The Option Pool Shuffle

SUPPORTED BY Products Archives @venturehacks Books AngelList About RSS The Option Pool Shuffle by Nivi on April 10th, 2007 “Follow the money card!&# – The Inside Man, Three-Card Shuffle Summary: Don’t let your investors determine the size of the option pool for you.

Option Pools and VC Negotiations

Rob Go

In my last post about raising seed vs. jumping straight to A, I received a good comment from Chris Woods that my analysis neglected to include the impact of option pools that are created at each financing round. In almost every financing round, there is an important stipulation in the term sheet that talks about the employee option pool that will be created in tandem with the financing. Add it up, and ask the VC why that level of options is not sufficient.

Trending Sources

When The VC Asks: About Your Hiring Plan

Hunter Walker

Whether it’s adding capacity to an existing function (#MawrEngineers) or bringing new talents onboard (“we intend to make our first marketing hire”), glossing over these bullet points towards the back of the pitch deck would be a mistake. I’m interested in not just what these people will be doing but how and when they’ll be hired. So when Homebrew asks about your hiring plan, here’s what I’m often looking for: Unicorns Needed? Do You Know Who You’re Hiring?

Founders Should Set Aside More Equity for Their Team & “Split the Pain” With Investors

Hunter Walker

But employee option pool is important enough that I wanted to briefly expand upon my comment above. While you should expect these sorts of hires to take below market cash comp versus what Google is paying them, this tradeoff needs to be replaced with equity upside.

What is it Like to Negotiate a VC Round?

Both Sides of the Table

How much is in the option pool? Well, if you have an option pool of only 6% and have many more execs to hire to build out your team you’re going to ask for more options to be created in the future. When you do, my 20% becomes 15% and thus my true price for your round is actually higher than it appears when I invested because I already know I’m going to face more dilution for options.

How to pick a co-founder

but it’s manageable. Breakups are hard If you’re going to fall out with your co-founder, do it early, recover the equity into the option pool to keep the company going, and recruit someone else great to fill the missing slot. Geeks can always be hired.

How to Divide Equity to Startup Founders, Advisors, and Employees

Manager or Junior Engineer 0.2 - 0.33. Percent of the outstanding option pool: meaningless. Strike price of options: meaningless. I was originally hired as a contractor, developing a SaaS app from scratch, including DB design and coding. Ill DM you a couple options.

In VC deals, Price Doesn't Matter - But The "Promote" Does

Seeing Both Sides

The investors who provided the $4 million own 40% of the company and the management team owns 60%. Another term that impacts the price is the size of the option pool. Most VCs invest in companies that need to hire additional management team members and sales and marketing and technical talent to build the business. These new hires typically receive stock options, and the issuance of those stock options dilute the other investors.

Everything you ever wanted to know about advisors, Part 1

This is the advisor paradox : hire advisors for good advice but don’t follow it, apply it. Your task is to hire the maverick advisors in the crowd. Hiring advisors is an ongoing effort. Then hire him if you like the results. Advisors can help you think through business challenges, make key introductions and/or offer personal/management advice. The Option Pool Shuffle. Venture Hacks Good advice for startups. SPONSORED BY. Products. Archives.

Startup Administrivia: Part 1 – getting started

Startup Musings

And you are managing your time so you are able to focus on these value generating activities. Hiring professional service providers. Hiring professional service providers. The easiest thing to do is to hire a corporate attorney to do it for you. You need it immediately if you are incorporating with more than 1 founder, and you definitely need it when you raise your first round, or when you need to define an option pool for new employees.

How to Fund a Startup

And if trouble withinvestors is one of the biggest threats to a startup, managing themis one of the most important skills founders need to learn. Ifyour competitors offer employees stock options that might make themrich, while you make it clear you plan to stay private, yourcompetitors will get the best people. The fund managers, who are called"general partners," get about 2% of the fund annually as a managementfee, plus about 20% of the funds gains. Want to start a startup?

A Compilation of the Web's Best Advice for Entrepreneurs

Platforms and Networks

Follow links in this post for current thinking on best practices in startup management. October 21, 2010 1:49 AM Post a Comment Newer Post Older Post Home Subscribe to: Post Comments (Atom) Blog Archive ► 2010 (1) ► January (1) Free Software for Managing a Lean Startup ▼ 2009 (4) ► December (2) Google and Open Systems Pitching ▼ November (1) A Compilation of the Web's Best Advice for Entrepr.

Startup Equity For Employees

5 Stock vs Options. The re-heating of the venture funded tech market has pushed a heat up of the hiring market, and Im getting more calls from friends asking for help understanding startup stock (equity) offers. NOTE: If youre an attorney or tax accountant with experience helping startup employees with stock and option issues, drop me a note. Also, most companies try to keep all employees on the same terms, and there are good management reasons to do that.

