venturehacks.com

OCTOBER 21, 2010

SUPPORTED BY Products Archives @venturehacks Books AngelList About RSS The Option Pool Shuffle by Nivi on April 10th, 2007 “Follow the money card!&# – The Inside Man, Three-Card Shuffle Summary: Don’t let your investors determine the size of the option pool for you. Don’t lose this game. share to $1.00/share:

Option Pool 68

Option Pool Pre-Money Valuation Dilution Warrant 68

Rob Go

JUNE 17, 2014

In my last post about raising seed vs. jumping straight to A, I received a good comment from Chris Woods that my analysis neglected to include the impact of option pools that are created at each financing round. Essentially, the new investor wants there to be a certain % of options available to employees after they invest.

Option Pool 65

Option Pool Dilution .Net Term Sheet 65

Both Sides of the Table

NOVEMBER 4, 2009

I often have career discussions with entrepreneurs – both young and more mature – whether they should join company “X&# or not. When we next spoke he had found out that the CEO had about 5% and there was no management option pool in place. Tags: Entrepreneur Advice Startup Advice.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

The Next Web

OCTOBER 21, 2013

As the European startup ecosystem matures, you would expect young entrepreneurs to enjoy ever-increasing access to useful advice from mentors, business leaders, experienced entrepreneurs, legal advisors and investors. In most cases entrepreneurs – especially first-time entrepreneurs – are naïve about fundraising.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

View from Seed

DECEMBER 4, 2014

In addition to being a co-founder of NextView Ventures, Lee was an early member of PayPal and a founding team member at LinkedIn, so he speaks as both a former entrepreneur and a VC. Below, Lee Hower offers advice for approaching these equity discussions objectively and properly.

Equity 315

Equity Founder Sweat Equity Cofounder 315

Pascal's View

JULY 9, 2017

Andrew Krowne and I recently co-wrote an article in Tech Crunch , Why SAFE Notes Are Not Safe for Entrepreneurs. At its core, this issue points to the lack of understanding about the importance of post-money valuation by both entrepreneurs and investors. Many entrepreneurs lose track of what they have been cooking up in the cap table.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

The Next Web

SEPTEMBER 30, 2014

In one instance, I told a CEO that we typically recommend a 15 percent stock options pool at seed/Series A stage. Entrepreneur Insider Analysis and Opinion tunein' She rolled her eyes in disbelief. When I try to illustrate that this. This story continues at The Next Web.

Equity 154

Equity Employee Option Pool Stock Options 154

Gust

AUGUST 30, 2012

Characteristics of the Entrepreneur. Valuation, Size of Raise, Amount of Investment, Form of Investment, Liquidation Waterfall, Option Pool, Board Composition, Anti-Dilution Rights, Protective Provisions, Founder Vesting, *original post can be found on Quora @ : [link] *. Characteristics of the Venture.

Founder Vesting 144

Founder Vesting Option Pool Vesting Exit Strategy 144

Both Sides of the Table

JUNE 5, 2015

How much is in the option pool? Well, if you have an option pool of only 6% and have many more execs to hire to build out your team you’re going to ask for more options to be created in the future. Option pool (likely dilution in the future, which is a function of a higher price just not yet defined).

Pre-Money Valuation 150

Pre-Money Valuation Option Pool Post-Money Valuation Dilution 150

Gust

SEPTEMBER 13, 2012

So, for example, taking a not-uncommon streamlined case of a company that had a seed round, a Series A and a Series B before being acquired (and for the purposes of this exercise disregarding any option pool), the math for a single-founder’s ownership of a startup would work like this based on giving up 20% each round: After Founding: 100%.

Option Pool 160

Option Pool Equity Valuation Startup 160

Tim Keane

JANUARY 12, 2010

Please see later version of this post on May 16, 2010 Entrepreneurs are often not experts in the area of term-sheet negotiations and all of the surrounding issues.   Investors sometimes “present” the terms they’d like and expect the entrepreneurs to react. Term-sheets and Valuations: Thinking about Negotiations.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Agile VC

DECEMBER 4, 2014

You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Cofounder 255

Cofounder Equity Founder Sweat Equity 255

www.inc.com

SEPTEMBER 24, 2011

Entrepreneur news from reporter Eric Markowitz. These days, start-up entrepreneurs like Parker do sometimes use equity not only to motivate key employees but also to help pay for consulting and other services. Create an options pool, if nothing more than in your mind, so you have some parameters to work within," Durkin says.

