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I’m not sure I really even need to write this at length because Nivi absolutely nailed the topic in his article “ The OptionPool Shuffle.&#. When I went to raise money in 2006 I thought I knew every term in a term sheet but somehow I still got a bit duped by the optionpool shuffle. No optionpool shuffle.
As first time entrepreneurs they did not create an employee optionspool; we’ll fix that in a little while. They come up with two options: Hire Praveena as an employee and offer her stock options. If the full pool were to be given out, the dilution is fairly significant to the founders.
Distribution revenue is CPC and CPA. . Historically more revenue came from distribution/lead-gen (57% in 2007), but this tipped in 2008 though appears to be steady from 2009 to 2010 at about 58% advertising and 42% distribution. Kayak generates both distribution (i.e. Expedia accounted for 24.5% as of 12/31/09).
The distribution of investors should mirrorthe distribution of startups, which has the usual power law dropoff.So 2 ]Its not the distribution of good startups that has a powerlaw dropoff, but the distribution of potentially good startups,which is to say, good deals. 13 ]Im not saying optionpools themselves will go away.
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? The one thing that I think is missing is distributing equity to every single employee in the company regardless of title. Title Range (%).
More often than not, these companies have no formal optionpool, although many have either formal or informal promises to grant options to key employees. The real value that these partners can bring is through being great customers, great suppliers or a distribution partner.
If youre offering the consultant stock options, youll also want to take into consideration what the exercise price is going to be and how long the options will be outstanding. Create an optionspool, if nothing more than in your mind, so you have some parameters to work within," Durkin says. Toshiba Laptops. Get ahead.
A liquidation preference means that the investors receive their investment back (plus dividends) prior to a distribution of the proceeds to stockholders. The investor may also ask for a participation in which the investors receive some additional multiple of their investment prior to distribution of proceeds to stockholders.
The Long Term Stock Exchange is building out a set of tools for founders for managing their cap tables, 409A valuations, cash on hand, optionspool, investor relations, etc. Some technology vendors are providing options to limit distribution of confidential information from GP reports. 11) Exit .
You can’t have an optionpool that takes up 50% of the company’s shares, and you have to leave room for future employees as well. turtlebarbeque I always believed the equity distribution is primarily based on the worth of the contribution. Thank you and great post bud. Thank you and great post bud.
But we had a solid product, strong weekly revenue growth (10% week over week), and two distribution/marketing channels that were already paying dividends. When we went out to raise money, we raised with only a couple thousand dollars in monthly recurring revenue. Almost all of that was foreign to me.
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