I’ve probably had a thousand or more discussions about startup equity: figuring out how much to offer, negotiating, or advising others. In practice, most equity grants within a company are driven by broad calibrations with existing employees. For example, if four co-founders agree to equal equity, they each own 25% at the very outset. Founder vesting is a “start-up prenuptial agreement”: it defines what happens with equity should someone leave the company. MORE
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. MORE
Todd Gitlin of Safire Partners was nice enough to compile some data on Start CTO Salary and Equity at Venture Backed Companies for the LA CTO Forum and present last year. You can find a public Google Spreadsheet with the data: CTO Equity Compensation Google Spreadsheet. MORE
The two founders with the least equity happen to be the two tech founders. Some of us feel that we made a mistake when allocating shares in the beginning – there is one founder in particular who does not do any work, and he has the second-most equity (the split goes like this: 32%, 26%, 10%, 7.5% Then, each of you will end up with an increase of your pro-rata percentage of his equity. If you have equity alignments early in your company, deal with them. MORE
After all, sweat equity can make up for a trim marketing budget, but it would be hard to make up for cuts in product development and customer service without sacrificing customer experience. Accessing capital to launch a business is brutal for entrepreneurs just starting out along the path. MORE
During that time one of the founders had mentioned that for the initial agreed time (3 months, equivalent dollars could be translated to 2% of equity but no agreement was reached at that time). When finally, I sat down and started talking, they basically tallied up the hours I spent and gave a choice to get equity at current $3 mil valuation or get full cash for my time or blend of both cash/equity. Likely this greatly affects cash vs. equity. MORE
The Texas State Securities Board voted 4-0 on Wednesday to approve new intrastate equity-based crowdfunding rules. The […] The post Texas Approves Equity-Based Crowdfunding Rules appeared first on SiliconHills. Austin San Antonio Crowdfunding Rules equity-based crowdfunding Texas State Securities Board By LAURA LOREK Reporter with Silicon Hills News Texas companies will soon be able to raise money from the average investor. MORE
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 MORE
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. MORE
ModCloth effectively treated the debt like growth equity, rather than recognizing the time bomb it could become. When the debt first came due in April 2015, existing ModCloth investors pumped in new equity to, in part, kick repayment down the road for two years. Once the income statement returned to the red, ModCloth again tried raising equity ― but prospective investors cited the debt overhang as their reason for passing on a company whose unit economics were otherwise fundable. MORE
Wealthfront Equity Plan from Wealthfront. The important similarities are that Andy and I both encourage companies to not only grant equity at the start date but also on an ongoing basis so that employees' equity ownership grows as their tenure and contributions grow. Where Andy and I differ a bit is how to calculate how much equity should be granted. I prefer to issue equity based on a multiple of current cash comp divided by the current valuation of the business. MORE
The two founders with the least equity happen to be the two tech founders. Some of us feel that we made a mistake when allocating shares in the beginning – there is one founder in particular who does not do any work, and he has the second-most equity (the split goes like this: 32%, 26%, 10%, 7.5% Then, each of you will end up with an increase of your pro-rata percentage of his equity. If you have equity alignments early in your company, deal with them. MORE
Lately, more founders are inquiring about convertible equity. Finance Grow convertible equity investment pitch money raising startup capital seed funding seep capitalSome wonder if it is a good replacement for convertible debt (which has become ubiquitous in seed stage startup funding). MORE
For ideas on scaling, see PEHub: How to Scale a Venture Capital (or Private Equity) Fund. The post How to Scale a Venture Capital (or Private Equity) Fund appeared first on David Teten. Contributed Articles Fund Management Private Equity Venture CapitalVC fund managers typically want to grow their businesses aggressively, just like the founders we back. MORE
Understand where they were in terms of being able to pay or was this equity-only (sweat equity only). And he was still in the process of raising additional capital, so it was equity only. However, when I told him that the level of engagement required from me and the fact that equity-only development was required, he seemed to be a bit offended. There are cases where I will do equity-only deals. MORE
Superfund Equities Report SIGN UP AT WWW.TINYLETTER.COM/SUPERFUND Greetings December! Today in Atlanta it was unseasonably warm. I like weather benchmarks, and today we blew one out. That will change with night fall. Come on strong winter! What is up with commodities? Are traders in Zurich shutting shop? Perhaps switching to Saudi only oil and for that fact, eastern demand for precious metals? The US oil industry is maturing, not ending. LINK Even lower crude prices possible. MORE
