Startup Professionals Musings

JANUARY 15, 2021

When an entrepreneur first incorporates a business, they may find themselves the proud owner of 10 million shares of common stock, commonly called founder’s shares. Make sure the government waits for a stock sale to collect taxes. Retain the right to reclaim stock from anyone leaving the startup. In the U.S.,

Vesting 298

Vesting Dilution Stock Founder Vesting 298

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

Startup Company Lawyer

AUGUST 31, 2012

Ted Wang believes that the “reason that capped convertible debt is the current market leader is that entrepreneurs have been conditioned over time to believe that convertible debt is (a) faster (b) cheaper and (c) better for them than equity investment.”

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Startup Professionals Musings

OCTOBER 29, 2013

Some entrepreneurs try to start with a huge number, hoping they can negotiate and close on a smaller one, while others understate their requirements, in hopes of getting their foot in the door with an investor. Do your financial model first with the volume, cost, and pricing parameters you want. See where your cashflow bottoms out.

Valuation 258

Valuation Early Stage Warrant Common Stock 258

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). Consequently, he passed.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Startup Professionals Musings

SEPTEMBER 27, 2023

When an entrepreneur first incorporates a business, they may find themselves the proud owner of 10 million shares of common stock, commonly called founder’s shares. Make sure the government waits for a stock sale to collect taxes. Retain the right to reclaim stock from anyone leaving the startup. In the U.S.,

Stock 240

Stock .Net Vesting Founder Vesting 240

Startup Professionals Musings

SEPTEMBER 19, 2012

Some entrepreneurs try to start with a huge number, hoping they can negotiate and close on a smaller one, while others understate their requirements, in hopes of getting their foot in the door with an investor. Do your financial model first with the volume, cost, and pricing parameters you want. See where your cashflow bottoms out.

Valuation 236

Valuation Early Stage Warrant Common Stock 236

Startup Professionals Musings

JUNE 9, 2010

Some entrepreneurs try to start with a huge number, hoping they can negotiate and close on a smaller one, while others understate their requirements, in hopes of getting their foot in the door with an investor. Do your financial model first with the volume, cost, and pricing parameters you want. Calculate what you need. Marty Zwilling.

Valuation 227

Valuation Early Stage Warrant Startup 227

Startup Company Lawyer

MARCH 14, 2010

My general opinion is that anything that makes the financing process faster and easier or otherwise educates entrepreneurs is a good thing. (A A legal opinion for a newly-incorporated early stage company probably doesn’t add much to the due diligence process and is probably unnecessary compared to the incremental cost to prepare.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

www.inc.com

SEPTEMBER 24, 2011

Entrepreneur news from reporter Eric Markowitz. Theres a huge opportunity cost in not taking equity," he says. In the 1990s, Graham was one of those entrepreneurs giving away equity in exchange for crucial services. He prefers to work with companies that are building Web-based applications and have relatively low start-up costs.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Austin Startup

JULY 6, 2018

Re: cash, the more “unbundled” types of accelerators (less formalized, less equity) tend to not provide any cash upfront, but also typically “cost” less in equity, often just 1–2% of your fully diluted capitalization. Entrepreneurs often celebrate faking it until you make it. Some entrepreneurs find it invaluable. Anti-Dilution.

Dilution 48

Dilution Startup Technical Review Equity 48

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

Tim Keane

JANUARY 12, 2010

Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. Term-sheets and Valuations: Thinking about Negotiations.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

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. Philip Kaplan – Entrepreneur. Possess reasonable training or domain expertise.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Startup Professionals Musings

MAY 18, 2015

When an entrepreneur first incorporates his or her business, he or she may find him or herself the proud owner of 10 million shares of common stock, commonly called founder’s shares. Make sure the government waits for a stock sale to collect taxes. Retain the right to reclaim stock from anyone leaving the startup.

Stock 120

Stock Vesting Common Stock Founder Vesting 120

Gust

DECEMBER 18, 2013

That said, the primary entrepreneur-friendly reason for doing a Convertible Note (and the reason that no serious investor under regular circumstances will therefore do an uncapped note) is: The valuation negotiation is put off until the next round. Invested Interests convertible note entrepreneur investors series seed'

Founder 150

Founder Valuation Seed Money Common Stock 150

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

The Startup Magazine

NOVEMBER 14, 2018

Startups and entrepreneurs will accumulate bitcoin and cash, hopefully. While investing in stocks, cryptocurrency, and companies can boost your wealth in less time, choosing the right path to take is essential to avoid missing out on growth opportunities. Stock Options. Source: Pixabay.

Common Stock 121

Common Stock Stock Stock Options Startup 121

Startup Professionals Musings

JANUARY 29, 2018

I’ll never forget that great sense of excitement I felt when I incorporated my first business, and realized that I was now the proud owner of 10 million shares of common stock. It’s great motivation for every entrepreneur to get that value up quickly. Buying back stock on the open market may cost a huge premium.

Stock 129

Stock Vesting Preferred Stock Cofounder 129

Lightspeed Venture Partners

OCTOBER 1, 2012

Price is always a consideration in investing, but particularly so if the entrepreneurs have shown an interest in an early exit. The entrepreneur was seeking $100k for 20% of the company. Barbara noted that the entrepreneur had been unlucky, and that luck doesn’t change, which is why he should sell the company to them.

