Rethinking Founder Vesting

K9 Ventures

One of these norms is how founder vesting and employee vesting works. I won’t get into employee vesting today as that has much more to consider than I have time to cover in this short post today. Here is a good summary post from Cooley GO on Founder Vesting. There are two main reasons for founder vesting: To ensure founders stick around and build the company. The post Rethinking Founder Vesting appeared first on K9 Ventures.

First Round Funding Terms and Founder Vesting

Both Sides of the Table

The meme was kicked off by Chris Dixon with this post saying that term sheets need to be simplified and align investor / founder interests. This is part of my ongoing series “Pitching a VC“ There’s a great meme developing this morning on the need to simplify funding terms and documents. That prompted Fred Wilson’s blog [.].

Trending Sources

First Round Funding Terms and Founder Vesting

Both Sides of the Table

The meme was kicked off by Chris Dixon with this post saying that term sheets need to be simplified and align investor / founder interests. One very important item from Chris’s original post that wasn’t picked up by Fred or Brad is founder vesting.

4 Deadly Legal Mistakes That Startups Make

Scott Edward Walker

Question My co-founders and I are working on a cool new site, and we’ll be ready to launch in a few weeks. Vesting Restrictions. The first deadly mistake relates to vesting restrictions. Any IP created or acquired by a founder (e.g.,

Standart termsheets

The Equity Kicker

In our case we set out to be founder friendly and wrote a termsheet that has the minimal set of investor protections that we can get away with as an institutional investor – we need some protections because we have a duty of care to the people who invest in our fund.

What do investors consider the most important aspect of a potential deal?

Gust

Valuation, Size of Raise, Amount of Investment, Form of Investment, Liquidation Waterfall, Option Pool, Board Composition, Anti-Dilution Rights, Protective Provisions, Founder Vesting, *original post can be found on Quora @ : [link] *. Characteristics of the Entrepreneur. Integrity, Passion, Startup Experience, Domain Expertise, Functional Skills, Leadership, Commitment, Vision, Pragmatism, Flexibility, Personality. Characteristics of the Venture.

When Founders Leave

StartupCFO

They say that the co-founder relationship is like a marriage. Indeed, founders probably spend more of their waking hours together than with their spouses. So, it should come as no surprise, that just as many marriages fail, the same is true of founder relationships.

How to Protect Your Startup Founder’s Shares

Startup Professionals Musings

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company.

The Co-Founder Mythology

Both Sides of the Table

I covered what I call “the co-founder mythology.&# Either you’re not technical and you think you need a technical co-founder or vice-versa. It is increasingly popular to have “founder dating&# or “startup weekend hackathons&# of some variety or the other. Hire your co-founder. Vested over 4 years. Truly treat them like a co-founder. Publicly call them a co-founder. I spoke at Stanford last year about starting a tech company.

Most Common Early Start-up Mistakes

Both Sides of the Table

These periods of time can leave a founder very vulnerable in the future. These same people will join you and your one other co-founder (maximum) 6 months later when you’ve established the company, done your Powerpoint deck, built a prototype or product and started fund raising discussions. That’s the difference between a founder and a non-founder. The world is much safer for non-founders. Founder vesting.

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Founder’s Stock Is Gold, If You Know The Rules

Gust

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company.

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Standard termsheets

The Equity Kicker

In our case we set out to be founder friendly and wrote a termsheet that has the minimal set of investor protections that we can get away with as an institutional investor – we need some protections because we have a duty of care to the people who invest in our fund.

After the VC Term Sheet is Signed – It’s Not Over Yet

Genuine VC

Founder vesting is the most common example. After completing a long process identifying the right venture firms to pitch, running an exhaustive fundraising process, finding a mutual fit, and successfully negotiating terms… at last, the term sheet is signed. So at this point it’s OK to just hand the process over to your lawyers, sit back, and let them work out the details, right? Wrong. The two- to six- week time between the signing of the term sheet and closing is “venture limbo.”

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. A few key lessons from today’s post are: Invest the time upfront to get the founders’ documents right.

Ten rules for better founding teams

High Contrast

Previously, I highlighted the legal aspects of structuring founder agreements. Therefore, a non-confrontational, positive approach is always the best way for a founding team to approach removing a co-founder. Just as I prefer balanced, independent boards where no one person or entity exerts too much control, I prefer companies where no one founder can force or block key votes against the wishes of the rest of the founding team and investors. Founder drag-along.