That means companies, ranging from restaurants and bars to video game makers and software companies, can now raise funds through equity crowdfunding portals from mom […] The post Equity Based Crowdfunding Starts Nationwide Today appeared first on SiliconHills. MORE
What options do they have available to them, since they can’t sell a share of the company (no equity investment)? There is no discussion of equity, or return on investment. equity funding investor non-profit philanthropist MORE
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 are likely not paid for a long time and have a sizeable equity percentage for early risk and having the concept. MORE
Gust announces acquisitions of Sharewave and Preferred Return; creates the most robust and affordable equity management solution for early-stage startups. June 22, 2016 – NEW YORK, NY – Gust, the global service provider powering the entrepreneurial ecosystem, announced today the launch of a comprehensive equity management platform, Gust Equity Management. Gust News Starting Your Company 409A valuations cap table management equity management MORE
YouEarnedIt, a startup focused on rewarding employees at companies, has landed an investment from Vista Equity Partners, based in Austin. The post Vista Equity Partners Backs Austin-based YouEarnedIt appeared first on SiliconHills. MORE
During that time one of the founders had mentioned that for the initial agreed time (3 months, equivalent dollars could be translated to 2% of equity but no agreement was reached at that time). When finally, I sat down and started talking, they basically tallied up the hours I spent and gave a choice to get equity at current $3 mil valuation or get full cash for my time or blend of both cash/equity. Likely this greatly affects cash vs. equity. MORE
Superfund Equities Report SIGN UP AT WWW.TINYLETTER.COM/SUPERFUND Greetings December! CH Chad Hagan CEO, Hagan Capital EIC, Superfund Equities Today in Atlanta it was unseasonably warm. I like weather benchmarks, and today we blew one out. That will change with night fall. Come on strong winter! What is up with commodities? Are traders in Zurich shutting shop? Perhaps switching to Saudi only oil and for that fact, eastern demand for precious metals? MORE
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.). MORE
11/29/2014 - Superfund Equities Report - www.tinyletter.com/superfund The fund sold F (Ford) and piled up on TASR (Taser), SWHC (Smith & Wesson), ZNGA (Zynga) and ABR (Arbor REIT) Citi Group''s Index unit is for sale - LINK OPEC''s meeting in Vienna this week shook the oil markets. CH Chad Hagan CEO, Hagan Capital EIC, Superfund Equities www.tinyletter.com/superfund MORE
Yet one of the first things a potential equity investor asks about is your exit strategy. Equity investments are not loans, so there is no loan payback period or interest payments. Find a private equity firm or friendly individual. entrepreneur equity investors IPO startup exit MORE
I’m seeing more and more growth equity financings come to market with an over-sized component of the financing allocated to existing shareholder liquidity. … Read more › The post Founder Liquidity and Growth Equity appeared first on Non-Linear. MORE
There is no specific ratio between “sweat equity” and cash in a venture, and that’s actually not a good way to think about the issue. You might have created that value by slaving 18 hours a day, seven days a week for five years (in which case the value of the sweat equity is $8.70 Invested Interests Angels cash equity effort ownership startup sweat equity VCs MORE
There are four reasons why.you should avoid giving your employees actual equity in your business. MORE
Invested Interests entrepreneur equity equity distribution idea startupIt depends on the quality of the idea. I’m a firm believer in Derek Sivers ‘ calculus, which goes like this: AWFUL IDEA = -$1. WEAK IDEA = $1. SO-SO IDEA = $5. GOOD IDEA = $10. GREAT IDEA = $15. BRILLIANT IDEA = $20. The real value, of course (as other answers here have noted), comes from executing on the idea. MORE
I spent a week in Europe a few weeks ago with our friend Eric who is a managing partner in a private equity firm. I’ve also had the pleasure of working on a board of one of our portfolio companies with a private equity investor who is making a few minority investments. Venture Capital and Private Equity are very different investment disciplines. 2/ Private equity can’t afford to lose money on an investment. MORE
Todd Gitlin of Safire Partners was nice enough to compile some data on CTO Equity and Compensation at Venture Backed Companies for the LA CTO Forum and present last year. You can find a public Google Spreadsheet with the data: CTO Equity Compensation Google Spreadsheet. MORE
Today Techstars announced an “ equity back guarantee ” for any company that goes through the Techstars program starting in 2015. So we decided to launch an equity back guarantee. The post Techstars Equity Back Guarantee appeared first on Feld Thoughts. MORE