Pre-Money Valuation 158

Pre-Money Valuation Valuation Participating Preferred Preferred Stock 158

Up and Running

DECEMBER 1, 2015

Typically, employers that offer employees equity compensation will do so in the form of common stock, preferred stock, or stock options. Don’t save starting costs by giving the business away.”. I’ll go into the difference between these in just a moment. Types of equity compensation. Pay the fees [for your vendors].

Equity 60

Equity Employee Stock Options Vesting 60

ReadWriteStart

MAY 8, 2012

So we asked a panel of eight successful young entrepreneurs from the Young Entrepreneur Council (YEC) about their startup funding successes (and failures) and the lessons they learned. Most entrepreneurs approach fundraising as a transaction. The best way to do that is to leverage the hard-won experience of real-world startup.

Cofounder 140

Cofounder Startup San Francisco Silicon Valley 140

Gust

JULY 23, 2012

Donations of private company stock may be an effective and tax-efficient method of giving with significant benefits to the donor. These assets often have a relatively low cost basis (e.g. At a simple level, you can deduct up to 30% of your annual adjusted gross income for the value of a stock donation. The Tax Benefit.

Stock 114

Stock Capital Gains Warrant Stock Options 114

Austin Startup

JULY 22, 2021

It’s hard to describe in words the palpable energy when a room is this packed full of incredible female entrepreneurs at the Women in Tech Summit at Capital Factory. On October 4th, five technology startup finalists will pitch to a panel of advisors and judges made up of successful investors, entrepreneurs, and industry leaders.

San Antonio 107

San Antonio Dallas Houston Founder 107

Scott Edward Walker

APRIL 9, 2012

Why Can’t a Startup Issue Shares of Common Stock to Investors? In fact, many incubators like Y Combinator and TechStars are issued shares of common stock for their initial investment (usually about $20,000). Friends and family are also often issued shares of common stock. Speed, simplicity and cost.

Preferred Stock 87

Preferred Stock Finance Common Stock Liquidation Preference 87

Gust

DECEMBER 8, 2011

I urge all entrepreneurs to consult and develop a good working relationship with a qualified startup lawyer. Make escrow arrangements for restricted stock (i.e., Consummate the stock issuances, make any necessary securities filings and issue the corresponding stock certificates. Caveat entrepreneur !

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

The Startup Magazine

JUNE 7, 2018

Just recently, WalletHub aimed to help aspiring entrepreneurs by comparing relative startup opportunities across over 180 cities in the U.S., and Jacksonville, Florida, which also happens to boast a comparatively low cost of living, ranked relatively high among the best places to start a business. Penny Stocks.

Small Business 102

Small Business Jacksonville Stock Florida 102

Startup Company Lawyer

JULY 20, 2009

At some point, however, an entrepreneur will need to formally incorporate a company. In addition, if an entrepreneur needs to engage third party contractors, it generally makes sense to incorporate a company so that the third party enters into an agreement with a company instead of an individual. Issuing stock options.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

Berkonomics

APRIL 4, 2019

On the other side, entrepreneurs and CEO’s usually have a natural fear of giving too much information to us investors after the initial investment is received. That burden is an ongoing cost of taking the investment, much as a public company takes on the additional burden of governmental reporting, both adding to costs over time.

Stock Options 48

Stock Options Balance Sheet Stock Common Stock 48

venturehacks.com

OCTOBER 21, 2010

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. This reverse dilution benefits all classes of stock proportionally even though the common stock holders paid for all of the initial dilution in the first place!

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Agile VC

APRIL 17, 2011

Obviously most of these employees are working hard primarily for equity upside compensation, but Kayak’s personnel costs are roughly $200K/head so the company is highly productive on a per employee basis. Interesting to note that Hafner and English own common stock but also made meaningful investments in the Series A & B rounds.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Both Sides of the Table

SEPTEMBER 18, 2014

At an accelerator … Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. Your A round?

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Professor VC

FEBRUARY 18, 2011

It was going to be challenging to get scale with a model that charged on a per business card basis, a requirement given the amount of funding and cost for the crowdsourced labor. He obviously has a founders common stock stake along with cash invested. Steve Bennet. at 1:20 PM.

Acquisition 31

Acquisition San Jose Angel Investor IPO 31

venturehacks.com

MARCH 21, 2008

Normal advisors are also assembled by naive entrepreneurs who think the mere presence of an advisory board will create social proof and help them raise money. Advisor compensation Whether you’re hiring a normal advisor or super advisor: Advisory shares are usually issued as common stock options. What are advisory shares?

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Gust

SEPTEMBER 17, 2014

Me: Raising convertible notes as a seed round is one of the biggest disservices our industry has done to entrepreneurs since 2001-2003 when there were “full ratchets” and “multiple liquidation preferences” – the most hostile terms anybody found in term sheets 10 years ago. It’s like we need a finance 101 course for entrepreneurs.

Liquidation Preference 153

Liquidation Preference Valuation Term Sheet Stock 153

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. Im a former Silicon Valley entrepreneur turned East Coast VC. billion in cash profit last year. Read More ».

IPO 100

IPO South Korea Venezuela Revenue 100