Both Sides of the Table

AUGUST 3, 2010

I can save tons of development time and I think I can buy it for all equity. How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. I’m not saying there are never reasons to buy another company for cash and/or equity. BUT … it’s your company.

Merger 276

Merger Technical Review Early Stage Dilution 276

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. Pitfalls in sharing equity. While equity can be a great tool for compensating early on, the drawbacks are significant.

Equity 116

Equity Stock Options Vesting Stock 116

Both Sides of the Table

FEBRUARY 6, 2013

it’s the most expensive dilution you’ll ever face. But not anal if one founder who shares equity graciously with early employees who are treated as “co-founders” My idea startup team is heaving on tech personnel but also has strong product management. Quick summary: Be careful not to have too many co-founders.

Cofounder 388

Cofounder Early Stage Startup Silicon Valley 388

Both Sides of the Table

SEPTEMBER 25, 2010

When I first read Paul Graham’s blog post on “High Resolution&# Financing I read it as a treatise arguing that convertible notes are better than equity. He’s fine with equity provided it’s cheap to paper it legally. Photo credit: D. Blanchard/O’Reilly Media.

Finance 286

Finance Term Sheet Technical Review Warrant 286

The Next Web

NOVEMBER 20, 2013

There are a lot of variables to go into calculating a fair equity split a startup team. So, a fair split, would be closer to 60/40 in favor of the funding founder, when diluted for the cash. You need to collectively take all four paragraphs into consideration, in calculating a fair equity split between the founders.

Cofounder 136

Cofounder Equity Founder Seed Stage 136

Both Sides of the Table

OCTOBER 1, 2009

We spent our future since the equity was artificial. If you’re raising $2 million and can close on $3 million – don’t optimize to minimize short-term dilution, optimize for contingencies in case the market gets worse. Consumer spending is where I’m dubious. So why the ’09 bounce? See point 2 below. million – take it.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

Both Sides of the Table

OCTOBER 14, 2011

million pre-money valuation, which is a $10 million post-money) you get diluted by 25% (2.5m / 10m). But understanding how you’re likely to get diluted over time is a more difficult concept. And figuring out how much your equity may be worth over the course of a 5-year stint at a startup is even more complicated.

Dilution 394

Dilution Pre-Money Valuation Startup Valuation 394

Both Sides of the Table

SEPTEMBER 17, 2011

Dilute your cash, equity or both. But it will not help your business grow faster. What will it do? Focus the most senior person in the company’s time away from critical decision making on daily business. Create hassles for post-merger integration of technology or teams. Lead to bad blood on your existing team.

Operations 292

Operations CTO Hire Startup Early Stage 292

Feld Thoughts

SEPTEMBER 2, 2011

Equity is split 55% and 45%, but where is that officially recorded? The benefit of hiring Praveena is they think they could keep more equity and control of the company. But, Praveena hails from the land of big paychecks and is not ready to leave that without considerable equity. Time to update the cap table.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

The Next Web

OCTOBER 7, 2013

Quite frankly, waiting provides more assurance around employment risk without the commensurate sacrifice in equity comp. Every time a startup raises capital, all common shareholders are diluted. In a CTO Salary and Equity trends report by Safire Partners, it finds non-founder equity compensation to settle out below 2 percent.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Both Sides of the Table

JANUARY 4, 2014

Equity for the future? If you are the person staying how resentful will you become working your arse off for equity that your co-founder who leaves will get value from. What should the financial settlement be for the founder leaves be? What mechanisms exist for mediating if you can’t come to a consensus on these issues?

Founder 340

Founder Cofounder Sacramento Technical Review 340

Startup Professionals Musings

MAY 9, 2014

Thus every serious investor reserves a certain amount of his investment capital for follow-on rounds, which allows them to stay to course to success, even with dilution. They will need more money. If you subscribe to truths one to five, startup investing can be lucrative.