Today we’re proud to release an updated Co-founder Equity Split tool. The post Enhancing the Co-founder Equity Split Conversation appeared first on The Gust Blog. MORE
I was just asked about a particular startup situation (seed stage, CMO hire, non-founder) and particularly what compensation and equity is appropriate. MORE
Growth Equity and Growth Hacking: A Symbiotic Relationship Growth equity and growth hacking enjoy a symbiotic relationship. Although there are capital efficient ways to growth hack that don’t require growth equity, some growth hacks absolutely require capital. MORE
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. MORE
Then, the unveiling of the Securities and Exchange Commission’s proposed equity crowdfunding rules reveals a panacea for growing your business’s coffers. Equity crowdfunding vs. donation crowdfunding. Equity crowdfunding differs from donation crowdfunding in two major ways. MORE
The biggest risk for many VC and private equity funds is team risk. – Specifically if you’re in the process of joining a fund: How to Negotiate a Partner Role at a Venture Capital or Private Equity Firm. DUE DILIGENCE ON PRIVATE EQUITY FUNDS. MORE
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. MORE
We’ve just released our free Co-founder Equity Split tool. The post Co-founder Equity Split: A New Framework to Objectively Divide Startup Ownership and Get Back to Building a Business appeared first on The Gust Blog. Starting Your Company co-founders equity starting a company startups MORE
If you had to right now, how would you rate your brand equity? Brand equity refers to the inherent value that a brand presents. This loosely represents your brand equity. So how can you measure your brand equity, and why is it important to know? And perhaps most importantly, how can you improve your brand equity if it’s not optimal for your company? The Importance of Brand Equity. High brand equity is usually correlated with high brand recognition. MORE
So the first question I usually get is what percent of the company or equity is that person worth? Just because it was your idea doesn’t mean you “deserve” 90% of the equity. The value in a startup is all about tangible results, so I see no equity value in the idea alone. MORE
Equity Related Topics Feld Thoughts
SEPTEMBER 4, 2014
Today Techstars announced an “ equity back guarantee ” for any company that goes through the Techstars program starting in 2015. So we decided to launch an equity back guarantee. The post Techstars Equity Back Guarantee appeared first on Feld Thoughts.
Gust
MAY 16, 2017
Today we’re proud to release an updated Co-founder Equity Split tool. The post Enhancing the Co-founder Equity Split Conversation appeared first on The Gust Blog.
Ask The VC
JANUARY 2, 2013
The two founders with the least equity happen to be the two tech founders. Some of us feel that we made a mistake when allocating shares in the beginning – there is one founder in particular who does not do any work, and he has the second-most equity (the split goes like this: 32%, 26%, 10%, 7.5% Then, each of you will end up with an increase of your pro-rata percentage of his equity. If you have equity alignments early in your company, deal with them.
SoCal CTO
NOVEMBER 14, 2012
I was just asked about a particular startup situation (seed stage, CMO hire, non-founder) and particularly what compensation and equity is appropriate.
A VC : Venture Capital and Technology
MARCH 20, 2017
ModCloth effectively treated the debt like growth equity, rather than recognizing the time bomb it could become. When the debt first came due in April 2015, existing ModCloth investors pumped in new equity to, in part, kick repayment down the road for two years. Once the income statement returned to the red, ModCloth again tried raising equity ― but prospective investors cited the debt overhang as their reason for passing on a company whose unit economics were otherwise fundable.
Gust
APRIL 9, 2014
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.).
A VC : Venture Capital and Technology
NOVEMBER 20, 2013
Wealthfront Equity Plan from Wealthfront. The important similarities are that Andy and I both encourage companies to not only grant equity at the start date but also on an ongoing basis so that employees' equity ownership grows as their tenure and contributions grow. Where Andy and I differ a bit is how to calculate how much equity should be granted. I prefer to issue equity based on a multiple of current cash comp divided by the current valuation of the business.
SiliconHills
APRIL 6, 2018
YouEarnedIt, a startup focused on rewarding employees at companies, has landed an investment from Vista Equity Partners, based in Austin. The post Vista Equity Partners Backs Austin-based YouEarnedIt appeared first on SiliconHills.
Ask The VC
JANUARY 2, 2013
The two founders with the least equity happen to be the two tech founders. Some of us feel that we made a mistake when allocating shares in the beginning – there is one founder in particular who does not do any work, and he has the second-most equity (the split goes like this: 32%, 26%, 10%, 7.5% Then, each of you will end up with an increase of your pro-rata percentage of his equity. If you have equity alignments early in your company, deal with them.
