Startup Professionals Musings

MARCH 23, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock dilution control.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Startup Professionals Musings

JANUARY 22, 2013

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock dilution control.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

Both Sides of the Table

MARCH 21, 2010

A “warrant&# is a right, but not an obligation for a company to buy stock in your company at a future date and at a pre-agreed price. Think of it as similar to an employee stock option. So let’s think first about employee options and how they can be similar to company warrants. Should You Offer Them?

Warrant 298

Warrant Dilution Startup Stock Options 298

Startup Professionals Musings

OCTOBER 7, 2010

In reality, so-called “founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock survives investment.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

www.inc.com

SEPTEMBER 24, 2011

Sales & Marketing | Wednesdays. Employee Benefits. SALES & MARKETING. Jumpstart wasnt much at the time, just four employees working from home offices. 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. Finance | Tuesdays. Tools & Research.

Arizona 40

Arizona Equity Iowa Venture Capital 40

Gust

JUNE 7, 2014

Every investment round in a company is made on the basis of extensivepaperwork (often upwards of 100 pages in total) specifying *precisely* what happens when it comes time to pay out the proceeds (if any) from the sale or dissolution of the company. So, here is the typical payout order, from first to last: 1) Salaries owed to employees.

Warrant 157

Warrant Preferred Stock Early Stage Common Stock 157

Gust

MARCH 16, 2014

In reality, so-called “Founder’s” shares are simply common stock, issued at the time of startup incorporation, for a very low price, and normally allocated to the multiple initial players commensurate with their investment or role. Vesting always stops when an employee leaves the company. Stock dilution control.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

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

Scott Edward Walker

NOVEMBER 22, 2015

Accordingly, each founder should carefully review any agreements with his prior employer and the employee handbook to determine if there are any provisions that may give the prior employer rights to the startup’s IP. Moreover, I recently saw this problem in the context of the sale of startup we were representing. code, a patent, etc.)

IP 40

IP Software Review Due Diligence Intellectual Property 40

Tim Keane

JANUARY 12, 2010

It also assumes the entire value of the investment is captured for investors at a sale of the company in the time specified in the term-sheet. This results in a range of sale prices; in this example from $118.6MM to $21MM.   In most cases, the preferred dividend is paid before any dividend is paid to the common.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Company Lawyer

MAY 4, 2009

How to scale from the first sale to the millionth. Description: How to set-up the right company structure to attract great employees and investors. The Founder Institute has developed Class F common stock , which provides founders with a maximum amount of control over the founder’s company. How to grow it.

Founder 28

Founder Warrant San Francisco Intellectual Property 28

Berkonomics

MARCH 8, 2018

The option price should be set by appraisal under IRS rule 409a, and certainly should be low enough to recognize that common stock options are not worth as much as preferred stock, given the many preferences of the latter. Expenses for travel are often reimbursed by the corporation.

Early Stage 102

Early Stage Vesting Stock Options Preferred Stock 102

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. Sales contracts accounting for significant revenue.

Intellectual Property 139

Intellectual Property Non-disclosure Agreement Delaware Stock 139

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

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. million in funding. Female Founders!

San Antonio 107

San Antonio Dallas Houston Founder 107

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. Q: How does the tax deduction work?

Stock 114

Stock Capital Gains Warrant Stock Options 114

Haystack

JULY 8, 2018

So, that’s why I’m writing this short post specifically for 1) employees of early-stage startups and 2) the earliest investors in these startups, who are often themselves new to the entire sector. For employees at early-stage companies… the equity you’ve been granted is likely common stock, just like the founders.

Early Stage 95

Early Stage Dilution Private Equity Equity 95

Berkonomics

APRIL 14, 2012

Summarizing income statements with a line for revenues, cost of revenue, general and administrative expenses, sales and other direct costs – all leading to net income, would satisfy the legal requirement for statement of income and expense.

Stock Options 81

Stock Options Balance Sheet Stock Common Stock 81

Growthink Blog

MAY 10, 2012

If it's not your plan to get venture capital down the road, then you'll probably stop in Stage 2-receiving enough funding to boost your marketing, sales, and infrastructure to grow organically from there to the point where you are satisfied or ready to sell. Series B is the round that follows series A in early stage financing.

Equity 88

Equity Mezzanine Later Stage Venture Capital 88

Berkonomics

OCTOBER 26, 2010

The option price should be set by appraisal under IRS rule 409a, and certainly should be low enough to recognize that common stock options are not worth as much as preferred stock, given the many preferences of the latter. Email readers continue here.] Expenses for travel are often reimbursed by the corporation.

Stock Options 66

Stock Options Early Stage Stock Vesting 66

Berkonomics

MAY 23, 2024

The option price should be set by appraisal under IRS rule 409a, and certainly should be low enough to recognize that common stock options are not worth as much as preferred stock, given the many preferences of the latter. How do you set the option price? How about companies without intent to sell or IPO in future?

Early Stage 62

Early Stage Vesting Stock Options Preferred Stock 62

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. Starting capital gains holding period in the event of a stock sale.

IP 67

IP Stock Options Preferred Stock Capital Gains 67

Startup Company Lawyer

FEBRUARY 21, 2010

I was speaking at an event last month to a group of CEOs and was surprised by the number of CEOs that were worried about the value of their common stock in a M&A transaction. Due to aggregate liquidation preferences that may exceed the acquisition price in an M&A deal, common stock may be rendered worthless.

Retention 31

Retention Liquidation Preference Employee Common Stock 31

ithacaVC

MAY 1, 2013

In a sale, the original amount and the interest all come due. It must be paid out before the common shares, which are typically held by the founders and other employees.” It is ONLY once the VC’s liquidation preference is cleared that the common stock held by founders and employees is worth anything.

Dividend 45

Dividend Liquidation Preference Common Stock Venture Capital 45

Berkonomics

JANUARY 6, 2022

First, the marginal exit event: Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.

Dividend 62

Dividend IRR Preferred Stock Participating Preferred 62

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. So let’s talk about the components of the 2,456,758 share number. Back to our basics.

Cap Table 67

Cap Table Pre-Money Valuation Option Pool Liquidation Preference 67

ithacaVC

FEBRUARY 23, 2011

The ALP is the total amount of $ that preferred stock holders are owed on a sale of the company under their liquidation preferences. The more the company raises the higher the ALP, and thus the higher the hurdle before the common stock held by founders and stock options held by other employees are in the money.

Liquidation Preference 55

Liquidation Preference Management Preferred Stock Dividend 55

Berkonomics

OCTOBER 1, 2015

Sometimes the end game or sale of the company is not a happy event for the early investors, including the entrepreneur or the founders. Most sophisticated investors will take either a promissory note or preferred stock, both of which come before founder or management stock in a sale or liquidation.

Dividend 48

Dividend Preferred Stock IRR Participating Preferred 48

Berkonomics

APRIL 4, 2019

Summarizing income statements with a line for revenues, cost of revenue, general and administrative expenses, sales and other direct costs – all leading to net income, would satisfy the legal requirement for statement of income and expense. Requirements created by investment documents.

Stock Options 48

Stock Options Balance Sheet Stock Common Stock 48

blog.simeonov.com

FEBRUARY 22, 2010

This can be a convenient shortcut to separate someone’s status (founder) from their role (employee or contractor or advisor, etc.) Compensation is a combination of cash (post funding) and common equity that is subject to vesting if professional investors are involved. Initial vesting typically matches employee founders.

Founder 44

Founder Vesting Agile Startup 44