Both Sides of the Table

OCTOBER 1, 2009

Unemployment coupled with a stock market drop will stop this spending cold IMHO. If these factors impact earnings the stock market may be headed South – If unemployment rises housing prices won’t. This will likely cause the stock market to contract. If the stock market holds then the pace of VC may hold steady.

Technical Review 269

Technical Review Stock Hawaii Early Stage 269

Startup Professionals Musings

MAY 1, 2023

Even with an agreed initial equity split, it’s smart to have Founder’s stock actually issue or vest over a period of at least two years, on a month-by-month basis. Of course, all cofounders need to remember that allocated percentages will be diluted as angel and VC investors are brought in.

Technical Cofounder 247

Technical Cofounder Equity Distribution Cofounder 247

Startup Professionals Musings

SEPTEMBER 10, 2018

Even with an agreed initial equity split, it’s smart to have Founder’s stock actually issue or vest over a period of at least two years, on a month-by-month basis. Of course, all co-founders need to remember that allocated percentages will be diluted as angel and VC investors are brought in.

Equity 238

Equity Cofounder Technical Cofounder Intellectual Property 238

The Next Web

JANUARY 24, 2014

So let’s take stock: What do we offer? The company has a checkered past, but it was the first corporation in history to issue stock in exchange for capital. This legal-financial ingenuity lead to the creation of the world’s first stock exchange in 1602: the Amsterdam Stock Exchange. Not in my view. How to fix this?

Netherlands 143

Netherlands Technical Review Stock Silicon Valley 143

Both Sides of the Table

JUNE 5, 2011

On a public stock market that is the value that investors place on future free cash flows of the business discounted to today’s date to account for the time value of money. The price of public stocks change instantly in reaction to news that is perceived to affect the future value of that company. Here’s what I mean.

Pre-Money Valuation 336

Pre-Money Valuation Valuation Silicon Valley Stock 336

The Next Web

OCTOBER 7, 2013

Every time a startup raises capital, all common shareholders are diluted. All of the estimates displayed above are figures prior to any dilution. As stated earlier, investors will dilute ownership upon nearly every round of financing. So, if o = initial ownership and y = total dilution, x = o * (1 – y). N: exit size.

Engineer 129

Engineer Dilution Option Pool Vesting 129

Feld Thoughts

SEPTEMBER 2, 2011

They come up with two options: Hire Praveena as an employee and offer her stock options. Bring Praveena in as a founder and offer 10-20% of the company as stock. If the full pool were to be given out, the dilution is fairly significant to the founders.

Cap Table 133

Cap Table CTO Hire Technical Cofounder Cofounder 133

The Next Web

JUNE 15, 2012

And perhaps most importantly, equity is a business’ most precious resource, and the amount you give a contractor in stock can end up being worth many, many times more in a few years. Not to mention the fact that every time you compensate with equity, you dilute your own ownership of the business. Plan upfront. Put it in writing.

Equity 116

Equity Stock Options Vesting Stock 116

Both Sides of the Table

APRIL 27, 2010

I learned how to retain employees when stock options were no longer a real currency. But the firm that funded my first startup was loyal to me for having stuck around in what they knew to be pretty tough times and having suffered much dilution. I learned how to integrate customers into our product development process.

Venture Capital 285

Venture Capital Hiring Software Review Stock Options 285

Both Sides of the Table

SEPTEMBER 25, 2010

The key is making sure the second close isn’t too high (I think 50% of X sounds about right) because you’ll be adding on that dilution to yourself & “X&# investors will own less of the company. I believe you reward investors who make an early call just like on the public stock market.

Finance 286

Finance Term Sheet Technical Review Warrant 286

Both Sides of the Table

OCTOBER 12, 2014

This might happen because to meet all investors needs they end up selling too much of the company, taking too much dilution and feeling beat up. Have you noticed the increase of founders selling their personal stock in what is known as a “secondary? If you listen to conventional wisdom this is the only thing happening.

Technical Review 336

Technical Review Later Stage Early Stage LP 336

Steve Blank

OCTOBER 22, 2024

If the stock price can stay high for 6 months the investors can sell their shares and make a pile of money regardless of what happens to the company. What are the physical specs – unique hardware needed ( dilution cryostats , et al) power required , connectivity, etc. How will the computer be programmed?

Technical Review 267

Technical Review Illinois Algorithm Software Review 267

Both Sides of the Table

AUGUST 14, 2017

Executives run the day-to-day so often the board is more involved as a sparring partner at key intervals. The administrative work we actually do at board meetings? 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.

Cofounder 217

Cofounder Stock Options Equity Technical Review 217

Both Sides of the Table

FEBRUARY 8, 2016

We do this in our consumer lives with everything ranging from housing purchases to public stocks. Optimize for a W more than % dilution in these circumstances. Employees hate them because it’s hard to reset expectations that their stock is worth less. Founders hate them because they’re dilutive. Start early.

Burn Rate 150

Burn Rate Cap Table Startup Dilution 150

The Next Web

OCTOBER 10, 2013

Too dilutive.”. Dilution – bringing on a co-founder likely means you’re splitting your share in half. We split our stock one-fifth each. You can’t be successful unless you are the single visionary, or unless you have a cofounder, or unless there are three of you. You know what is definitely the wrong number of cofounders?

Cofounder 143

Cofounder Technical Cofounder Kenya Dilution 143

Startup Professionals Musings

AUGUST 24, 2016

Even with an agreed initial equity split, it’s smart to have Founder’s stock actually issue or vest over a period of at least two years, on a month-by-month basis. Of course, all co-founders need to remember that allocated percentages will be diluted as Angel and VC investors are brought in. But don’t get greedy.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

The Startup Magazine

MARCH 14, 2022

The equity dilution at this nascent stage is on desirable terms; such investing can lead to profitable returns. Once the company has established itself and created brand recognition, then the company’s promoters look to list the shares of the company on the stock exchanges. 2) Seed funding. The transforming startup ecosystem.