How many co-founders should you have?

StartupCFO

While I was checking out their website to learn more about his company, I noticed that Austin is one of eleven co-founders. That got me thinking, how many co-founders should you have? Being a founder is tough. I needed to know more about the dynamic between the six founders.

How to pick a co-founder

venturehacks.com

SUPPORTED BY Products Archives @venturehacks Books AngelList About RSS How to pick a co-founder by Naval Ravikant on November 12th, 2009 Update : Also see our 40-minute interview on this topic. Picking a co-founder is your most important decision. Build in founder vesting (a.k.a.

Startup School

charliecrystle.com

Founder Agreements For agreements between founders, there's not a lot of centralized info, but a lot of advice scattered about. Here are some posts that might inform your thinking about your founders agreements. But you need to accommodate for the potential downsides like a co-founder going catatonic and not performing, or someone quitting before the race is over, etc and keeping all of their stock. Here are some links related to founder agreements.

Max Niederhofer On His Move To Sunstone And VC Negotiations

ArcticStartup

One- they know how to negotiate the terms and two- they will explain to you exactly what that means to have, for example, founder vesting over four years with a one year cliff.

A Startup Knows It Needs a Lawyer When:

ithacaVC

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. A good lawyer will be able to help you with all these issues and even give meaningful input on how much equity the new director should get and appropriate vesting period.

Founder’s Stock is Simple, but Watch the Details

Startup Professionals Musings

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company.

Startup CEOs: Masters of Alignment

Instigator Blog

Co-founders. A lack of co-founder alignment can kill a company before it gets off the ground. I wrote a bit more about this here: 4 Ways to Align Interests Between Startup Founders and Investors.

The New Deal – A Founding CEOs Value is Non Linear

Steve Blank

As a founder I fought with VC’s over vesting as they brought in a new CEO and walked me out the door. As a board member I negotiated with founding CEO’s over vesting when I thought it was their time to go. Yet the traditional vesting model ignores this.

Doing It Right the First Time: The 15 Most Common, but Avoidable, Mistakes Made by High Growth Start-ups

VC Deal Lawyer

4. Failing to properly structure founder shares - once you’ve decided who the founders are going to be, you’ll need to structure your founder shares. Founder shares embody the concept that if a founder receives all of their shares upfront, fully vested, then there’s no incentive to stick around and help build the company. Founder shares usually vest over a period of time and are issued as restrictive stock grants.

allensblog: Some Tough Questions You Should Ask

Allen's Blog

If you want to raise money from VC’s, here’s a really tough, really important question you ought to ask yourself very early in the process: “ How many co-founders should I have ?” Plus, unlike some miscalculations, here the wrong answer hurts only the founders, not the VC or later employees. In Silicon Valley (assume it’s the same in other startup regions), “founders” have a bunch of iconic attributes, some good, some bad. He’s a founder.) allensblog.

The Equity Equation

venturehacks.com

They don’t even try to get market price for their investment; they limit their holdings to leave the founders enough stock to feel the company is still theirs.” Ask the Attorney” – Founder Vesting. We’re founders (Epinions), investors (Twitter), students (life), and advisors (billions). How to pick a co-founder. Pitching Hacks , Cap Table , and Co-founder Interview. Venture Hacks Good advice for startups. SUPPORTED BY. Products. Archives.

Allen's Blog: Some Tough Questions You Should Ask

Allen's Blog

If you want to raise money from VC’s, here’s a really tough, really important question you ought to ask yourself very early in the process: “ How many co-founders should I have ?” Plus, unlike some miscalculations, here the wrong answer hurts only the founders, not the VC or later employees. In Silicon Valley (assume it’s the same in other startup regions), “founders” have a bunch of iconic attributes, some good, some bad. He’s a founder.) Allens Blog.

Allen's Blog: Commandment #10: Control the Meeting (But Be Smart.

Allen's Blog

Pref shares, dilution, down-rounds, founder vesting, squeeze-outs, restructured boards, inside rounds, ways they fire management, the real uses of observers: these and much more besides you need to know, and know well. Allens Blog. « Commandment #9: Be Like Goldilocks | Main. | "Managing" Your Board of Directors » April 03, 2005. Commandment #10: Control the Meeting (But Be Smart About It).

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