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 are likely not paid for a long time and have a sizeable equity percentage for early risk and having the concept.

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.

CTO 130

Trending Sources

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.

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.).

An Advisor Equity and Advisor Pool Breakdown

Eric Friedman

This is the classic “hire people smarter than you” which is harder said than done. Bigger/better advisors who get more equity have things like; excellent domain expertise to help you avoid pitfalls, deep connections within the industry to help with the intros, partnerships, and more.

Equity-Only CTO and Equity-Only Developers

SoCal CTO

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.

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 Divide Equity to Startup Founders, Advisors, and Employees

thinkspace.com

How to Divide Equity to Startup Founders, Advisors, and Employees. The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees? Equity for Founders.

Are You Ready for Equity Based Crowdfunding?

Up and Running

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.

Startup compensation: flat salaries and equity/options work best

The Equity Kicker

With those caveats the best structures are flat salaries and a share of the equity. The share of equity only pays out a small percentage of the time and is far in the future which makes it imperfect as an incentive, but it is great for aligning everyone around building value and for creating a shared sense of ownership. Hat tip to Gail McManus of PER , a recruitment firm for private equity professionals.

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.

Hiring a CTO for Your Startup

SoCal CTO

Several people have recently come to me to help them source and/or hire full-time CTOs for their startup having found me through my post that looks at: Startup CTO Salary and Equity Data. You now have two issues: sourcing and hiring. Have they found and hired developers?

CTO 129

The Generic VC / PE Reference Questions For An Executive Hire

Feld Thoughts

Would you hire Person X again? I don’t know which VC or Private Equity firm first came up with this list of questions, but like many elements of a term sheet, they seem to have been passed down from generation to generation. ” The post The Generic VC / PE Reference Questions For An Executive Hire appeared first on Feld Thoughts. Venture Capital hiring pe personnel VCI’m on the receiving end of a lot of reference calls.

Use Equity to Hire the Best

Inc Startups

Equity grants are your most powerful tool for attracting top-tier talent. Your weapon of choice, of course, is equity. There is no magic formula for figuring out how much equity it takes to lure top-flight talent. percent to 1 percent equity.

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.

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. Salary vs Equity. I get asked all the time: how much equity should I expect?

10 Partner Qualities to Test Before Sharing Equity

Startup Professionals Musings

Partner decisions are more important than hiring decisions. entrepreneur startup co-founder partner equity businessA while back I talked about how and where to find a co-founder in “ For a Startup, Two Heads are Always Better Than One.”

Hiring a CTO for Your Startup

SoCal CTO

Several people have recently come to me to help them source and/or hire full-time CTOs for their startup having found me through my post that looks at: Startup CTO Salary and Equity Data. You now have two issues: sourcing and hiring. Have they found and hired developers?

CTO 102

Startup Hiring: The 10% Solution

www.readwriteweb.com

Startup Hiring: The 10% Solution. But you can still reel in good people - if youre generous with your equity. Offer them a big chunk of equity, or theyll go to a company thats actually selling its products - and where half of 1% is more likely to one day be worth some real money.

8 Secrets for Maximizing Startup Equity and Control

Startup Professionals Musings

Bootstrapping avoids all the cost, pain, and distractions of finding angels or VCs, and allows you to keep control and all your hard-earned equity for yourself. Every outside hire increases your cost and risk. Hire experts, not help.

Is Dead Equity Crippling Your Company?

Altgate

—————– Dead equityequity held by employees and founders no longer working at the company — is a large and growing problem. Choe opted to forgo a cash payment “in the thousands” for the equity equivalent at the time.

Sorry Startup Employee #100, Your Equity Probably Won’t Make You Rich

Hunter Walker

In no particular order: Startup Equity Is Unlikely to Make You Fabulously Wealthy After Four Years Unless One or More of the Following Apply… You were a founder. Even in successful companies, most initial equity grants will be worth a few hundred thousand dollars to perhaps $1-2m, when fully vested. On the employee end they should realize there’s often a tradeoff between salary and equity.

IPO 39

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.

7 Reasons A Small Business Should Hire Advisors 

YoungUpstarts

The right advisor can have a greater impact on the success of your small business than any other hire you ever make. It’s time small businesses started hiring more advisors. by Jonathan Aspatore, CEO of ExecRank.

Deciding How Much Equity to Give - How Much is Less Important Than What It's Worth!

Small Business Force

Equity and percentage ownership has always been a lightning rod for discussion and controversy with startups and entrepreneurs. The point of it was that with any kind of equity distribution, dilution will always occur. Often you use that very equity to do that.

