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.

Founder Agreements – Vesting, Vesting and more Vesting

High Contrast

Some time ago Sim Simeonov asked me to write a guest post on the subject of founder agreements. In part this is because I broke my leg skiing and in part it is because the number of founders walking through our doors these days seems to be on the rise.

Trending Sources

6-year vesting

Venture Hacks

Every team member of AngelList is on a 6-year vesting schedule. Including the founders. Everyone asks whether they get more equity to make up for the longer vesting schedule. If you’re interested in a 6-year vesting schedule, AngelList is hiring engineers and designers. Because it takes a long time to build something important. And we want everyone to stick around for a long time. Because we want people who are here for the mission , not a payday.

Equity basics: vesting, cliffs, acceleration, and exits

The Startup Toolkit

false As a cheatsheet, the “normal” equity structure is: Founder terms: 4 year vesting, 1 year cliff, for everyone, including you. 2.0% ) : 4 year vesting, optional cliff, full acceleration on exit. Cliffs & vesting. Vesting is how we fix that.

The Importance of Vesting Schedules for the Founders

Scott Edward Walker

One of the biggest mistakes I see startups make is failing to set-up vesting schedules for the founders. v=-R01YcgJ3Yw What Is a Vesting Schedule? Why Do You Need Vesting Schedules? What Is the Typical Vesting Schedule? Where Is the Vesting Schedule Addressed?

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

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.

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Startup founders: Here’s why vesting is your best friend

The Next Web

You have an awesome idea and a great co-founder with whom you want to work. This is why vesting is so important. Investing in vesting. Standard vesting clauses typically last four years and have a one year ‘cliff’.

How to Divide Founder Equity: 4 Criteria to Discuss

View from Seed

Editor’s note: Understanding how to divide founder equity at a startup can be tricky, even to the point of reaching emotional riffs between founders. But not all co-founders are equal in terms of title, ownership, responsibilities, and so forth.

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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.

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.

Founder Liquidity

K9 Ventures

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. If there is one piece of advice I would give to the founders of BST, it is to consider selling a part of their personal stock in the company at that stage. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

Founder Liquidity

K9 Ventures

Let’s say you’re the founder (I use a solo-founder in my example to keep things simple, but this could just as well apply to a founding team) of a startup called Blood, Sweat and Tears, Inc. If there is one piece of advice I would give to the founders of BST, it is to consider selling a part of their personal stock in the company at that stage. The objective is really to be able to get some risk off the table for the founders and not leave all their eggs in one basket.

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

I like to say that “there are only co-founders” — it’s extraordinarily rare for a successful business to have just a sole founder. But not all co-founders are equal in terms of title, ownership, responsibilities, and so forth.

Checklist For Launching A Startup

Ask The VC

It’s summarized at If I Launched A Startup and includes stuff on incorporation, founders stock, vesting, NDAs, and some other useful things. Company Creation incorporation launch nda vestingI ran across a dynamite set of posts for anyone launching a startup. If you are launching a startup, go check it out.

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Optimum Share and Option Vesting

Angel Blog

I believe vesting is the most important element of corporate structure. Vesting has incredibly powerful effects on the group psychology, culture and corporate performance. I have seen many companies literally fail due to flaws in their vesting. Even though there is now reasonable agreement on the ideal magnitudes of equity ownership, there is still discussion on the optimum vesting formula. All vesting for senior employees accelerates on a sale of the Company.

What is an effective “pre-incorporation-agreement” between possible founders of a startup?

Gust

Then sit down with your co-founders and divvy up the equity based on the contributions you all believe each of you will make…providing for reverse vesting, a large option pool, and a clear decision-making structure. Pivotal Moments equity Founder equity founder relationships founders incorporation agreement startupsThe bottom line is that the very question you are asking is one of the trickiest things of all when it comes to startup founding.

Founder's Dilemmas: Equity Splits

Startup Lessons Learned

The following is an excerpt from HBS Professor Noam Wasserman’s new book, The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. On average, the founders who keep the most control over their company make the least amount of money.

How to Find a Co-Founder

How to Change the World

After the fact, people may recognize one founder as the innovator, but it takes a team to make a new venture work. Derek Sivers, the co-founder of CD Baby, said it best: “The first follower is what transforms the lone nut into a leader.”. Do not add founders to enhance fundability.

Founder's Dilemmas: Equity Splits

www.startuplessonslearned.com

Founders Dilemmas: Equity Splits. The following is an excerpt from HBS Professor Noam Wasserman’s new book, The Founders Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup. How should founders deal with such developments? Lessons Learned. by Eric Ries.

