Using Debt Like Growth Equity

A VC : Venture Capital and Technology

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.

Employee Equity

A VC : Venture Capital and Technology

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.

Trending Sources

What VC Can Learn From Private Equity

A VC : Venture Capital and Technology

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. VC & Technology

Are You Getting Your Fair Share Of Startup Equity?

Startup Professionals Musings

You need to find the skills or experience you don’t have in business, technology, or money. 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.

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.

CTO Equity and Compensation at Venture Backed Companies

SoCal CTO

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.

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Equity value

Chris Dixon

This is a useful way to understand the meaning of “equity value” You learn in finance that equity value is the overall value of a the stock (i.e. equity) of a business, which in turn is the present value of all future profits. So equity value is a function of the degree to which you can make your market inefficient by making your business hard to copy (so called “defensibility”).

How To Allocate Founder and Employee Equity

A VC : Venture Capital and Technology

It never makes sense to give anyone equity without vesting. The thing I love the most about Joel's post is he throws darts into a lot of conventional wisdom about founder equity allocation. I particularly like his notion that the person with the idea should not command a premium on equity allocation. Founding teams that allocate the founders equity fairly stay together a lot more than founding teams where one founder has a much better deal than the others.

Smart Entrepreneurs Don’t Need Disruptive Technology

Startup Professionals Musings

It may not be as sexy, but starting a new business that builds on an existing technology or business model is usually less risky than introducing that ultimate new disruptive technology. There is always time later for your next startup, using that disruptive technology of your dreams.

Equity-Only CTO and Equity-Only Developers

SoCal CTO

And do I fit as a Part-Time CTO , Technology Advisor , CTO Founder , Acting 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.

Texas Proposes Equity-based Crowdfunding Rules

SiliconHills

By LAURA LOREK Founder of Silicon Hills News In Austin, one of the big issues facing startups, particularly in the technology industry, is lack of access to capital. Last year, Austin companies received $626 million in venture capital, or 49 percent of the venture capital dollars for Texas, said Michele Skelding, senior vice president of […] The post Texas Proposes Equity-based Crowdfunding Rules appeared first on SiliconHills.

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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.

The Right Way to Grant Equity to Your Employees

Redeye VC

He also teaches courses on technology entrepreneurship at Stanford Graduate School of Business. is the virtually universal practice among tech companies of distributing meaningful equity (usually in the form of stock options) to ordinary employees. Andy Rachleff is President and CEO of Wealthfront, a software-based financial advisor. Prior to Wealthfront, Rachleff co-founded and was general partner of Benchmark Capital.

Startup compensation: flat salaries and equity/options work best

The Equity Kicker

We had some success with this system, most notably at Zeus Technology, which was a good exit for my old firm Draper Esprit, but these days I recommend flat salaries with upside coming from options or founder shares. With those caveats the best structures are flat salaries and a share of the equity. Hat tip to Gail McManus of PER , a recruitment firm for private equity professionals.

Convertible Equity, A Better Alternative To Convertible Debt?

techcrunch.com

Convertible Equity, A Better Alternative To Convertible Debt? As a refresher, a convertible note is a loan that automatically converts into equity upon the closing of a Series A round of financing. Startups. Mobile. Gadgets. Europe. Video. Enterprise. Venture. Social. GreenTech. Gaming.

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.

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. They have seen first-hand the impact technology can have in the medical field through exposure to a number of Denver Health IT initiatives.

What is Sweat Equity Worth?

www.entrepreneur.com

Technology Technology Home Online Business Tools Security Phones & Mobile Gadgets Tech Tips Technology The Future of Facebook -- Streaming Live Now. Answers Ask Entrepreneur Home Business Operations Business Opportunities Sales & Marketing Advertising & PR Finance & Accounting Franchises Home Business Human Resources Internet/E-Commerce Legal Issues Starting Up Technology Most Recent Answers How Can I Streamline My E-Commerce Operation? What is Sweat Equity Worth?

How To Reduce Startup Risk Using Existing Technology

Startup Professionals Musings

It may not be as sexy, but starting a new business which builds on an existing technology or business model is usually less risky than introducing that ultimate new disruptive technology. There is always time later for your next startup, using that disruptive technology of your dreams.

Announcing Volition Capital’s Newest $250 Million Growth Equity Fund, Volition Capital Fund III

Thinking About Thinking

This fund will have substantially the same strategy and focus as all of our prior funds – which we call small cap technology growth equity. We invest in high growth, principally bootstrapped, technology companies that are poised for market leadership. Our small cap technology growth equity strategy is not a marketing pitch – it’s our genuine, feel-it-in-our bones, part-of-our-DNA, belief about how to best steward the capital of our investors.

Announcing Volition Capital’s Newest $250 Million Growth Equity Fund, Volition Capital Fund III

Thinking About Thinking

This fund will have substantially the same strategy and focus as all of our prior funds – which we call small cap technology growth equity. We invest in high growth, principally bootstrapped, technology companies that are poised for market leadership. Our small cap technology growth equity strategy is not a marketing pitch – it’s our genuine, feel-it-in-our bones, part-of-our-DNA, belief about how to best steward the capital of our investors.

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

Nathan Hurst

Nathan Hursts Blog Thoughts on Software, Technology, and Startups « Back to blog Im on the technical side of entrepreneurship in NYC. Technically inclined people can definitely build something on their own, and then seek a non-technical cofounder, retaining more equity for themselves.

