Feld Thoughts

FEBRUARY 28, 2023

Employee option pool: The framework conditions for employee option pools remain a major problem in Germany. Even after the 2021 reform, employee option pools will continue to be structured via phantom stocks, as this is the only way to reliably avoid the dry-income problem.

Germany 165

Germany IPO Liquidation Preference Option Pool 165

Eric Friedman

DECEMBER 27, 2021

The calculus is that if the stock is going to be worth a fortune, they are better off paying for expertise early vs. take a risk on early full time employees risking option pool, culture fit, and ramp time. I think this manifested itself in liquid teams, outlined by Packy [link]. Hey not bad – scored an incredible 1.5

Stock 97

Stock Cofounder Balance Sheet LP 97

Both Sides of the Table

JUNE 5, 2015

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. Option pool (likely dilution in the future, which is a function of a higher price just not yet defined).

Post-Money Valuation 150

Post-Money Valuation Dilution Pre-Money Valuation Option Pool 150

SoCal CTO

SEPTEMBER 27, 2011

Wilson Sonsini and DFJ Gotham Ventures : The Option Pool Shuffle : Title Range (%) CEO 5 – 10 COO 2 – 5 VP 1 – 2 Independent Board Member 1 Director 0.4 – 1.25 Because of the Art aspect of early employee equity, I had trouble finding much in the way of numbers for that specific aspect. I did find a few things for later points.

Early Stage 391

Early Stage Equity Startup CTO Hire 391

Scott Edward Walker

JULY 20, 2011

Whatever the issue, the advice is simple (albeit difficult to execute): in order to maintain negotiating leverage and credibility, the entrepreneur should not capitulate first.

Entrepreneur 78

Entrepreneur Private Equity Liquidation Preference Venture Capital 78

The Next Web

SEPTEMBER 30, 2014

In one instance, I told a CEO that we typically recommend a 15 percent stock options pool at seed/Series A stage. During the first conversation with a given founder about employee equity, it is not uncommon for the CEO to fire back with the following question: Why would I give any equity to my employees?

Equity 154

Equity Startup Employee Option Pool 154

Hunter Walker

AUGUST 7, 2017

But employee option pool is important enough that I wanted to briefly expand upon my comment above. As you can see, Weekend VC Twitter gets pretty wild and crazy!!!!

Founder 92

Founder Equity Pre-Money Valuation Option Pool 92

The Next Web

JUNE 15, 2012

Any decision to hand out stock or stock options should be made within the big picture context of your company’s valuation and the total number of shares you’ll be granting. It’s wise to create a stock options pool that includes all the employees and contractors you plan on hiring in the next 18 months and how many shares each might get.

Equity 116

Equity Stock Options Vesting Silicon Valley 116

Up and Running

SEPTEMBER 20, 2021

Total share ownership is the sum of the common stock, stock options, preferred stock, and any other stock category for a single individual. Here you can see that the founders own most of the shares at 67.7%, then the ESOP (employee stock option pool) at 12.31 Outline your plans for future employee stock option pools.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Valuation 112

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] *.

Founder Vesting 144

Founder Vesting Exit Strategy Option Pool Vesting 144

The Next Web

OCTOBER 21, 2013

More often than not, these companies have no formal option pool, although many have either formal or informal promises to grant options to key employees. While there are no hard and fast rules, when we make a Series A investment we expect to own around 20% of the company on a fully-diluted basis.

Entrepreneur 128

Entrepreneur Angel Investor Cap Table Option Pool 128

Berkonomics

NOVEMBER 23, 2023

Inducing a new CEO to come aboard usually means creation of a stock option package of 5-8%. That size of grant would take much or most of the option pool. All other grants usually are much lower, allowing for the typical 15% pool to last for quite a while in most companies.

Equity 62

Equity Vesting Stock Options Early Stage 62

ReadWriteStart

SEPTEMBER 2, 2011

Including things like liquidation preferences impact both future rounds and ultimate liquidity to why VCs ask to expand an option pool before investing as part of their term sheet. This will give you tons of information on all the terms you'll encounter when raising a venture round and how they could impact your deal.

Term Sheet 122

Term Sheet Cap Table Liquidation Preference Technical Review 122

Both Sides of the Table

AUGUST 3, 2010

If they raise a bunch of capital little ole you isn’t going to be around to have your option pool topped up. The moment you sell, somebody else controls the exit timing, exit price, capital raising, etc. And your outcomes are tied to their moves and their stock. I promise they’re not.

Merger 276

Merger Early Stage Dilution Technical Review 276

Gust

SEPTEMBER 13, 2012

So, for example, taking a not-uncommon streamlined case of a company that had a seed round, a Series A and a Series B before being acquired (and for the purposes of this exercise disregarding any option pool), the math for a single-founder’s ownership of a startup would work like this based on giving up 20% each round: After Founding: 100%.

Startup 160

Startup Option Pool Equity Valuation 160

Pascal's View

JULY 9, 2017

Company Y receives an offer from an angel or ‘unsophisticated’ smaller VC fund that is unwilling to lead and price the equity but wants to ‘invest now’.

Post-Money Valuation 49

Post-Money Valuation Valuation Equity Cofounder 49

Gust

NOVEMBER 8, 2012

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. original post can be found on Quora @ : [link] *.

Founder 134

Founder Startup Option Pool Vesting 134

Both Sides of the Table

AUGUST 17, 2009

Assuming normal valuations at fund raising rounds you’ll be down to 6-12% after you’ve created a stock-option pool and raised capital. But these people seldom make retirement money from the stock options on these companies. It is hard enough to have a great financial outcome when you start with 100%.

