Both Sides of the Table

JULY 22, 2010

This means that participation truly only applies in downside scenarios and once your exit outcome is above a certain price investors would still be better off converting to common stock and not taking their preference. Tags: Startup Advice This Week in Venture Capital.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Both Sides of the Table

JULY 29, 2010

Mike Stern (wasn’t sure which one so leave a comment if it’s you): Q: “is it possible to sell your startup without venture investment if the company has big traction and a large user base?&# The downside is that people need to buy their stock. This question runs from about minute 2 – minute 8. Do it early.

Venture Capital 282

Venture Capital Term Sheet Valuation Stock Options 282

Gust

MAY 24, 2012

As a quick review, most startups begin life as corporations with a single class of equity securities, referred to as Common Stock , issued to founders, employees, and outside service providers. Options and warrants, when issued, are also typically exercisable for shares of Common Stock.

IPO 159

IPO Equity Common Stock Stock 159

Startup Lessons Learned

AUGUST 26, 2009

Lessons Learned by Eric Ries Wednesday, August 26, 2009 Building a new startup hub Last week, I had a unique opportunity to spend some time in Boulder at the behest of TechStars. It was a great experience to see a relatively new startup hub in action - and thriving. Their model looks like a key ingredient in the startup brew there.

San Francisco 113

San Francisco Silicon Valley Startup Lean 113

YoungUpstarts

AUGUST 25, 2015

One of the first actions you will take with your startup is to organize your company a separate legal entity to protect yourself from personal liability for the company’s debts. In the tech startup context, you’ll typically choose between a Corporation and a Limited Liability Company (“LLC”).

LLC 100

LLC Technical Review Software Review Limited Liability Company 100

Agile VC

APRIL 17, 2011

AGILEVC My idle thoughts on tech startups. Interesting to note that Hafner and English own common stock but also made meaningful investments in the Series A & B rounds. One can infer valuations based on per share prices of preferred stock and oustanding common shares (~5.3M How to Evaluate Firms for a Seed VC.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

Up and Running

SEPTEMBER 19, 2017

Capital investments are like gasoline on a startup business’s metaphorical fire. If you’re like most startup CEOs, your startup has been your personal fiefdom and baby. Background: Justin Klemm’s analytics and website uptime startup, Ghost Inspector , wants to revolutionize the way businesses manage their ecommerce funnels.

Private Equity 94

Private Equity Pre-Money Valuation Equity Startup 94

Scott Edward Walker

SEPTEMBER 28, 2011

Indeed, you must make sure that all of the shares of common stock issued by the corporation to the founders are subject to vesting restrictions – which means that ownership of the shares would vest over time (instead of all of the shares being owned outright on day one). Vesting Restrictions. and start negotiating with them.

Vesting 89

Vesting Software Review IP Intellectual Property 89

Feld Thoughts

DECEMBER 28, 2011

Recently, Microsoft announced the Microsoft Kinect Accelerator , a program created to incubate startups building the next generation of innovative experiences for the Kinect. If accepted, each company will receive an equity investment of $20,000 in exchange for six percent of the company in common stock, which will be held by TechStars.

Intellectual Property 134

Intellectual Property Common Stock Seattle Cofounder 134

The Next Web

JUNE 15, 2012

From Silicon Valley to Peoria, Illinois, cash-strapped startups look for inventive way to finance their business – often handing out equity to employees, consultants, vendors, and other service providers. Speed is often of the essence early on in the startup lifecycle, and that often means rushing into casual arrangements.

Equity 116

Equity Stock Options Vesting Stock 116

www.paulgraham.com

APRIL 28, 2010

Want to start a startup? A typical startup goes throughseveral rounds of funding, and at each round you want to take justenough money to reach the speed where you can shift into the nextgear. Few startups get it quite right. 1 ] A startups life will be more complicated, legally, if any of theinvestors arent accredited.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

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. But that’s only the beginning of the story.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

View from Seed

DECEMBER 4, 2014

Editor’s note: Understanding how to divide founder equity at a startup can be tricky, even to the point of reaching emotional riffs between founders. Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits.

Equity 315

Equity Founder Sweat Equity Cofounder 315

David Teten

JANUARY 19, 2021

More and more startups are pursuing Revenue-Based VCs , but “RBI” doesn’t fit everyone. Eligible for favorable treatment under Qualified Small Business Stock exemption, if structured as equity. This applies if the investment converts into common stock; details are beyond this essay’s scope. of startups raise VC.

Cofounder 78

Cofounder Technical Review Equity Dividend 78

Austin Startup

JULY 6, 2018

Background Reading: Why startups need signals. More traditional and comprehensive programs often require 5–8% of common stock, but often provide between $20K and $100K up-front as well. See: Startup Accelerator Anti-Dilution Provisions; The Fine Print. Anti-Dilution. Originally published at Silicon Hills Lawyer.

Dilution 48

Dilution Startup Technical Review Equity 48

Startup Company Lawyer

AUGUST 31, 2012

Over the past few years, convertible debt has emerged as a quick and inexpensive method for startup companies to raise money from angel investors and early stage venture funds. However, most typical convertible debt issued by startups have a maturity date of typically one year or later from the time of issuance. Background.

