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Want to Know How VC’s Calculate Valuation Differently from Founders?

Both Sides of the Table

I’m not sure I really even need to write this at length because Nivi absolutely nailed the topic in his article “ The Option Pool Shuffle.&#. When I went to raise money in 2006 I thought I knew every term in a term sheet but somehow I still got a bit duped by the option pool shuffle. No option pool shuffle.

Valuation 405
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What to expect before accepting the offer to become Engineer #1 at a startup

The Next Web

They were referring to non-founder engineers, most commonly the first hire for technology businesses. Startup employees are granted common shares out of something called an option pool. Again this is somewhat simplified as the liquidity event (sale or IPO) may come as cash, stock, or a combination of the two.

Engineer 129
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Cash-strapped? How to pay for services with your startup’s equity

The Next Web

After all, cash may be in short supply, but there’s a virtually endless amount of work to be done, from coding and web development, to PR, sales, general operations, or sage advice from an industry veteran. Many young tech startups reserve 15%-20% for employee stock options. It’s a logical solution.

Equity 116
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Beware of Premature Merge Elation

Both Sides of the Table

But to be clear the overwhelming majority of deals involve one company driving the cultural integration, establishment of uniform processes, hiring / firing decisions, etc. If they raise a bunch of capital little ole you isn’t going to be around to have your option pool topped up. They often involve big hugs on stage.

Merger 276
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Be careful about equity and options!

Berkonomics

The document should also contain clear buy-sell clauses, forcing any sale of shares to first be offered to the corporate treasury, then to the other founders in proportion to their holdings, and then if there is no interest, to outside investors. An option plan should carve out an addition of about 15% of the “fully diluted” shares.

Equity 62
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Why I left Wall Street to figure it out.

Austin Startup

This was my time at a Wall Street firm that had hired me after I applied for their Junior Stockbroker position, a little while after I graduated from college. Having just moved to Austin from Boston, she thought adding African car sales could help, maybe thinking Africans looking for used cars can use it to find car deals.

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Should You Share Equity with Consultants?

www.inc.com

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