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

thinkspace.com

SEPTEMBER 7, 2012

Percent of the outstanding option pool: meaningless. Strike price of options: meaningless. Are there other tools that you’ve used that you think would be helpful to share with other entrepreneurs and founders? Your equity in relation to other employees: meaningless. link] Peter Chee. link] Joseph. Great Job Peter!

Equity 62

Equity Employee Founder CTO Hire 62

Both Sides of the Table

FEBRUARY 22, 2011

And I always encourage entrepreneurs to do reference checking. When you consider that they’ll also want a 15-20% option pool in the company you’re talking about founders owning as little as 40% after just one round. So obviously before agreeing to work with this VC you better make sure you know them really well.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

David Teten

DECEMBER 3, 2019

Small investment firms often have interns and entrepreneurs in residence passing through, each of which is a security risk. Chris Dixon, Partner, A16Z, observes , “Success in VC is probably 10% about picking, and 90% about sourcing the right deals and having entrepreneurs choose your firm as a partner”. 2) Market .

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Professor VC

JANUARY 17, 2008

I think the title of this post is a TV show, but fitting as there has been much debate in the venture community as to the whether angel investors are good or bad for entrepreneurs and VCs. One group charges entrepreneurs "an administrative fee" to present to the group. Touched by an Angel.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Agile VC

DECEMBER 4, 2014

You don’t really need to worry about how much common stock will be set aside for an employee option pool or how much preferred stock might be issued from raising future VC rounds in order to determine an equitable founder stock division.

Cofounder 173

Cofounder Equity Founder Sweat Equity 173

Hunter Walker

MAY 7, 2014

“Growing the team” is almost always one of the ways entrepreneurs utilize new investment dollars. The entrepreneurs had some ties into the broader startup community so weren’t completely on an island but hadn’t sourced or vetted any candidates. Building a senior team but pushing back on having a healthy employee option pool?

Hiring 132

Hiring Option Pool Early Stage Term Sheet 132

The Equity Kicker

OCTOBER 8, 2014

We have taken their feedback and tweaked the termsheet as appropriate with the result that on all terms bar valuation, option pool and details of founder vesting our termsheet is now, in effect, very close to fully negotiated before we send it to companies. Forward Partners Venture Capital'

Founder Vesting 92

Founder Vesting Vesting Option Pool Institutional Investors 92

Seeing Both Sides

JULY 15, 2009

Thus, the universe of financings that even the most experienced entrepreneurs get directly exposed to is typically 5-10 financings over a 15-20 year career. Year in, year out, Thus, VCs and entrepreneurs are not operating on an equal playing field when it comes to negotiating financings and interpreting the impact of the terms involved.

Pre-Money Valuation 49

Pre-Money Valuation Option Pool Stock Options Post-Money Valuation 49

techcrunch.com

FEBRUARY 25, 2010

You could make the same argument about acquisitions and option pools. Now consider what would happen if the same company raises another $10 million, expands the employee option pool to hire more executives and to support 300 people. VCs want their pound of flesh, and entrepreneurs do too.

Liquidation Preference 63

Liquidation Preference Founder Option Pool Acquisition 63

Business Plan Blog

NOVEMBER 20, 2013

When it comes to the division of equity in startup, there is a similar process every entrepreneur must follow beginning with raising the first round of startup funding and, if you’re lucky, finishing at the point of IPO. Raising Funding From Family and Friends: Division of Equity.

Equity 61

Equity Option Pool Cofounder Vesting 61

Early Growth Financial Services

JUNE 26, 2014

The role of a CEO — As an entrepreneur, in addition to setting and communicating your vision and mission, one of your main roles is selling your company to investors. Option Pool — An important piece of your hiring and compensation … Continue reading → Videos'

Pre-Money Valuation 51

Pre-Money Valuation Option Pool Dilution Common Stock 51

Both Sides of the Table

MAY 9, 2018

This is a very common scenario when entrepreneurs pitch VCs and frankly is a very common scenario when VCs try to raise money from LPs. At night I had a group dinner where I met 6 new entrepreneurs and hung out with some old friends from law firms, banks and other VC funds. What do I do now? Some were interesting, some weren’t.