Founder Vesting 365

Founder Vesting Cofounder Vesting Stock Options 365

Early Growth Financial Services

JUNE 26, 2014

Valuation — Know what these terms mean: Fully-diluted — This includes all issued stock and anything that could be converted into common stock (typically after an acquisition or IPO), such as your stock option pool. Pre-money valuation — The value of the company prior to investment, calculated on a fully-diluted basis.

Pre-Money Valuation 51

Pre-Money Valuation Option Pool Dilution Valuation 51

View from Seed

DECEMBER 4, 2014

You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Equity 315

Equity Founder Cofounder Sweat Equity 315

Business Plan Blog

NOVEMBER 20, 2013

You also need to think about how much equity you want to have set aside and available for your future employees in your option pool. Future investors will want and option pool, and more importantly it is ways of attracting talented employees to your startup.

Equity 61

Equity Cofounder Option Pool Startup 61

Agile VC

APRIL 17, 2011

Precise valuations are impossible to determine because of adjustments to employee option pools, possible buybacks of common stock, etc. One can infer valuations based on per share prices of preferred stock and oustanding common shares (~5.3M as of 12/31/09). But these should be directionally correct.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Cofounder Dividend 113

Agile VC

DECEMBER 4, 2014

You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

ithacaVC

DECEMBER 13, 2013

They are typically pretty simple: (i) shares owned by founders and (ii) shares authorized for issuance in a stock option pool, some of which may be issued to employees already and some of which will be available for future issuance. And don’t forget that the options granted would come out of the available option pool.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

This is going to be BIG.

AUGUST 21, 2023

Here’s the option pool that I think fairly incentivizes you. If a VC thought that you were the right founder and this was the right company, they’d deliver you a term sheet after looking at your current one with something that translates into the end result they’re looking for. Sure it squishes down everyone else.

Cap Table 78

Cap Table Term Sheet Founder Startup 78

The Equity Kicker

OCTOBER 8, 2014

We have taken their feedback and tweaked the termsheet as appropriate with the result that on all terms bar valuation, option pool and details of founder vesting our termsheet is now, in effect, very close to fully negotiated before we send it to companies.

Founder Vesting 92

Founder Vesting Vesting Venture Capital Option Pool 92

Early Growth Financial Services

DECEMBER 4, 2014

It could be the size of the option pool, or maybe the provisions around reverse vesting. There’s less chance of you being blindsided. You’ll also have the opportunity to decide ahead of time (and figure out your negotiating strategy on) which points you care about most.

Term Sheet 51

Term Sheet Vesting Liquidation Preference Option Pool 51

Eric Friedman

DECEMBER 30, 2020

The calculus is that if the stock is going to be worth a fortune, they are better off paying for expertise early vs. take a risk on early full time employees risking option pool, culture fit, and ramp time. I almost bailed on 6 predictions this year and glad I didn’t.

Stock 120

Stock Cofounder Startup LP 120

The Equity Kicker

APRIL 10, 2015

Note: if the option pool has been increased between rounds this will have the effect of reducing the increase in share price and should be factored into the analysis. However, comparing the post-money of the new round with the post-money of the old round gives the illusion that the valuation has doubled – £8m to £16m.

Valuation 60

Valuation Pre-Money Valuation Post-Money Valuation Option Pool 60

The Startup Lawyer

JANUARY 10, 2011

Terms like the option pool , liquidation preference , and board composition are just a few other investment terms that have a meaningful impact on your startup. It can be a mistake to arrive at a consensus with your investor on pre-money valuation & investment amount before receiving the full term sheet.

Term Sheet 64

Term Sheet Pre-Money Valuation Liquidation Preference Option Pool 64

Business Plan Blog

SEPTEMBER 18, 2012

Most sophisticated investors will require a stock option pool upon investment, and a company that fails to reserve a sufficient amount of equity up-front runs the risk of being forced to establish a pool at a later date that may dilute the founders’ ownership. Whatever the percentage, it pays to plan ahead.

Stock Options 61

Stock Options Stock Option Pool Dilution 61

The Equity Kicker

OCTOBER 8, 2014

We have taken their feedback and tweaked the termsheet as appropriate with the result that on all terms bar valuation, option pool and details of founder vesting our termsheet is now, in effect, very close to fully negotiated before we send it to companies.

Founder Vesting 68

Founder Vesting Vesting Venture Capital Option Pool 68

www.readwriteweb.com

DECEMBER 29, 2011

This includes things like how liquidation preferences impact future rounds and ultimate liquidity, to why VCs ask to expand an option pool before investing as part of their term sheet. This will give you tons of information on all the terms you'll encounter when raising a venture round and how they could impact your deal.

Term Sheet 47

Term Sheet Cap Table Liquidation Preference Technical Review 47

ithacaVC

SEPTEMBER 4, 2011

Note how the new CTO Praveena implicitly negotiated to get her 15% founders shares after creation of the stock option pool. This is significant because Jane and Dick took all the dilution from the option pool creation. I think Brad’s post simplified a few things (a bit too much) so I will expand some here: 1.

Cap Table 49

Cap Table Finance Option Pool Dilution 49

Agile VC

DECEMBER 4, 2014

You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Seeing Both Sides

JULY 15, 2009

Another term that impacts the price is the size of the option pool. These new hires typically receive stock options, and the issuance of those stock options dilute the other investors. These new hires typically receive stock options, and the issuance of those stock options dilute the other investors.

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Post-Money Valuation Stock Options 49

venturehacks.com

FEBRUARY 24, 2010

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. Convince him to work on yours part-time — he’ll drop his idea once yours gets traction. Build in founder vesting (a.k.a.

Cofounder 101

Cofounder Founder Technical Cofounder Technical Review 101