Angel Investor 278

Angel Investor Angel Groups Accredited Investor IRR 278

thinkspace.com

SEPTEMBER 7, 2012

How to Divide Equity to Startup Founders, Advisors, and Employees. The part that I’d like to zero in on is when you’ve got a high growth company what are some of the best practices out there to distribute equity to the founders, advisors, and employees? Equity for Founders. Equity for Employees. Bookkeeper.

Equity 62

Equity Employee Founder CTO Hire 62

www.avc.com

SEPTEMBER 22, 2011

Employee Equity: How Much? The most common comment in this long and complicated MBA Mondays series on Employee Equity is the question of how much equity should you grant when you make a hire. And the amount of equity you need to grant to accomplish these hires is also an art and most certainly not a science.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

This is going to be BIG.

MAY 17, 2012

Getting less dilution than standard means that you have to have made fantastic progress, have a world class team, etc. Whatever cap you put on the round, that's essentially the price, because no one would bet on you unless they thought you could beat the cap--so its essentially equity.

Venture Capital 118

Venture Capital Framework Dilution Equity 118

The Next Web

OCTOBER 10, 2013

Too dilutive.”. Dilution – bringing on a co-founder likely means you’re splitting your share in half. Your company needs to be worth three times more for your equity to be worth the same. Backblaze has to be worth five times more than if any of us had founded the company itself for our equity to be worth the same.

Cofounder 143

Cofounder Technical Cofounder Kenya Dilution 143

Both Sides of the Table

AUGUST 14, 2017

Boards are not appointed to be founder-friendly lapdogs for the 1–3 founders who start companies and usually own the largest equity positions in the company. To be clear — most founders I’ve ever worked with have been super ethical, very conscientious, not overly greedy and take their personal responsibilities very seriously.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

ReadWriteStart

JUNE 1, 2020

Forms of funding. ? Equity investment. Equity investment is the most popular and most talked-about avenue for startup funding. These investments are made instead of shares or equity in your startup. Equity investors. The third source of funding is from equity investors. Stages of Equity-based funding. ?

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

David Teten

JANUARY 21, 2021

V: Should you raise venture capital from a traditional equity VC or a Revenue-Based Investing VC? VI: Revenue-based financing: The next step for private equity and early-stage investment. VIII: The Leading Flexible VCs, With Structures Between Equity and Revenue-Based Investing.

Equity 78

Equity Revenue Cofounder Colorado 78

VC Cafe

FEBRUARY 27, 2024

In smaller funds, ticket sizes tend to be lower, so pre-seed is the only stage where micro funds are able to secure their minimum equity targets. There are of course anomalies, like French AI startup Mistral which raised a “seed” round of $113M in June last year.

Valuation 186

Valuation Software Review Generative AI Technical Review 186

The Startup Magazine

MARCH 14, 2022

The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. Equity listing offers an opportunity for investors from cities to own a part of the company. At this stage, the founder mainly raises funding from their sources or family and friends. 2) Seed funding.

Technical Review 167

Technical Review Due Diligence India Startup 167

Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. Over time, other people receive pieces of equity in exchange for work (employee stock options), money (seed, angel and venture investors), services (attorneys, directors, etc.). Uncategorized company equity dilution founder investors startup'

Dilution 150

Dilution Equity Vesting Stock Options 150

YoungUpstarts

OCTOBER 24, 2013

Lobock believes that Worthworm is one of the strongest tools in an investor’s arsenal, providing them with a consistent framework with which to standardize the screening process or later due diligence. “If you are an angel investor and a venture is seeking capital from you, insist on getting its Worthworm report.

Pre-Money Valuation 150

Pre-Money Valuation Web Technical Review Angel Investor 150

YoungUpstarts

SEPTEMBER 23, 2017

Deciding whether to increase money or trade equity in the business for much needed assistance, could be a tough call. I raised money and traded equity, but with my venture, I had to make one of the toughest decisions, to build it with some assistance of co-founders. Both the choices tend to take away a few options. Plan, Plan and Plan.

Cofounder 124

Cofounder Sweat Equity Equity Dilution 124

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. Below, Lee Hower offers advice for approaching these equity discussions objectively and properly. Sometimes co-founders put off the equity split question for some time.

