Both Sides of the Table

AUGUST 17, 2009

Assuming normal valuations at fund raising rounds you’ll be down to 6-12% after you’ve created a stock-option pool and raised capital. But these people seldom make retirement money from the stock options on these companies. It is hard enough to have a great financial outcome when you start with 100%.

Founder Vesting 365

Founder Vesting Intellectual Property Stock Options IP 365

The Next Web

JUNE 15, 2012

Any decision to hand out stock or stock options should be made within the big picture context of your company’s valuation and the total number of shares you’ll be granting. 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.

Equity 116

Equity Stock Options Vesting Stock 116

ReadWriteStart

SEPTEMBER 2, 2011

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. This will give you tons of information on all the terms you'll encounter when raising a venture round and how they could impact your deal.

Cap Table 125

Cap Table Term Sheet Liquidation Preference Technical Review 125

Scott Edward Walker

JULY 20, 2011

Whatever the issue, the advice is simple (albeit difficult to execute): in order to maintain negotiating leverage and credibility, the entrepreneur should not capitulate first.

Private Equity 78

Private Equity Liquidation Preference Option Pool Entrepreneur 78

crowdSPRING Blog

NOVEMBER 15, 2013

Model Equity Calculator for Founders with Option Pool Expansion – crowdspring.co/1fwUdsA. How Content Marketing Can Help Grow Your Business in 2014 – crowdspring.co/1gNMc5E. The 10 Best Conference Call Services for Entrepreneurs – crowdspring.co/1eIUvyQ. The Second Time Is Harder – crowdspring.co/18prpgk.

Social Media 93

Social Media Small Business Design Media 93

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

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. Convince him to work on yours part-time — he’ll drop his idea once yours gets traction. Build in founder vesting (a.k.a.

Cofounder 101

Cofounder Founder Technical Cofounder Technical Review 101

Agile VC

APRIL 17, 2011

Precise valuations are impossible to determine because of adjustments to employee option pools, possible buybacks of common stock, etc. One can infer valuations based on per share prices of preferred stock and oustanding common shares (~5.3M as of 12/31/09). But these should be directionally correct.

Pre-Money Valuation 113

Pre-Money Valuation Liquidation Preference Dividend Common Stock 113

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

Eric Friedman

DECEMBER 27, 2021

The calculus is that if the stock is going to be worth a fortune, they are better off paying for expertise early vs. take a risk on early full time employees risking option pool, culture fit, and ramp time. I think this manifested itself in liquid teams, outlined by Packy [link]. Hey not bad – scored an incredible 1.5

Balance Sheet 97

Balance Sheet Stock Private Equity Option Pool 97

Both Sides of the Table

NOVEMBER 4, 2009

When we next spoke he had found out that the CEO had about 5% and there was no management option pool in place. I asked him how much of the company would be owned by the parent company and how much would be owned by management. He hadn’t thought to ask. My advice was … run! I said, “all the hard work is ahead.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

View from Seed

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.

Equity 315

Equity Founder Sweat Equity Cofounder 315

www.paulgraham.com

APRIL 28, 2010

Theyleave 20% as an options pool for later employees (but they setthings up so that they can issue this stock to themselves if theyget bought early and most is still unissued), and the three founderseach get 25%. So after this the option pool is down to 13.7%). [ Theres only common stock at this stage.

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

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. During the first conversation with a given founder about employee equity, it is not uncommon for the CEO to fire back with the following question: Why would I give any equity to my employees?

Equity 154

Equity Employee Option Pool Stock Options 154

Gust

AUGUST 30, 2012

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] *.

Founder Vesting 144

Founder Vesting Option Pool Vesting Exit Strategy 144

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

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

Feld Thoughts

FEBRUARY 28, 2023

Employee option pool: The framework conditions for employee option pools remain a major problem in Germany. Even after the 2021 reform, employee option pools will continue to be structured via phantom stocks, as this is the only way to reliably avoid the dry-income problem.

Germany 165

Germany Liquidation Preference Option Pool Advisory Board 165

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

Pascal's View

JULY 9, 2017

Company Y receives an offer from an angel or ‘unsophisticated’ smaller VC fund that is unwilling to lead and price the equity but wants to ‘invest now’.

Post-Money Valuation 49

Post-Money Valuation Valuation Cap Table Covenant 49

The Next Web

OCTOBER 21, 2013

More often than not, these companies have no formal option pool, although many have either formal or informal promises to grant options to key employees. While there are no hard and fast rules, when we make a Series A investment we expect to own around 20% of the company on a fully-diluted basis.

