Both Sides of the Table

JULY 22, 2010

You’ll need to hire and retain talen to grow your company. The VC’s $1 million still buys them 25% of your company – it’s you who has diluted to 60% ownership rather than 75%. But this example above is all entrepreneur math, not the VC’s. The VC assumes you’ll have an option pool.

Valuation 405

Valuation Liquidation Preference Pre-Money Valuation Term Sheet 405

Both Sides of the Table

MARCH 19, 2013

The era of VCs investing in successful consumer Internet startups such as eBay led to a belief system that seemed to permeate many enterprise software startups that hiring sales or implementation people was a bad thing. That it is non-dilutive financing? This article initially appeared on TechCrunch. I believe it’s flawed.

Technical Review 403

Technical Review Startup Software Review Churn Rate 403

Both Sides of the Table

AUGUST 3, 2010

How much dilution should I take for it?&# My friend’s company was pre-revenue. Me: “Zero dilution. But to be clear the overwhelming majority of deals involve one company driving the cultural integration, establishment of uniform processes, hiring / firing decisions, etc. They often involve big hugs on stage.

Merger 276

Merger Technical Review Early Stage Dilution 276

Both Sides of the Table

APRIL 27, 2010

My original post was directed at hiring managers. It said that I didn’t believe it was a good idea to hire job hoppers. My view still stands – for many hiring managers a large factor in looking through resumes of somebody who is 30+ and has never worked somewhere for more than 18 months will be the job hopping element.

Venture Capital 285

Venture Capital Hiring Software Review Stock Options 285

Both Sides of the Table

SEPTEMBER 5, 2012

In a standard VC term sheet there is a standard term called an “anti dilution provision” and they are in nearly 100% of deals. It has nowhere near the same dilutive effects as a full ratchet except in extreme edge cases. But my $500k, while only buying 10% of the company (and now diluted down to 7.5%

Ratchet 354

Ratchet Liquidation Preference Equity Stock 354

Both Sides of the Table

SEPTEMBER 17, 2011

One great solution I see is to hire an outstanding CFO who runs both. Dilute your cash, equity or both. I think people understand this title to mean more somebody who handles operational issues rather than somebody who is more like a “chief of staff&# as a COO often is. But they aren’t the COO. What will it do?

Operations 292

Operations CTO Hire Startup Early Stage 292

Both Sides of the Table

NOVEMBER 14, 2017

As a startup in this phase you often raise capital, get press, hire staff and everything feels possible. I always push companies to hire “an operationally focused CFO” during this phase because in order to systematize you need somebody who brings economic rigor to decision making. As an early-stage VC I love this phase.

Operations 286

Operations New York City Technical Review Startup 286

Startup Professionals Musings

AUGUST 21, 2019

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale.

Dilution 224

Dilution Merger Flash Global 224

The Next Web

OCTOBER 7, 2013

They were referring to non-founder engineers, most commonly the first hire for technology businesses. Every time a startup raises capital, all common shareholders are diluted. All of the estimates displayed above are figures prior to any dilution. So, if o = initial ownership and y = total dilution, x = o * (1 – y).

Engineer 129

Engineer Dilution Option Pool Vesting 129

Steve Blank

APRIL 10, 2019

Investors bet that by offering prospective hires a stake in the company’s future growth- with a visible time horizon of a payoff – employees would act more like owners and work harder– and that would align employee interests with the investor interests. That made sense.

Stock Options 335

Stock Options Stock Vesting Common Stock 335

Steve Blank

NOVEMBER 13, 2018

The company was going to hire a VP of Marketing. This sentence is worth reading multiple times as no one – not the person who hired you, the VC’s or your peers -is going to tell you when you’re hired that the company will likely outgrow you. Your original hires embody the company culture. I was devastated.

Part-Time VPE 334

Part-Time VPE Employee Cofounder Hiring 334

Startup Professionals Musings

OCTOBER 14, 2013

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale.

Dilution 187

Dilution Merger Flash Global 187

YoungUpstarts

JUNE 13, 2011

They end up trying to do too much for too many, which dilutes their focus and often the quality of their product or service. Hiring smart. Hiring mistakes are costly, time consuming, and create quality and financial control risks for small businesses. The problem is that too many entrepreneurs never learn to say ‘NO!’