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.

Private Equity: Threat or Menace?

Inc Startups

Private equity is under attack in Presidential politics. If you let that affect your decision to accept private equity capital, you're out of your mind. What is surprising, though, is that the target of one of the attack ads is private equity. So, What is Private Equity, Exactly?

Startup Investor Makes a Deal: Engineers for Equity

mashable.com

“Once that product is built, you will probably have given away a lot of equity.&# In exchange for $150,000 to $300,000 of work, each startup has given Kayweb 14% to 40% equity. ); // Welcome to Mashable! Sign in with Facebook or Twitter to get started!

Adapt or Die: The New Technology Landscape

Inc Startups

Innovation and access to seed capital is making it easier than ever to start a technology company. As information technology’s power and ubiquity have grown, its strategic importance has diminished.”

More on Adjusting to the Great Reset

Non-Linear Growth

Growth Equity Markets Venture Capital fear great reset greed growth equity risk technology valuationsMy post on Adjusting to the Great Reset was something that has been brewing in my head for a while. I was pleased then when Luke Norris , CEO of Faction asked me to go deeper. Luke had seen a short presentation I put together for an CEO Forum earlier this week and he gave me a good reason to clean it up.

Why Volition Capital Invested In Recycle Track Systems (RTS)

Thinking About Thinking

For that reason, we have always loved investing in the disruptive companies that are transforming the workflow or supply chain of large existing markets with low technology adoption. We also invested in Globaltranz, which has become one of the leading technology-enabled freight brokerages and is on its way to $1 billion in annual revenue. Filed under: Founder-Owned Businesses , Growth Equity , Technology , Venture Capital , Volition Capital.

Rise Of Equity Crowdfunding To Boost Industry

ArcticStartup

The growth of technology crowdfunding investments will accelerate in coming years, boosted by increasing equity investments, research firm Juniper said on Monday. Juniper said it expects total technology crowdfunding to rise to $8.2

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Private Equity Investing: Secrets of Doing it Right (Part I)

Growthink Blog

Well, in most forms of angel and early-stage private equity investing, these breakdowns flow from a misunderstanding of the power and nature of outliers. The concept of outliers and how they apply to early stage private equity investment was best described by the Lebanese thinker and writer Nicolas Taleb, in his best-selling books "Fooled by Randomness" and "The Black Swan." So does this mean that early stage private equity investing is for the birds?

Government Grants Cost No Equity, But are Not Free

Startup Professionals Musings

A grant is not an equity investment, so the entrepreneur doesn’t have to give up a stake in the company either. In today’s fast moving technology world, that may give your competitor the edge, or your startup may wither and die waiting.

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

Hunter Walker

I think the exciting thing about being a small business in today’s world is that so many of the brilliant minds in technology are building tools to help businesses like ours. HW: What’s a problem you wish a technology startup could solve for you?

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Debt Crowdfunding: The Real Potential When It Comes to Main Street USA

Up and Running

While most of the media attention about this new opportunity has focused around the ability for an entrepreneur to sell shares (equity) in his or her enterprise, the real (and neglected) opportunity for Main Street businesses comes down to debt crowdfunding.

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. Choe opted to forgo a cash payment “in the thousands” for the equity equivalent at the time. Anticipating and Avoiding the Dead-Equity Pitfalls.

Founder Dilution

A VC : Venture Capital and Technology

Employee Equity: Dilution. In both posts, I lay out how the equity gets shared with employees and investors as the company grows and scales. Here’s the most important quote from those two posts: In my experience, it will generally take three to four rounds of equity capital to finance the business and 20-25% of the company to recruit and retain a management team. entrepreneurship VC & Technology

How Do Angel Investors Make Decisions?

Early Growth Financial Services

They’ll want to know what’s unique about your IP and … Continue reading → Investment Capital: Equity / Debt / VC FundingIn some ways, getting your startup funded has parallels with The Amazing Race. It can seem like a long, winding, obstacle-strewn course.

Convertible and SAFE Notes

A VC : Venture Capital and Technology

Angel/seed rounds used to be done via priced equity securities, either common or preferred. Here are some suggestions for the entire angel/seed sector (founders, angel investors, seed investors, lawyers): Do priced equity rounds instead of notes. As I wrote seven years ago, the cost of doing a simple seed equity deal has come way down. VC & TechnologyThen, starting about ten years ago, we started to see convertible debt being used in the angel and seed rounds.

The Carlota Perez Framework

A VC : Venture Capital and Technology

Longtime readers of this blog will know that I am a huge fan of Carlota’s work , her research around technology revolutions and financial capital, and her book about all of that. VC & Technology

The Right Way to Grant Equity to Your Employees

Inc Startups

The equity culture among young technology companies is almost universal. Unfortunately, despite decades of experience building new hire option plans, many start-ups still fail to put in place an equity compensation plan that adequately rewards long term employees over time.

What Is Going To Happen In 2017

A VC : Venture Capital and Technology

The SAAS sector will continue to consolidate, driven by a trifecta of legacy enterprise software companies (like Oracle), successful SAAS companies (like Workday), and private equity firms all going in search of additional lines of business and recurring subscription revenue streams. blockchain crypto economics enterprise entrepreneurship genetics machine learning policy Politics stocks VC & TechnologyHappy New Year Everyone.

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