Equity 315

Equity Founder Sweat Equity Cofounder 315

Both Sides of the Table

SEPTEMBER 29, 2009

This came in part due to the huge influx of money into VC but also because hedge funds and private equity shops with no VC experience wanted part of the action. High burn-rates fueled by over investment – One of the most damning things that happened to the start-up markets in 97-00 and 05-08 was the overfunding of technology companies.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

Agile VC

OCTOBER 23, 2012

And even if they wanted the index return, there is essentially no way to buy (or sell) a broad-based basket of VC funds in the way you can trade the S&P 500 or Russell 2000 or other public equity index. What about fund of funds (FoF), you ask? Aren’t they a form of bundled investment into the VC asset class?

LP 176

LP Accredited Investor Carried Interest Distribution 176

Both Sides of the Table

AUGUST 30, 2010

Convertible debt is an investment that “converts&# into equity in the future usually at a discount to your next funding round price and sometimes has a “cap&# (maximum price). prefer equity to convertible debt): If you’re an early stage investor (e.g. 20-25% dilution). In my mind the deal is priced.

Equity 319

Equity Early Stage Angel Investor Valuation 319

ReadWriteStart

OCTOBER 28, 2010

More excerpts from "Do More Faster" Title chapter: " Do More Faster " by David Cohen How should we split the equity? Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. Or worse, one that claims equity that you don't believe is due.

Cofounder 128

Cofounder Founder Equity Dilution 128

View from Seed

APRIL 30, 2015

Glen Mello: Venture debt is a good complement to equity. It’s generally got a lower cost compared to equity capital and can help support growth. So it makes it a lot more challenging when you have debt on the books that isn’t as longer term as equity. NVV: Is there any dilution? What are some pros and cons?

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120

This is going to be BIG.

FEBRUARY 27, 2011

This is where your business starts to incur real costs—but it’s also where entrepreneurs don’t like to be short term “sellers” of their equity. They’re hesitant to raise money—selling equity to investors—when things look great.

Dilution 104

Dilution Equity Hiring Partner 104

Gust

APRIL 11, 2014

Let’s get right down to business: Dilution of founders’ and other early shareholders’ equity in startups is frequently a subject of intense interest and debate. That’s the concept of what some call mathematical dilution. That is not economic dilution, but rather its opposite ( accretion ).

Dilution 162

Dilution Equity Pre-Money Valuation Prospectus 162

VC Adventure

AUGUST 16, 2020

Yet others try to use cash to minimize dilution for early employees and try to rapidly reduce their reliance on options. Both of those things are not good for your business, so while it’s ok to offer some level of cash/equity trade-off, it shouldn’t be over-done. But better to have a view on this that is deliberate.

Programming 148

Programming Vesting Equity Software Review 148

Agile VC

DECEMBER 4, 2014

As a result, one of the trickier things co-founders tackle is determining the equity split amongst the founding group of individuals. 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.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

ReadWriteStart

SEPTEMBER 10, 2010

Whether it is credit or equity, funding is very, very tight. You can get cash without diluting your ownership in the company. Because customer financing equals revenue, not equity. I gave Gio some advice on funding, which I will repeat here for all of you. This is important, so please listen up.

Cloud 115

Cloud Silicon Valley Incubator Bootstrapping 115

Business Plan Blog

OCTOBER 4, 2013

Be sure to leave plenty of equity for investors. Having too many co-founders will only lead to your eventual dilution. While you should be prepared to give up a large portion of the company’s equity to a co-founder, it is important that one founder maintains a majority share and creative control.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

David Teten

DECEMBER 2, 2019

And of course, effectively all venture capitalists are going to require some equity for their investment. I’m now researching non-dilutive funding for Action Tank , a startup I’m gestating to “Make America Functional Again”. I emphasize my focus here is organizations which are backing for-profit companies and do not take equity.

Technical Review 60

Technical Review SBIR Dilution Silicon Valley 60