View from Seed
AUGUST 6, 2015
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
Startup Professionals Musings
APRIL 27, 2016
Yet one of the first things a potential equity investor asks about is your exit strategy. Equity investments are not loans, so there is no loan payback period or interest payments. Find a private equity firm or friendly individual. entrepreneur equity investors IPO startup exit
SoCal CTO
APRIL 18, 2012
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.
SoCal CTO
FEBRUARY 22, 2011
Todd Gitlin of Safire Partners was nice enough to compile some data on Start CTO Salary and Equity at Venture Backed Companies for the LA CTO Forum and present last year. You can find a public Google Spreadsheet with the data: CTO Equity Compensation Google Spreadsheet.
SoCal CTO
SEPTEMBER 27, 2011
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 are likely not paid for a long time and have a sizeable equity percentage for early risk and having the concept.
Gust
JUNE 22, 2016
Gust announces acquisitions of Sharewave and Preferred Return; creates the most robust and affordable equity management solution for early-stage startups. June 22, 2016 – NEW YORK, NY – Gust, the global service provider powering the entrepreneurial ecosystem, announced today the launch of a comprehensive equity management platform, Gust Equity Management. Gust News Starting Your Company 409A valuations cap table management equity management
Up and Running
DECEMBER 1, 2015
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.
YFS Magazine
JULY 20, 2015
Lately, more founders are inquiring about convertible equity. Finance Grow convertible equity investment pitch money raising startup capital seed funding seep capitalSome wonder if it is a good replacement for convertible debt (which has become ubiquitous in seed stage startup funding).
David Teten
MARCH 21, 2018
The biggest risk for many VC and private equity funds is team risk. – Specifically if you’re in the process of joining a fund: How to Negotiate a Partner Role at a Venture Capital or Private Equity Firm. DUE DILIGENCE ON PRIVATE EQUITY FUNDS.
YoungUpstarts
NOVEMBER 17, 2016
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.
David Teten
MARCH 14, 2018
For ideas on scaling, see PEHub: How to Scale a Venture Capital (or Private Equity) Fund. The post How to Scale a Venture Capital (or Private Equity) Fund appeared first on David Teten. Contributed Articles Fund Management Private Equity Venture CapitalVC fund managers typically want to grow their businesses aggressively, just like the founders we back.
Non-Linear Growth
MARCH 12, 2014
I’m seeing more and more growth equity financings come to market with an over-sized component of the financing allocated to existing shareholder liquidity. … Read more › The post Founder Liquidity and Growth Equity appeared first on Non-Linear.
Chaganomics
DECEMBER 1, 2014
Superfund Equities Report SIGN UP AT WWW.TINYLETTER.COM/SUPERFUND Greetings December! CH Chad Hagan CEO, Hagan Capital EIC, Superfund Equities Today in Atlanta it was unseasonably warm. I like weather benchmarks, and today we blew one out. That will change with night fall. Come on strong winter! What is up with commodities? Are traders in Zurich shutting shop? Perhaps switching to Saudi only oil and for that fact, eastern demand for precious metals?
Chaganomics
NOVEMBER 29, 2014
11/29/2014 - Superfund Equities Report - www.tinyletter.com/superfund The fund sold F (Ford) and piled up on TASR (Taser), SWHC (Smith & Wesson), ZNGA (Zynga) and ABR (Arbor REIT) Citi Group''s Index unit is for sale - LINK OPEC''s meeting in Vienna this week shook the oil markets. CH Chad Hagan CEO, Hagan Capital EIC, Superfund Equities www.tinyletter.com/superfund
A VC : Venture Capital and Technology
MAY 15, 2015
I spent a week in Europe a few weeks ago with our friend Eric who is a managing partner in a private equity firm. I’ve also had the pleasure of working on a board of one of our portfolio companies with a private equity investor who is making a few minority investments. Venture Capital and Private Equity are very different investment disciplines. 2/ Private equity can’t afford to lose money on an investment.
Blogtrepreneur | Entrepreneur Blog
FEBRUARY 4, 2018
If you had to right now, how would you rate your brand equity? Brand equity refers to the inherent value that a brand presents. This loosely represents your brand equity. So how can you measure your brand equity, and why is it important to know? And perhaps most importantly, how can you improve your brand equity if it’s not optimal for your company? The Importance of Brand Equity. High brand equity is usually correlated with high brand recognition.
Chaganomics
DECEMBER 1, 2014
Superfund Equities Report SIGN UP AT WWW.TINYLETTER.COM/SUPERFUND Greetings December! Today in Atlanta it was unseasonably warm. I like weather benchmarks, and today we blew one out. That will change with night fall. Come on strong winter! What is up with commodities? Are traders in Zurich shutting shop? Perhaps switching to Saudi only oil and for that fact, eastern demand for precious metals? The US oil industry is maturing, not ending. LINK Even lower crude prices possible.