How does funding work? Angel & VC investment in Nordic startups by the numbers


In our example, Tine and Oscar have now managed to get the product out to a lot of users, and the team has expanded to one front end developer on a contract basis, and one marketing intern.

The Things I Wish I Could’ve Told Young Mr Fishkin | Rand Fishkin, Moz | BoS EU 2016

Business of Software Blog

There’s a number of frustrations that I have around this, one of the biggest ones is that I have a hard time hiring and identifying great engineers, early in my career. But early on, I made plenty of mistakes in hiring including in leadership and junior roles, all across the board.

Founders versus early employees

Being an early hire at a startup gives an individual the ability to make tremendous impact on an organization as it grows – and both the founders and those hires should know it.” As Naval points out that you still need to pay employees market rates , but with all employees you need to ask yourself “whether she [a new hire] is likely to increase the next round’s share price”. Manager or Junior Engineer 0.2 – 0.33

Growth & Arrogance vs. The Power of a Customer Centric Culture | Art Papas, Bullhorn | BoS USA 2015

Business of Software Blog

And I liked medicine and I love the idea of being a doctor, but I also took a course called the calculus 13, which was like optional calculus. And if anybody remembers that time, all you had to do was use the words world-wide web on a PowerPoint, and this is the PowerPoint presentation that I used to raise $4 million from GE asset management. And some of my management teams said I made money, I’m gonna tip out the door. I actually do a lot of new hire training.

The Future of Startup Funding

7 ] And though theres going to be one investor who gives them the firstcheck, and his or her help in recruiting other investors willcertainly be welcome, this initial investor will no longer be thelead in the old sense of managing the round. In effect, this structure gives the investora free option on the next round, which theyll only take if itsworse for the startup than they could get in the open market.Tranched deals are an abuse. Want to start a startup?

Beware of Premature Merge Elation

Both Sides of the Table

It meant that the management teams hadn’t figured out a product / market fit for their own businesses. But to be clear the overwhelming majority of deals involve one company driving the cultural integration, establishment of uniform processes, hiring / firing decisions, etc.

Startups: Cut the Wheat from the Chaff on Quora

VC Cafe

Basecamp – project management. How do bootstrapped companies hire talent? 1 CEO who doubles as head of product management.


Will Price

I often notice post Series A close a sense of chaos amidst the hope and a need to quickly triangulate on key metrics to manage to and to report against. Data-driven start-up management appears to be an oxymoron - there is by definition little data and hardly any trending possible. Despite the rapid changes, founders should move to quickly put in place templates, reports, and best-practices to manage with in order to reduce risk in the plan and unwise capital consumption.

CompStudy Highlights: “Live Tweets” from the Webcast

Noam Wasserman

Sources of Hires. TECH] Advice from panel (Aaron): As upturn starts, have to start pulling triggers a little quicker for both sides of hiring (co, hire). [LS] LS] Sources of hires in LS ventures: For all non-CEO/non-CFO positions, CEO-as-source-of-hire has increased in 2009 by at least 14%. have gotten into very bad hiring practices & selection criteria.” down slightly from 18.16% in our 2008 edition” Equity pool.

Should You Share Equity with Consultants?

Leadership & Managing | Tuesdays. LEADERSHIP & MANAGING. Managing Creativity. Back in 1997, Randy Parker was staring at a blank whiteboard, wondering where hed find the money to hire the employees and consultants he needed to build his new product. "We Durkin , managing partner with the Boston -based law firm Lucash, Gesmer & Updegrove LLP. Create an options pool, if nothing more than in your mind, so you have some parameters to work within," Durkin says.

Here I Go Again. Why My Second Startup is Different. | Nick Halstead, Cognitive Logic | BoS Europe 2016

Business of Software Blog

it’s important for everything: selling well, raising money, hiring good employees. A nudgenudge winkwink for additional funding and expand the option pool = “We will give you x% so YOU don’t get diluted, but EVERYONE ELSE on your staff gets diluted. It’s a false economy in the end because you are only getting options, not actual voting control, which you lose.”. Always hire the smartest employees!! Managed to make the meeting and present to him.

Changing Equity Structures for Early Startup Employees

I gave him similar numbers to what I had been given when I was hiring the first few employees for Standout Jobs. This is especially true when you think of a tech startup, where the first few hires are typically engineers/programmers.

9 Quick Tips Learned While Raising $33 Million In Venture Capital


The title is “Money, Marketing and Management with HubSpot’s Founders”. Sign-up for: Money, Marketing and Management (aka “Stuff we learned about startups that you’ll probably find useful”).

Equity is the currency of early stage businesses.


It should contain a mandatory sale clause in the event of separation of a founder, so that a major owner who is passive in the enterprise cannot easily vote against measures other active founders endorse. . The real insight here is that stock options or phantom stock are the tools of early stage businesses used to attract great talent when there is not enough cash to pay market rates. An option plan should carve out an addition of about 15% of the “fully diluted” shares.