A VC: Employee Equity: How Much?

www.avc.com

Employee Equity: How Much? The most common comment in this long and complicated MBA Mondays series on Employee Equity is the question of how much equity should you grant when you make a hire. For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula. And the amount of equity you need to grant to accomplish these hires is also an art and most certainly not a science. Musings of a VC in NYC.

Hiring Momentum: Underrated Component of Startup Success

Hunter Walker

But there are signs to look for, such as (A) do their former coworkers want to work with them again and (B) asking about their hiring plan. And don’t fall back on the crutch that hiring is hard because you didn’t go to Stanford or work at Facebook. Shyp made a key hire before their seed round had even closed and has built an incredible team without founders having the valley pedigree. Equity that’s perceived to have upside.

The Biggest Hiring Mistake You Can Make

Inc Startups

In case you weren''t aware, it''s incredibly difficult to hire software engineers right now. This usually happens when you find the right hire, but make a bad offer. As a startup you''re obviously low on cash, but you''re most definitely rich in equity.

My 20+ Year Career in Venture Capital and Private Equity is Built Upon a Rubber Chicken

Inc Startups

How to Hire the BestThat chicken was there for me at the moment I needed him most.

Secret to Hiring the Best and Brightest

Inc Startups

Many entrepreneurs can''t afford to hire the best and the brightest. Giving employees equity and allowing them to share in the upside creates a sense of ownership--and nothing is more motivating. What else do you do to make sure you''re hiring the best?

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%. Also, I have been offered 10% equity with 4 year vesting and 1 year cliff. If they are, then the hired CEO and COO getting 10% equity each is probably not unreasonable given that the founders are separate from the investors. Equity angel ceo early stage equity ownership

If, Why, and How Founders Should Hire a “Professional” CEO

Reid Hoffman

I speak from personal experience, since I hired and partnered with a CEO, Jeff Weiner, very successfully at LinkedIn five years after co-founding the company. Couldn’t we just hire a COO and have you stay as CEO?”. And any CEO you hire should be eager to accept your honest counsel.)

Hire today or gone tomorrow: How your startup is getting lapped by companies who know how to hire

This is going to be BIG.

Still, I contend that most companies have no idea how to hire, and in the last week, my theory got proved to me several times over. I wasn't hiring, but I agreed to meet him due to his generous offer. What's unfortunate is that the company that wanted to hire him is a great company with a really inspiring founder--but it left a bad taste in the candidate's mouth. I know the team who hired this person--he wouldn't have gotten an offer if he wasn't terrific.

When The VC Asks: About Your Hiring Plan

Hunter Walker

Whether it’s adding capacity to an existing function (#MawrEngineers) or bringing new talents onboard (“we intend to make our first marketing hire”), glossing over these bullet points towards the back of the pitch deck would be a mistake. I’m interested in not just what these people will be doing but how and when they’ll be hired. So when Homebrew asks about your hiring plan, here’s what I’m often looking for: Unicorns Needed? Do You Know Who You’re Hiring?

Who Should you Hire at a Startup?

Both Sides of the Table

Only Hire A+ People Who Punch Above Their Weight Class. There are people who tell startups that they should hire the most senior people that they can find. I’m a big believer in only hiring A+ team members. I had given him a small equity stake in my company.

Converts versus equity deals

Chris Dixon

There has been a debate going on the past few days over whether seed deals should be funded using equity or convertible notes (converts). Equity financings normally give investors explicit rights (most equity terms sheets specify board seats, specific blocking conditions, etc) in addition to standard shareholder rights under whatever state the company incorporated in (usually CA or Delaware).

“Why give up that much equity for an amount we could raise other ways?:” SMB Tech Talk from ArtJamz

Hunter Walker

But, based on our sales and the amount we we’re looking to raise, $60-$120K, it could have meant giving up over 40% equity. Why give up that much equity for an amount we could raise other ways?

SBA 22

Is Dead Equity Crippling Your Company?

Noam Wasserman

Dead equityequity held by employees and founders no longer working at the company — is a large and growing problem. One who attracted much attention is David Choe, the graffiti artist hired to paint the company’s first headquarters. By: Noam Wasserman for Inc.com.

Piercing the Corporate Veil of Sweat Equity

grasshopperherder.com

Piercing the Corporate Veil – Sweat Equity Consulting. But much like becoming a co-founder, getting paid sweat equity is essentially becoming an investor in the company. If you did, why would you be consulting for sweat equity instead of investing as a VC or for yourself?

Introducing the Cap Table and Hiring the CTO

Feld Thoughts

This week they set out to create their cap table and hire a CTO. Equity is split 55% and 45%, but where is that officially recorded? They come up with two options: Hire Praveena as an employee and offer her stock options. The benefit of hiring Praveena is they think they could keep more equity and control of the company. But, Praveena hails from the land of big paychecks and is not ready to leave that without considerable equity.