Indianapolis 219

Indianapolis Minneapolis Kentucky Virginia 219

The Next Web

OCTOBER 10, 2013

Hire everyone you need as an employee. Too dilutive.”. Dilution – bringing on a co-founder likely means you’re splitting your share in half. The required number of cofounders for success is: “Zero” – You don’t need a cofounder. You are the founder, the visionary, the uber-entrepreneur. One” – You have to have a cofounder.

Cofounder 143

Cofounder Technical Cofounder Kenya Dilution 143

Both Sides of the Table

JUNE 5, 2011

But the reality is that you’re faced with two problems: 1) the earlier the stage the riskier and thus more write-offs so you need to have enough ownership percentage in your winners to make up for the losers and 2) the earlier stage your check the more likely the company will need many more funding rounds behind you and thus you face dilution.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

Up and Running

JULY 2, 2014

We had personally invested $70,000 of our own money at this point, and we were hoping to raise at least another $250,000 to help us hire a team, launch our company, and begin to build our product. of our company in exchange for the $300K, and my business partner and I each diluted from 50% ownership down to 33.3%

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

The Next Web

JUNE 15, 2012

Not to mention the fact that every time you compensate with equity, you dilute your own ownership of the business. It’s wise to create a stock options pool that includes all the employees and contractors you plan on hiring in the next 18 months and how many shares each might get. Tips for compensating with equity.

Equity 116

Equity Stock Options Vesting Stock 116

Startup Professionals Musings

SEPTEMBER 2, 2017

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale.

Dilution 134

Dilution Merger Flash Global 134

This is going to be BIG.

FEBRUARY 27, 2011

Despite advances in cloud infrastructure, many businesses still have fleshy parts—soft underbellies where a human hand is required to keep quality control, stuff something into a box, order inventory, hire enough engineers to keep the site going or manage cash. Scale brings complexity. If you’re lucky, you realize it in time.

Dilution 104

Dilution Equity Hiring Partner 104

YoungUpstarts

JANUARY 19, 2015

Don’t dilute your content. Many website owners make the mistake of diluting their content. Many people prefer to hire copywriters to take care of their blog and page content. They will ensure that what gets written is not diluted. And there are plenty of online tools to help you test and check your site’s accessibility.

Dilution 100

Dilution Web Web Development Flash 100

Both Sides of the Table

DECEMBER 1, 2009

I know that people find safety in numbers (and there always seems to be 3 amigos) but imagine this for a moment – you go and raise venture capital and you’re fighting over whether to dilute with a VC by 25% or 30% as a company. Resist the temptation to hire clones of you. Are you intuitive vs. process oriented?

Hiring 289

Hiring Cofounder Dilution Startup 289

Startup Professionals Musings

JANUARY 14, 2015

A common practice is to hire local employees who know the geographic culture, even though this may well dilute the company culture. This usually marks the end of organic growth, as partnerships and alliances aid growth, but again dilute the focus on culture. Product-line expansion. Efficiency and scale.

Matching 120

Matching Marketing Dilution Startup 120

Business Plan Blog

OCTOBER 4, 2013

Don’t hire people with skills and qualifications similar to yours. Hire based on functionality and avoid having too many C’s. This helps to better divide the work, make people accountable, and show investors just why each founder/hire is key to the organization. Hiring the right people at the right time is key.

Part-Time VPE 79

Part-Time VPE Fractional VPE Cofounder CTO Hire 79

Gust

APRIL 9, 2014

Equity dilution works when the same pie is divided among more people. Because the total percentage of equity will always equal exactly 100%, every time anyone gets another piece, by definition it “dilutes” all of the previous equity holders. Uncategorized company equity dilution founder investors startup'

Dilution 150

Dilution Equity Vesting Stock Options 150

ReadWriteStart

OCTOBER 28, 2010

Common areas to address are decisions around capitalization, executive hiring and firing, share issuance (dilution), and acquisitions. You'll need to decide what kinds of decisions the board makes, and which ones it won't. What happens if one of us leaves the company?

