Up and Running

SEPTEMBER 19, 2017

For a business that anticipates needing, for example, $500,000 in startup capital, that means that best-case scenario Klemm can expect to give up half of his business’s common stock (and an even larger percentage of control of the business once the deal’s fine print provisions are considered). Those days are long gone.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Both Sides of the Table

SEPTEMBER 18, 2014

Less than you’ll probably grant your most junior employees in stock options? There are a million ways to do quick, easy, low-cost rounds with prices. If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. Me: I know.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Agile VC

DECEMBER 4, 2014

You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

VC Adventure

AUGUST 15, 2018

Most boards did some level of work to determine the FMV of a company’s stock but generally options were priced between 10% and 15% of a company’s then preferred price (because common equity sits behind preferred equity there is typically a discount applied to the FMV of common stock to account for this “overhang”).

Valuation 48

Valuation Common Stock Cap Table Software Review 48

www.inc.com

SEPTEMBER 24, 2011

Employee Benefits. Jumpstart wasnt much at the time, just four employees working from home offices. Theres a huge opportunity cost in not taking equity," he says. But as Arizona Bay grew--it now has 40 employees and more than a dozen clients--Graham began to worry that he was missing out. Financing A Small Business.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Scott Edward Walker

OCTOBER 19, 2020

Accordingly, legal counsel must review all of the written agreements between the founder and his prior employer (as well as the employee handbook/manual) to determine if there are any provisions that may give the prior employer rights to the startup’s IP. . Mistake #2 – You Did Not Assign to the Company All IP Created Pre-Incorporation.

IP 40

IP Software Review Founder Technical Review 40

www.paulgraham.com

APRIL 28, 2010

The reason is that employees are investors too—oftheir time—and they want just as much to be able to cash out. 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. Theres only common stock at this stage.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Agile VC

DECEMBER 4, 2014

You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently. It’s also worth keeping in mind that regardless of how the founders’ common stock is divided, there will be future issuance of stock that will dilute the founders over the lifecycle of the company.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

venturehacks.com

MARCH 21, 2008

Super advisors The super advisor can get as much stock as a board member: 1%-2% of a company’s post-Series A stock. Or they bring you a handful of great employees. Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

keen.io

FEBRUARY 5, 2013

From there, I began googling things like “first employee startup equity” and “startup offer negotiation.” These were the best resources I found: Equity for Early Employees in Early Stage Startups. Startup Equity for Early Employees. We had a big team meeting, with all three founders and all three potential new employees.

Salary 50

Salary Equity Startup San Francisco 50

Startup Company Lawyer

MAY 4, 2009

Startup companies consume resources intelligently, put people to work in efficient ways, and produce market driven products at lower costs. The application fee is $50, which only partially offsets costs associated with processing applications. Helping smart people start new companies should, in fact, help the global economy.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

ReadWriteStart

JANUARY 28, 2022

Common stock. The holding of common stock in a company indicates ownership in the corporation. Investors of common stock are eligible for : The choice of the Board of Directors. However, the holder of a warrant holds a leveraged bet on the corporation’s common shares. Preferred shares.

Valuation 108

Valuation Equity Warrant Common Stock 108

Tim Keane

JANUARY 12, 2010

.   In some rare cases, there may also be a participation provision for dividends which pays the preferred a dividend beyond their own equal to any dividend paid to the common.   It is very expensive if you’re the entrepreneur since it doubles the cost to the company of paying dividends to the entrepreneur.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

www.payne.org

SEPTEMBER 22, 2011

Startup Equity For Employees. 2 Stock Classes: Common and Preferred. 5 Stock vs Options. 6 Founders / Restricted Stock. 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.

Equity 56

Equity Employee Vesting Preferred Stock 56

Gust

SEPTEMBER 17, 2014

Less than you’ll probably grant your most junior employees in stock options? There are a million ways to do quick, easy, low-cost rounds with prices. If you want to give them a 50% discount offer them $1 of common-stock warrants (no liquidation preference) for every $1 of stock they buy. Him: Not so good.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

Gust

JULY 23, 2012

Donations of private stock enable investors, founders and employees to support charitable causes and contribute to the community while receiving simultaneous benefits in the form of substantial cash savings from reduced taxes as well as bypassing capital gains taxes. These assets often have a relatively low cost basis (e.g.

Stock 114

Stock Capital Gains Warrant Stock Options 114

Gust

DECEMBER 8, 2011

Determine the allocation of equity among co-founders, early employees or other service providers, and future contributors as applicable, as well as the vesting schedule , if any, that will apply. Make escrow arrangements for restricted stock (i.e., Offer letters for employees. Pick a name for the new legal entity (e.g.,

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

Austin Startup

JULY 22, 2021

All finalists will receive: A fast track into the Capital Factory portfolio where you will receive opportunities to get in front of potential investors, customers and employees. Any software, hardware, or CPG startup in Texas with a female founder or co-founder can apply to participate. Female Founders!

San Antonio 107

San Antonio Dallas Houston Founder 107

Berkonomics

APRIL 14, 2012

Others worry that investors will latch onto individual line items within financial data and engage in inquisitions regarding telephone bills, marketing costs and other tactical line items in detailed financial statements. That is one of the many costs of becoming a public entity as many CEO’s have found and dealt with over the years.

Stock Options 81

Stock Options Balance Sheet Stock Common Stock 81

Agile VC

FEBRUARY 2, 2012

These companies report gross ad revenue but then subtract out “TAC” (Traffic Acquisition Costs) which is basically accounting-speak for the revenue share they pay to the partner sites where the ads actually appear. To put that in perspective, Facebook’s overall operations (which are highly profitable) generated about $1.5

IPO 100

IPO South Korea Venezuela Revenue 100

ithacaVC

SEPTEMBER 20, 2011

In “VC world” Rule 409A is best known for providing a safe harbor for private company valuations, and in particular the setting of strike prices for employee stock options. A whole cottage industry popped up, and the cost of a valuation is typically $4-8K. And the company will typically get it updated yearly.

Liquidation Preference 49

Liquidation Preference Common Stock Stock Options Valuation 49

Startup Company Lawyer

JULY 20, 2009

Once again, please keep in mind that the documents from typical online incorporation services do not contain IP assignment provisions in connection with the purchase of founders stock or separate IP assignment documents. Hiring employees or third party contractors.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

Berkonomics

APRIL 4, 2019

Others worry that we will latch onto individual line items within financial data and engage in inquisitions regarding telephone bills, marketing costs and other tactical line items in detailed financial statements. That is one of the many costs of becoming a public entity as many CEO’s have found and dealt with over the years.

Stock Options 48

Stock Options Balance Sheet Stock Common Stock 48

venturehacks.com

OCTOBER 21, 2010

&# As your lawyer explains that the so-called pre-money valuation always includes a large unallocated option pool for new employees, your stomach sinks. If you don’t keep your eyes on the option pool, your investors will slip it in the pre-money and cost you millions of dollars of effective valuation. Don’t lose this game.

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

This is going to be BIG.

AUGUST 4, 2024

In explaining how this will kill the startup industry, they get the basics of how it works wrong—leaving out exceptions for illiquidity, the five-year amortization, the fact that you can also write off unrealized losses, and not factoring in the obvious factors of vesting, common stock 409a discounts.

United States 167

United States Cofounder Myanmar Silicon Valley 167