Cap Table 128

Cap Table Option Pool Angel Investor Entrepreneur 128

www.paulgraham.com

OCTOBER 23, 2010

13 ]Im not saying option pools themselves will go away. Which in turn means the investment community willtend to become more stratified. [ 12 ]The two 10 minuteses have 3 weeks between them so founderscan get cheap plane tickets, but except for that they could beadjacent. [ Theyrean administrative convenience.

Startup 93

Startup Valuation Non-Compete Deal Flow 93

www.readwriteweb.com

DECEMBER 29, 2011

This includes things like how liquidation preferences impact future rounds and ultimate liquidity, to why VCs ask to expand an option pool before investing as part of their term sheet. This will give you tons of information on all the terms you'll encounter when raising a venture round and how they could impact your deal.

Cap Table 47

Cap Table Term Sheet Liquidation Preference Technical Review 47

Gust

NOVEMBER 8, 2012

Then sit down with your co-founders and divvy up the equity based on the contributions you all believe each of you will make…providing for reverse vesting, a large option pool, and a clear decision-making structure. original post can be found on Quora @ : [link] *.

Founder 134

Founder Option Pool Vesting Cofounder 134

www.inc.com

SEPTEMBER 24, 2011

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 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

Chris Dixon wrote a blog post about “ The one number you should know about your equity grant “ The one number you should know about your equity grant is the percent of the company you are being granted (in options, shares, whatever – it doesn’t matter – just the % matters). Percent of the outstanding option pool: meaningless.

Equity 62

Equity Employee Founder CTO Hire 62

Both Sides of the Table

FEBRUARY 22, 2011

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 in order to get a two-handed deal you need to dilute by 40% which is an awful lot at the start of your company.

Dilution 314

Dilution Cap Table Due Diligence Option Pool 314

Hunter Walker

AUGUST 7, 2017

But employee option pool is important enough that I wanted to briefly expand upon my comment above. As you can see, Weekend VC Twitter gets pretty wild and crazy!!!!

Equity 97

Equity Pre-Money Valuation Option Pool Founder 97

venturehacks.com

MARCH 21, 2008

Many advisors want options they can exercise immediately —that’s fine. If your company hasn’t raised a Series A, increase the advisor’s equity by roughly 30%-50% to account for dilution from seed investors, Series A investors, option pools, swimming pools, and the like.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

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

The Startup Lawyer

FEBRUARY 4, 2011

Other incubators may want to set up an option pool. If so, the startup’s founders need to know this option pool lowers your pre-money valuation. Most incubators take common stock and sit “side-by-side&# with the founders, but some may want some (weak) preferred stock and/or dilution protection.

Incubator 105

Incubator Pre-Money Valuation Option Pool Advisory Board 105

Professor VC

JANUARY 17, 2008

At a $1 million, pre-money, with an investment of $500K, that would leave 67% of the company for the founders and initial option pool. Keeping this simple with no employee option pool and just founders and investors, investors would hold 60% at this point (20% for angels and 40% for VCs) and founders would have 40%.

Pre-Money Valuation 28

Pre-Money Valuation Angel Investor Angel Groups Valuation 28

Up and Running

SEPTEMBER 20, 2021

Total share ownership is the sum of the common stock, stock options, preferred stock, and any other stock category for a single individual. Here you can see that the founders own most of the shares at 67.7%, then the ESOP (employee stock option pool) at 12.31 Outline your plans for future employee stock option pools.

Cap Table 112

Cap Table Pre-Money Valuation Stock Options Option Pool 112

David Teten

DECEMBER 3, 2019

The Long Term Stock Exchange is building out a set of tools for founders for managing their cap tables, 409A valuations, cash on hand, options pool, investor relations, etc. I’ve seen other VCs use Bridge to more efficiently make and track introductions. .

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Tim Keane

JANUARY 12, 2010

Seen from a 35,000-foot vantage point, term-sheets and valuations are a method of assessing risk and making mutual promises about assuming various risk components. Seen from a 35,000-foot vantage point, term-sheets and valuations are a method of assessing risk and making mutual promises about assuming various risk components.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Austin Startup

JANUARY 25, 2020

As the founder, I learned about incorporation, building a team, validating a product, fundraising documents (convertible notes, safe notes), company valuations, hiring documents, creating option pools, working with contractors, working with lawyers, marketing, working with interns, filing SEC Form D documents ( which we did when we raised a 25K pre-seed), (..)

Delaware 62

Delaware SEC New York City New York 62

VC Cafe

OCTOBER 16, 2010

Instead of a 20% option pool, we created a 40% option pool, and gave out half of it to the first half-dozen hires who came on and were willing to work without salary for a period of time, forming the core team. How do bootstrapped companies hire talent?

Option Pool 88

Option Pool Analytics LLC Startup 88