Software Review 381

Software Review Churn Rate Due Diligence New York 381

The Equity Kicker

OCTOBER 8, 2014

We have taken their feedback and tweaked the termsheet as appropriate with the result that on all terms bar valuation, option pool and details of founder vesting our termsheet is now, in effect, very close to fully negotiated before we send it to companies. Forward Partners Venture Capital'

Founder Vesting 68

Founder Vesting Vesting Option Pool Institutional Investors 68

The Equity Kicker

APRIL 10, 2015

Investors and entrepreneurs alike want to present the progress in the best light by showing the biggest multiple they can and they often default to comparing the post-money valuation of the new round with the post-money valuation of the last round. Venice Project'

Valuation 60

Valuation Pre-Money Valuation Post-Money Valuation Option Pool 60

Scott Edward Walker

AUGUST 31, 2011

Introduction This post was originally part of the “ Ask the Attorney ” series which I am writing for VentureBeat (one of my favorite websites for entrepreneurs). We’re first time entrepreneurs, and we don’t know if this is standard practice and what we should do. Any advice would be appreciated.

Silicon Valley 45

Silicon Valley Term Sheet Liquidation Preference Redemption 45

www.instigatorblog.com

OCTOBER 23, 2010

You can’t have an option pool that takes up 50% of the company’s shares, and you have to leave room for future employees as well. Paul Graham offers up a formula for the equity challenge , which I think proves the fact that those first few employees deserve more.

Equity 41

Equity Employee Startup Vesting 41

Business Plan Blog

DECEMBER 26, 2013

The entrepreneur will need to be ready and able to respond to due diligence information requests. A capitalization table showing the post-investment ownership structure of the business to include founders, option pool and investors in the current round. Professional fees and costs. Exclusivity period and timescales. -

Angel Investor 51

Angel Investor Due Diligence Pre-Money Valuation Angel Groups 51

Rob Go

AUGUST 29, 2016

Founders also had to do a little math on the new option pool to really understand what their ownership would be post investment, since it was typically taken out of the company pre-money. Most term sheets talked about the valuation in these terms, and you added the dollars invested to get a post-money valuation.

Post-Money Valuation 52

Post-Money Valuation Valuation Cap Table Term Sheet 52

www.mattbartus.com

DECEMBER 9, 2012

You have a 20% option pool, so you know this will take your ownership down from 80% to 60%, and the VC will get 25%. Option Pool. Option Pool. My question is, can you elaborate on the benefits you see for the entrepreneur in trying to sell this to the investors? Take a look at the numbers: Pre-Money.

Warrant 40

Warrant Valuation Pre-Money Valuation Term Sheet 40

venturehacks.com

FEBRUARY 24, 2010

Breakups are hard If you’re going to fall out with your co-founder, do it early, recover the equity into the option pool to keep the company going, and recruit someone else great to fill the missing slot. I know a lot of people who want to be an entrepreneur but many do not have what I call the “survival gene&#.

Cofounder 101

Cofounder Founder Technical Cofounder Technical Review 101

ReadWriteStart

SEPTEMBER 2, 2011

Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and a critical step in the development of their business. Including things like liquidation preferences impact both future rounds and ultimate liquidity to why VCs ask to expand an option pool before investing as part of their term sheet.

Cap Table 125

Cap Table Term Sheet Liquidation Preference Technical Review 125

crowdSPRING Blog

NOVEMBER 15, 2013

The 10 Best Conference Call Services for Entrepreneurs – crowdspring.co/1eIUvyQ. 10 things Entrepreneurs Can Learn From Coach – crowdspring.co/1bkxKuq. The 10 Best Conference Call Services for Entrepreneurs – crowdspring.co/1eIUvyQ. 10 things Entrepreneurs Can Learn From Coach – crowdspring.co/1bkxKuq.

Social Media 93

Social Media Small Business Design Media 93

Agile VC

APRIL 17, 2011

Precise valuations are impossible to determine because of adjustments to employee option pools, possible buybacks of common stock, etc. Im a former Silicon Valley entrepreneur turned East Coast VC. One can infer valuations based on per share prices of preferred stock and oustanding common shares (~5.3M as of 12/31/09).

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

www.readwriteweb.com

DECEMBER 29, 2011

Therefore, going down the fundraising path is something many technology entrepreneurs will need to do and is a critical step in the development of their business. Too many entrepreneurs focus exclusive on the valuation number and this book can really help you understand all the implications around the term sheet you receive.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47