Convertible Security 73

Convertible Security Equity Security Preferred Stock 73

Agile VC

DECEMBER 4, 2014

Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

Startup Professionals Musings

JUNE 9, 2010

Startups ask me “How much money should I ask for?” The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options.

Valuation 227

Valuation Early Stage Warrant Startup 227

Both Sides of the Table

MARCH 21, 2010

This is part of my ongoing series on Startup Advice. As startup entrepreneurs we all want to work with them because having their name as reference clients makes it so much easier for marketing, PR, selling to other customers, fund raising and even recruiting. Make the warrants for common stock and not preferred stock.

Warrant 298

Warrant Dilution Startup Stock Options 298

keen.io

FEBRUARY 5, 2013

How I negotiated my startup compensation. When I started thinking about joining Keen, I quickly realized there is a lot I don’t know about startups. For example: Don’t accept equity compensation (stock shares) without knowing the percentage of the company you’ll own. I knew enough to know I wanted to join a startup.

Salary 50

Salary Equity Startup San Francisco 50

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. entrepreneur founder rules startup stock' Marty Zwilling.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Steve Blank

APRIL 26, 2022

At the turn of the century after the dotcom crash, startup valuations plummeted, burn rates were unsustainable, and startups were quickly running out of cash. Some even insisted that all prior preferred stock had to be converted to common stock. You can do another startup again with your head held high.

Cram Down 417

Cram Down Founder Venture Capital Recapitalization 417

Both Sides of the Table

SEPTEMBER 18, 2014

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. If you want to give them a 33% discount you offer them half of a $1 common-stock warrant for every $1 share they purchase. Startup Lessons' ” Simple. And so forth.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

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. Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

Both Sides of the Table

APRIL 14, 2010

Liquidation preference is the amount of money that an investor gets paid before the common stock (e.g. It also gets the new investor concerned that management (common stock holders) will not be incentivized because they realize that the investors will take most of the money unless there is a big upside scenario.

Venture Capital 289

Venture Capital Liquidation Preference Common Stock Pre-Money Valuation 289

Scott Edward Walker

NOVEMBER 22, 2015

For many startups, intellectual property (IP) is their most valuable asset. Below are the three most common IP-related mistakes that startups make — the first of which I discuss in this brief video with Jason Calacanis. This is a particular concern if the startup is in the same space as a founder’s prior employer.

IP 40

IP Software Review Due Diligence Intellectual Property 40

Startup Company Lawyer

MARCH 14, 2010

In addition, I think that a “peace treaty&# between early-stage investors and startup companies on standard terms (at least at a term sheet level) is a step in the right direction. Almost all startup companies don’t declare dividends, so deletion of a dividend preference is irrelevant to an investor. Legal fees.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Tim Keane

JANUARY 12, 2010

Startups and angels: Along the way to success.   Posted at 04:19 PM in Funding startups | Permalink. Funding startups. Startup ideas. Resources for startups. Startups and angels: Along the way to success. By Tim Keane, Angel Investor, Golden Angels Investors, LLC. TrackBack URL for this entry: [link].

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Gust

MAY 31, 2014

So before a startup receives outside funding, the board is “elected” by—and usually consists of—the founders (although it may exist in name only.). Invested Interests board of directors business entrepreneur founders startup' A company’s board of directors is technically elected by the company’s shareholders.

Common Stock 159

Common Stock Startup Founder Stock 159

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. Tags: entrepreneur funder's stock startup investor business. Marty Zwilling.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

YoungUpstarts

JUNE 26, 2020

by Rizwan Virk, author of “ Startup Myths and Models: What You Won’t Learn in Business School “. If you are building a startup, you’ll find no shortage of people who are willing to give you advice, particularly when it comes to raising financing. I used to think a valuation was kind of like a stock price of a public company.

Finance 205

Finance Silicon Valley Valuation Startup 205

Startup Professionals Musings

OCTOBER 29, 2013

Startups ask me “How much money should I ask for?” The most common case is an equity investment, but there are many terms that can impact what request size is credible. I’m talking about things like anti-dilution clauses, preferred versus common stock, valuation tied to later round, warrants, and bridge loan options.

Valuation 258

Valuation Early Stage Warrant Common Stock 258

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. Startup owners need to assume a three to five year wait for a liquidity event, such as acquisition or going public, before they can cash out.

Stock 240

Stock .Net Vesting Founder Vesting 240

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

Both Sides of the Table

MAY 13, 2013

For the past 5 years or so Google, Facebook and a handful of tech industry giants have been quietly buying scores of early-stage startups for their talent. A couple of tech giants throw millions around in either cash (for which they have hoards) or part with some publicly traded stock. Go do a startup. Startup Advice'

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Agile VC

DECEMBER 4, 2014

Across both the startups I’ve personally been involved in (PayPal and LinkedIn) and the startups in which I’ve been an investor, I’ve seen a broad range of co-founder equity splits. You can then work with your law firm to formally draw up founder common stock paperwork either then or subsequently.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Both Sides of the Table

SEPTEMBER 8, 2012

I recently wrote about my views that startups rounds should be priced. Here is what I recommend very often – privately – to startup entrepreneurs for angel funding. Almost every startup needs an anchor. And a few others. Luckily there are tools like Storify – so you can actually see a synopsis here.

Pre-Money Valuation 294

Pre-Money Valuation Finance Liquidation Preference Warrant 294