Expert insights. Personalized for you.
But, how should founders divide things up in the very beginning , where none of these internal reference points exist? And, how can founders talk about percentages before any funding? Five percent might feel fair in a particular situation for a near-founder post-funding, but how much is that pre-funding, with unknown dilution? First, founders can agree on ownership ratios among themselves, completely isolating unknown, future dilution. MORE
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. MORE
The meme was kicked off by Chris Dixon with this post saying that term sheets need to be simplified and align investor / founder interests. If you’ve read any of my blog posts before you’ll probably recognize that I’m from this school of thought where founders & investors need to be more aligned and I’ve been very cynical of historic VC practices. Chris writes that early-stage deals should have: Founder vesting w/ acceleration on change of control. MORE
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 [.]. MORE
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. MORE
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. MORE
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. One founder companies can work, against the odds (hello, Mark Zuckerberg). So can three founder companies (hello, @biz, @ev, and @jack). When 4-5 founder companies work, it’s because two founders dominate. 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. A few key lessons from today’s post are: Invest the time upfront to get the founders’ documents right. MORE
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. MORE
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. We looked at the other standard termsheets that are out there, Series Seed, Series Summit, etc and were either consistent with them or more founder friendly they are. MORE
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Vesting with no cliff. Accelerated vesting conditions. MORE
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.” MORE
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. Indeed, you must make sure that all of the shares of common stock issued by the corporation to the founders are subject to vesting restrictions – which means that ownership of the shares would vest over time (instead of all of the shares being owned outright on day one). MORE
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. We looked at the other standard termsheets that are out there, Series Seed, Series Summit, etc and were either consistent with them or more founder friendly they are. MORE
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. MORE
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. The customary vesting model has founders vest their stock over 4-years , and when the founding CEO gets in over their head the VC’s bring in professional management. The fallacy is believing that a founders value is evenly distributed over four years. MORE
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Vesting with no cliff. Accelerated vesting conditions. MORE
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Vesting with no cliff. Accelerated vesting conditions. MORE
When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. Every entrepreneur needs to understand the following basics, to be addressed at company formation, as they engage a qualified attorney to draw up the paperwork: Allocate founder’s stock commensurate with commitment. This is the purpose of a vesting schedule, which issues allocated stock over time. MORE
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. MORE
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Here are some typical special terms for founder’s stock: Negligible par value. MORE
Founder Vesting Related Topics K9 Ventures
OCTOBER 27, 2016
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.
Both Sides of the Table
AUGUST 17, 2009
The meme was kicked off by Chris Dixon with this post saying that term sheets need to be simplified and align investor / founder interests. If you’ve read any of my blog posts before you’ll probably recognize that I’m from this school of thought where founders & investors need to be more aligned and I’ve been very cynical of historic VC practices. Chris writes that early-stage deals should have: Founder vesting w/ acceleration on change of control.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
Both Sides of the Table
AUGUST 17, 2009
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 [.].
Scott Edward Walker
SEPTEMBER 28, 2011
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. Indeed, you must make sure that all of the shares of common stock issued by the corporation to the founders are subject to vesting restrictions – which means that ownership of the shares would vest over time (instead of all of the shares being owned outright on day one).
Gust
AUGUST 30, 2012
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.
The Equity Kicker
OCTOBER 8, 2014
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. We looked at the other standard termsheets that are out there, Series Seed, Series Summit, etc and were either consistent with them or more founder friendly they are.
Startup Professionals Musings
MAY 18, 2015
When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. Every entrepreneur needs to understand the following basics, to be addressed at company formation, as they engage a qualified attorney to draw up the paperwork: Allocate founder’s stock commensurate with commitment. This is the purpose of a vesting schedule, which issues allocated stock over time.
Startup Professionals Musings
MARCH 23, 2014
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Vesting with no cliff. Accelerated vesting conditions.
Startup Professionals Musings
JANUARY 22, 2013
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Vesting with no cliff. Accelerated vesting conditions.
Steve Blank
JULY 19, 2010
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. The customary vesting model has founders vest their stock over 4-years , and when the founding CEO gets in over their head the VC’s bring in professional management. The fallacy is believing that a founders value is evenly distributed over four years.
Genuine VC
OCTOBER 2, 2012
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.”
Both Sides of the Table
AUGUST 17, 2009
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.
Both Sides of the Table
MAY 9, 2011
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.
Andrew Payne
SEPTEMBER 9, 2017
But, how should founders divide things up in the very beginning , where none of these internal reference points exist? And, how can founders talk about percentages before any funding? Five percent might feel fair in a particular situation for a near-founder post-funding, but how much is that pre-funding, with unknown dilution? First, founders can agree on ownership ratios among themselves, completely isolating unknown, future dilution.
Gust
MARCH 16, 2014
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Vesting with no cliff. Accelerated vesting conditions.
Startup Professionals Musings
OCTOBER 7, 2010
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. These shares are allocated and committed, but not really issued and owned (vested) until later. Vesting always stops when an employee leaves the company. Here are some typical special terms for founder’s stock: Negligible par value.
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. A few key lessons from today’s post are: Invest the time upfront to get the founders’ documents right.
ithacaVC
JUNE 20, 2011
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.
venturehacks.com
FEBRUARY 24, 2010
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. One founder companies can work, against the odds (hello, Mark Zuckerberg). So can three founder companies (hello, @biz, @ev, and @jack). When 4-5 founder companies work, it’s because two founders dominate.
venturehacks.com
SEPTEMBER 22, 2011
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.
61 
Let's personalize your content