Technical Review 167

Technical Review Due Diligence India Startup 167

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. Here are some typical special terms and considerations for Founder’s stock: Negligible real value.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Both Sides of the Table

SEPTEMBER 29, 2009

The professor plotted data and showed us statistically that most people buy stocks when they are booming (e.g. Whether you like it or not, VC investors are impacted by investment psychology and get scared when markets are in a free fall. The best MBA class I took was an investment strategy class. VC’s are not immune to this phenomenon.

Burn Rate 263

Burn Rate Valuation Pre-Money Valuation Private Equity 263

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. Spread stock issuance over an earning period. This is called stock dilution control.

Stock 240

Stock .Net Vesting Founder Vesting 240

Up and Running

JULY 2, 2014

of our company in exchange for the $300K, and my business partner and I each diluted from 50% ownership down to 33.3% ownership and never dilute. When fundraising for a startup, all investors dilute as additional investors join in on the deal. The deal we made with him was he’d get 33.3%

Technical Review 118

Technical Review Angel Investor Due Diligence Dilution 118

thinkspace.com

SEPTEMBER 7, 2012

Should founders have anti-dilution rights? Consider the stock exchange, knowing something that will effect the price of a stock before it is well known allows you to make the right move with the stock. You’d have to look at your stock options contract. Dilution should occur across the board.

Equity 62

Equity Employee Founder CTO Hire 62

Startup Professionals Musings

SEPTEMBER 22, 2012

Many employees forget that there isn’t even a market for stock, until after the company has gone public, which hasn’t happened positively to many companies in the last few years. Thus, stock doesn’t “pay the mortgage” today, so to speak. Your compensation is the total package of stock plus salary plus benefits.

Stock Options 230

Stock Options Stock Advisory Board Startup 230

Startup Professionals Musings

OCTOBER 17, 2013

Many employees forget that there isn’t even a market for stock, until after the company has gone public, which hasn’t happened positively to many companies in the last few years. Thus, stock doesn’t “pay the mortgage” today, so to speak. Your compensation is the total package of stock plus salary plus benefits. Marty Zwilling.

Stock Options 224

Stock Options Stock Advisory Board Startup 224

Agile VC

OCTOBER 23, 2012

For example, if there were no S&P 500 ETFs or index mutual funds an investor could easily buy a “synthetic” equivalent by buying shares of all the S&P 500 stocks in proportion to each company’s weighting in the index. But the median investment is almost certainly a middling return if not a modest loss.

LP 176

LP Accredited Investor Carried Interest Distribution 176

Both Sides of the Table

FEBRUARY 20, 2019

If angel investors are pressuring you to set up a board and if you don’t have the leverage to push back a little then I might suggest a 3-person board in which all 3 seats are appointed by the common stock and you agree to appoint one of these seats to the angel investor but perhaps make it either time based or event based.

Venture Capital 236

Venture Capital Startup Angel Investor Silicon Valley 236

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. Here are some typical special terms for founder’s stock: Negligible par value. Stock survives investment.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

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. Spread stock issuance over an earning period. This is called stock dilution control.

Vesting 298

Vesting Dilution Stock Founder Vesting 298

This is going to be BIG.

FEBRUARY 27, 2011

You get dilution sensitive and you start optimizing on price of a financing deal, versus finding the right partners or raising enough money to grow. I’ve never heard of a team that did this, and then regretted the decision to take a little more money (and dilution) in a round to get the best people around a table.

Dilution 104

Dilution Equity Hiring Partner 104

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

Startup Company Lawyer

MARCH 14, 2010

To differentiate it from typical “Series A&# preferred stock, which comes with certain expectations with regard to rights. There is no real rule to what a particular series of preferred stock is called. Anti-dilution protection. Deleting anti-dilution rights saves several pages of text in the Certificate of Incorporation.

Finance 70

Finance Software Review Term Sheet Liquidation Preference 70

Hunter Walker

SEPTEMBER 10, 2024

Unlike a public stock which gets revalued every day, the intermittent nature of startup valuations means that it becomes all too easy for investors to develop a false sense of security about their portfolios. Paper marks are deceptive! I tell new and aspiring VCs to not believe the ‘content marketing’ version of our job.

Venture Capital 89

Venture Capital Silicon Valley Memphis Cap Table 89

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. Here are some typical special terms and considerations for Founder’s stock: Negligible real value.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

ReadWriteStart

JUNE 1, 2020

The shares given out can either be common stocks or preferred stocks. ? Debt investment. Raising higher capital at an early stage means more equity to be diluted to the investors. Equity investment is the most popular and most talked-about avenue for startup funding. Capital is expensive. It might be tempting to do so.

Startup 150

Startup Entrepreneur Elevator Pitch Seed Stage 150

Startup Professionals Musings

JULY 1, 2022

Many employees forget that there isn’t even a market for startup stock, until after the company has gone public, which hasn’t happened positively to many companies in the last few years. It never hurts to ask in a job interview what stock options are available, and don’t fall for the offer which promises to “work out the equity terms later.”

Stock Options 343

Stock Options Advisory Board Stock Startup 343

The Startup Magazine

AUGUST 9, 2022

Being faced with the same issues as Zumba a couple of years earlier, either you spend tons of money for major artists or you’re left with commonplace stock tracks, we realized a middle ground was needed. One of the most underrated jobs of a leader in a scaling organization is making sure the culture doesn’t get diluted.

Cofounder 158

Cofounder Founder Miami Marketing 158

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