article thumbnail

Equity for Early Employees in Early Stage Startups

SoCal CTO

For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula. For example, suppose you're just two founders and you want to hire an additional hacker who's so good you feel he'll increase the average outcome of the whole company by 20%. n = (1.2 - 1)/1.2 =.167. and we have 11.1%

article thumbnail

How to Scale a Venture Capital (or Private Equity) Fund

David Teten

VC is a “get rich slow” business, because most VC Partners will not see a carry check for 5-10 years, after waiting for both liquidity events and for LPs to be paid first. – Hire more Partners. For a VC fund to be actively engaged in a large number of investments, it needs to hire more Partners to sit on more boards.

Insiders

Sign Up for our Newsletter

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

article thumbnail

How to Fund Your Startup Without Losing Control

Up and Running

They allow you to hire more people, purchase new technology, and establish new business connections, among many other benefits. That is to say, they’d want to be able to control costs and revenues at a high level. Capital investments are like gasoline on a startup business’s metaphorical fire. Conclusion.

article thumbnail

Startup Stock Options – Why A Good Deal Has Gone Bad

Steve Blank

Investors bet that by offering prospective hires a stake in the company’s future growth- with a visible time horizon of a payoff – employees would act more like owners and work harder– and that would align employee interests with the investor interests. That made sense. Today that’s less true.

article thumbnail

The New Deal – A Founding CEOs Value is Non Linear

Steve Blank

Where’s My Liquidity Event. Some VC’s feel that if a startup has grown past the founder’s ability to manage and scale (and hasn’t had a liquidity event,) they should be able to remove the founding CEO and (at best) walk them out the door with only the stock they vested to that day. I’ll posit that both views are wrong.

Vesting 251
article thumbnail

New Rules for the New Internet Bubble

Steve Blank

The signals are loud and clear : seed and late stage valuations are getting frothy and wacky, and hiring talent in Silicon Valley is the toughest it has been since the dot.com bubble. VC’s worked with entrepreneurs to build profitable and scalable businesses, with increasing revenue and consistent profitability – quarter after quarter.

Internet 334
article thumbnail

What Startups Need To Know About Business Valuation

YoungUpstarts

Why is it important to hire an experienced valuation firm? A company can have value, even if there is no current income or revenue. A valuation is needed for accounting or financial reporting purposes when the company’s auditor or another stakeholder, such as a bank, requires it.

Valuation 100