Cofounder 128

Cofounder Founder Equity Dilution 128

The Startup Magazine

AUGUST 9, 2022

Even hiring can be thought of as a subset of adaptability whereby at first you’re hiring generalists that can wear many hats because you simply don’t have the resources to hire individualists (people that are great at very specific things) and as the company grows, you need to adapt that hiring. Quality control?

Cofounder 158

Cofounder Founder Miami Marketing 158

VC Cafe

JUNE 10, 2022

As a result, founders are accepting increased dilution of the stakes they hold in their own companies. These changes come as Meta is dealing with slowed revenue growth , which has led the company to freeze hiring in some divisions. Bloomberg reports that Meta also stopped the launch of a new smart watch with two cameras.

Valuation 151

Valuation Marketing Israel Venture Capital 151

thinkspace.com

SEPTEMBER 7, 2012

Should founders have anti-dilution rights? I was originally hired as a contractor, developing a SaaS app from scratch, including DB design and coding. Along the way, I was hired full time (I believe about 8 months after I started), a coder from India was hired and another contractor was added to the team. Five years?

Equity 62

Equity Employee Founder CTO Hire 62

www.avc.com

SEPTEMBER 22, 2011

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. For your first key hires, three, five, maybe as much as ten, you will probably not be able to use any kind of formula. First, a caveat. Let's say the number is $25mm.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

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. But it will also change the nature of your workforce if you only hire employees that can work for well below market cash comp. It’s also important not to go crazy with the trade-off.

Programming 148

Programming Vesting Equity Software Review 148

Both Sides of the Table

MAY 7, 2016

From Aspiration to Hero For companies that do have that moment of success where everything seems to come together: funding, hiring, customers, PR, product releases and so forth — you have a “hero” moment where you feel invincible. Maybe it’s the system, maybe it’s me — but either way what could I do differently to change outcomes?

Churn Rate 150

Churn Rate Vesting Dilution Europe 150

Startup Lessons Learned

JULY 5, 2010

Brant and Patrick undertook a difficult challenge: to provide a generally accessible introduction to Customer Development, without diluting its impact or dumbing-down its principles. On the minus side, that has made it a wee bit hard to understand. I think theyve succeeded. The Entrepreneur’s Guide is an easy read.

Customer Development 166

Customer Development Developer San Francisco Customer 166

betashop.com

OCTOBER 8, 2012

The most important hiring criteria for your executives is cultural fit. As CEO, you are responsible for every hire. Until Fab reached 150 people, Bradford and I interviewed every single person we hired. If we make a hiring mistake - and we do from time to time - I put that blame on me, not on anyone else.?.

Technical Review 108

Technical Review Technology Software Review Valuation 108

The Next Web

AUGUST 19, 2013

It’s always better to be earn money, not just raise it, as money you earn doesn’t dilute your ownership and reassures your investors. If this channel works, you can later hire other folks to join you. You don’t need to hire an army as you can do the most of the work yourself. Good salespeople are expensive.

Belarus 137

Belarus Viral Channel Startup 137

Both Sides of the Table

FEBRUARY 17, 2011

If you are able to raise money from credible sources at a reasonable dilution percentage then I personally favor getting the round done now and building your business. How much dilution am I going to have to take now? So if you can take 27% dilution for $1.5 25% dilution). But this is the exception, not the rule.

Pre-Money Valuation 303

Pre-Money Valuation Dilution Valuation PR 303

YoungUpstarts

MAY 6, 2019

If you are getting funded for the first time, which means that you have not diluted the shares of your company, you will be receiving Series A funding. Hiring more resources. When you are done with making product improvements, start hiring more resources that can work to solidify your brand presence. Series A, B, C Funding.

Startup 113

Startup Technical Cofounder Merger Early Stage 113

View from Seed

APRIL 30, 2015

In many instances, you raise an institutional round to either fulfill a product strategy or go-to-market strategy or you’re increasing sales and marketing hires, so you have better visibility into what needs to happen in the next six, 12, 18 months. NVV: Is there any dilution? Any equity the venture debt lender gets?

Term Sheet 120

Term Sheet Equity Startup Seed Stage 120