stock Options 48

Stock Options Stock Distribution Programming 48

Berkonomics

OCTOBER 8, 2015

Not many founders or entrepreneurs do experience the success of a favorable sale of the business they dreamed would make them rich. Others are diluted by subsequent investors to the point where there was nothing for them to celebrate at all in a sale. Many fail multiple times. Some fail in the first year of the attempt. Hit the beach.

Entrepreneur 48

Entrepreneur Dilution .Net Sales 48

Berkonomics

OCTOBER 7, 2011

For employees, a late or missed payroll is the ultimate test of corporate loyalty, divorced even from an employee’s ability to make do without a paycheck. And it is that disconnected employee, usually one or more of the better performers, that starts looking for a job when times look bad for a company.

Valuation 54

Valuation Dilution Down Round Employee 54

Berkonomics

AUGUST 27, 2011

Minor decisions, such as replacing employees who have left the company or equipment needing updating, are usually considered operational in nature, and unless the business is changing direction, not relevant to this analysis. Each decision you make to commit resources affects the future value of the business to some degree.

Acquisition 73

Acquisition Distribution Channel Revenue 73

www.vccafe.com

MARCH 11, 2013

turn customer feedback into sales and relationships. BambooHR -Â Employee Records, Benefit Information, Payroll Data, etc. SaaS Sales Team Compensation â?? Startups For Sale. SnapEngage â?? live chat integrates with your apps. Zendesk â?? web help software. UserVoice â?? turn customer feedback into action. Kampyle â??

Software Review 53

Software Review Technical Review Startup 53

www.quora.com

JANUARY 16, 2011

I've been the technical co-founder or first tech employee at three companies in a row (I'm CEO of the fourth). Think instead about the set of capabilities the leadership at your company needs: Great network and reputation to get you intros to investors, partners, employees. For your employees? So it can be done.

Developer 42

Developer Technical Review Cofounder Technical Cofounder 42