SoCal CTO
FEBRUARY 22, 2011
Todd Gitlin of Safire Partners was nice enough to compile some data on CTO Equity and Compensation at Venture Backed Companies for the LA CTO Forum and present last year. You can find a public Google Spreadsheet with the data: CTO Equity Compensation Google Spreadsheet.
Gust
DECEMBER 6, 2012
Invested Interests entrepreneur equity equity distribution idea startupIt depends on the quality of the idea. I’m a firm believer in Derek Sivers ‘ calculus, which goes like this: AWFUL IDEA = -$1. WEAK IDEA = $1. SO-SO IDEA = $5. GOOD IDEA = $10. GREAT IDEA = $15. BRILLIANT IDEA = $20. The real value, of course (as other answers here have noted), comes from executing on the idea.
SoCal CTO
JANUARY 18, 2011
During that time one of the founders had mentioned that for the initial agreed time (3 months, equivalent dollars could be translated to 2% of equity but no agreement was reached at that time). When finally, I sat down and started talking, they basically tallied up the hours I spent and gave a choice to get equity at current $3 mil valuation or get full cash for my time or blend of both cash/equity. Likely this greatly affects cash vs. equity.
SoCal CTO
JANUARY 18, 2011
During that time one of the founders had mentioned that for the initial agreed time (3 months, equivalent dollars could be translated to 2% of equity but no agreement was reached at that time). When finally, I sat down and started talking, they basically tallied up the hours I spent and gave a choice to get equity at current $3 mil valuation or get full cash for my time or blend of both cash/equity. Likely this greatly affects cash vs. equity.
SiliconHills
MAY 16, 2016
That means companies, ranging from restaurants and bars to video game makers and software companies, can now raise funds through equity crowdfunding portals from mom […] The post Equity Based Crowdfunding Starts Nationwide Today appeared first on SiliconHills.
Up and Running
NOVEMBER 12, 2014
Then, the unveiling of the Securities and Exchange Commission’s proposed equity crowdfunding rules reveals a panacea for growing your business’s coffers. Equity crowdfunding vs. donation crowdfunding. Equity crowdfunding differs from donation crowdfunding in two major ways.
Up and Running
FEBRUARY 6, 2017
After all, sweat equity can make up for a trim marketing budget, but it would be hard to make up for cuts in product development and customer service without sacrificing customer experience. Accessing capital to launch a business is brutal for entrepreneurs just starting out along the path.
Feld Thoughts
JULY 29, 2011
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.
Startup Professionals Musings
OCTOBER 13, 2013
What options do they have available to them, since they can’t sell a share of the company (no equity investment)? There is no discussion of equity, or return on investment. equity funding investor non-profit philanthropist
Andrew Payne
SEPTEMBER 9, 2017
I’ve probably had a thousand or more discussions about startup equity: figuring out how much to offer, negotiating, or advising others. In practice, most equity grants within a company are driven by broad calibrations with existing employees. For example, if four co-founders agree to equal equity, they each own 25% at the very outset. Founder vesting is a “start-up prenuptial agreement”: it defines what happens with equity should someone leave the company.
Inc Startups
AUGUST 17, 2017
There are four reasons why.you should avoid giving your employees actual equity in your business.
Gust
DECEMBER 20, 2012
There is no specific ratio between “sweat equity” and cash in a venture, and that’s actually not a good way to think about the issue. You might have created that value by slaving 18 hours a day, seven days a week for five years (in which case the value of the sweat equity is $8.70 Invested Interests Angels cash equity effort ownership startup sweat equity VCs
Non-Linear Growth
DECEMBER 19, 2014
Growth Equity and Growth Hacking: A Symbiotic Relationship Growth equity and growth hacking enjoy a symbiotic relationship. Although there are capital efficient ways to growth hack that don’t require growth equity, some growth hacks absolutely require capital.
SiliconHills
OCTOBER 23, 2014
The Texas State Securities Board voted 4-0 on Wednesday to approve new intrastate equity-based crowdfunding rules. The […] The post Texas Approves Equity-Based Crowdfunding Rules appeared first on SiliconHills. Austin San Antonio Crowdfunding Rules equity-based crowdfunding Texas State Securities Board By LAURA LOREK Reporter with Silicon Hills News Texas companies will soon be able to raise money from the average investor.
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