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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Avoid the 50/50 co-founder model - here's why

joel.is

I recently received an email asking some advice about co-founders, specifically about whether a 50/50 ownership split makes sense for a startup. The 50/50 co-founder model. When I talk about the 50/50 co-founder model, what I really mean is the equal stake model.

5 Mistakes Every Startup Founder SHOULD Make

OnStartups

So here''s an initial list of mistakes that you SHOULD make as a startup founder. Someone - your partner, co-founder, employee, investor, or any other character in your unfolding plot - will mess you over. It''s natural to want to keep your cards close to your vest.

8 Ways To Maximize The Value Of Your Startup Stock

Startup Professionals Musings

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. This is the purpose of a vesting schedule, which issues allocated stock over time.

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How To Allocate Founder and Employee Equity

A VC : Venture Capital and Technology

Before factoring in dilution from investors, the founders should end up with about 50% of the company, total. It never makes sense to give anyone equity without vesting. Nobody who is not working full time counts as a founder. The thing I love the most about Joel's post is he throws darts into a lot of conventional wisdom about founder equity allocation.

Legal Checklist for Startups

Scott Edward Walker

Set-up vesting schedules for the founders (see post here ) and file 83(b) elections with the IRS (see #3 here ). I’ve been a corporate lawyer for 17+ years, and there are certain fundamental legal mistakes that I’ve seen startups repeatedly make.

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.

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.

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 Founder Agreements

High Contrast

Simeon, can you tell us how you structure ownership and control so you can fire your co-founders if necessary? The first part will dispel some myths, address the lifecycle of founder agreements and the key compensation and control parameters in them. Let’s start by dispelling some myths: There is a standard founder agreement. These templates can have meaningful variations, some of which are founder-friendly and some of which are not. Which founder agreement?

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 [.].

Success = Co-founder vs. Failure = "Early Employee"

Allen's Blog

Have you ever noticed, that, after the fact, successful companies have many "co-founders", while failed startups have only "early employees". This occurred for all of the usual reasons that plague post-acquisition integration: financial reasons (becoming fully vested, etc.), I began to notice that anyone who had worked at PayPal in the first year of its existence identified themselves as a "Co-founder".

What Founders Need to Know About Equity Grants

Early Growth Financial Services

Employees who feel vested and part of the team are more committed to their companies. Annie Webber, Founder and CEO of LegalHero, and David Ehrenberg, Founder and CEO of EGFS, took us through the ins and out of Sharing the Pie.

10 Dilemmas Every Startup Founder Must Deal With

Startup Professionals Musings

Most entrepreneurs struggle with many startup Founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-Founders to help you?

Founders Agreements

VC Ready Blog

Whether you’re starting a company with your best friend or a few guys you met at a coffee house, you can’t predict how the relationship among Founders will change over time. Many companies (and friendships) have been ruined because a difficult situation arose and the Founders could not agree on how to resolve it, so it can be incredibly valuable to put in place an agreement that spells out what the Founders’ rights and obligations are towards each other in certain circumstances.

Founders Agreements

VC Ready Blog

Whether you’re starting a company with your best friend or a few guys you met at a coffee house, you can’t predict how the relationship among Founders will change over time. Many companies (and friendships) have been ruined because a difficult situation arose and the Founders could not agree on how to resolve it, so it can be incredibly valuable to put in place an agreement that spells out what the Founders’ rights and obligations are towards each other in certain circumstances.

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.

Should You Really Sit on Other Boards When You’re a Startup Founder?

Both Sides of the Table

I recently read Brad Feld’s thought provoking piece encouraging founders to sit on the board of another startup company. I found it thought provoking because I’ve always believed startup founders need extreme focus on only their company to succeed.

What is the best way to divide up ownership in a startup?

Grasshopper Herder

When considering this issue, many people will focus on incentivizing the founders as well as issues of equality and equity. Finding Co-Founders Investment co-founders equity vesting scheduleI would recommend a deep understanding how roles and responsibilities will be divided prior to discussing the equity split.

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.

10 Tough Quandaries That Lead Entrepreneurs Astray

Startup Professionals Musings

Most entrepreneurs struggle with many startup Founders dilemmas in building their business, and these key dilemmas are probably the biggest source of pain and failure for the entrepreneur lifestyle. Should you start a company solo or find co-Founders to help you?