Steve Blank

OCTOBER 24, 2017

The founders along with all the other employees would vest their stock over 4 years (earning 1/48 a month). Some founders have three-year vesting. As long as the CEO’s behavior affects their employees not their customers or valuation, VCs often turn a blind eye. Today, these are no longer hard and fast rules. Some have no cliff.

Founder 281

Founder Technical Review CTO Hire IPO 281

SoCal CTO

JANUARY 18, 2011

During all this time, valuation pitched to the investors was in the $1M – $3M range. When finally, I sat down and started talking, they basically tallied up the hours I spent and gave a choice to get equity at current $3 mil valuation or get full cash for my time or blend of both cash/equity. What are the specifics of the 2%?

CTO 150

CTO CTO Hire Equity Vesting 150

The Next Web

OCTOBER 7, 2013

It is typical for employees to vest their options over four years with a one year cliff, which means a new hire must stay on the company for at least one year to see any shares. After a year, shares will vest in monthly or quarterly splits until the full grant is vested. Converting percents to cents (and dollars).

Engineer 129

Engineer Dilution Option Pool Vesting 129

The Next Web

JUNE 15, 2012

And giving equity as compensation can help build loyalty among contractors and consultants, as they now have a truly vested interest in your company’s success. 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.

Equity 116

Equity Stock Options Vesting Stock 116

The Startup Toolkit

FEBRUARY 15, 2013

false As a cheatsheet, the “normal” equity structure is: Founder terms: 4 year vesting, 1 year cliff, for everyone, including you. 2.0% ) : 4 year vesting, optional cliff, full acceleration on exit. When it comes to equity terms, there are only 3 things to understand: vesting, cliffs, and acceleration. Cliffs & vesting.

Vesting 56

Vesting Equity Cofounder Technical Review 56

Both Sides of the Table

AUGUST 17, 2009

Last to weigh in was Brad Feld whose blog post argues that the only 2 terms that should be negotiated are amount raised & valuation. One very important item from Chris’s original post that wasn’t picked up by Fred or Brad is founder vesting. Without proper vesting you also place a risk on all other co-founders.

Founder Vesting 252

Founder Vesting Vesting Founder Term Sheet 252

Tim Keane

JANUARY 12, 2010

Term-sheets and Valuations: Thinking about Negotiations.   I’ve sat down with entrepreneurs and a copy of a term sheet guide I like [ “Term Sheets & Valuations - A Line by Line Look at the Intricacies of Venture Capital Term Sheets & Valuations ” by Alex Wilmerding, Aspatore Press.] The Valuation Question.

Term Sheet 68

Term Sheet Valuation Dividend Liquidation Preference 68

Startup Professionals Musings

AUGUST 24, 2016

Investors may not be called co-founders, but they always get equity, commensurate with their share of the total costs anticipated, or share of the current valuation. 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.

Equity 120

Equity Cofounder Technical Cofounder Intellectual Property 120

The Next Web

NOVEMBER 20, 2013

So, let’s say that one founder puts in $100,000 in seed capital, that could be worth 20 percent of a seed stage company’s valuation. You should also make sure you have a vesting schedule in place on any equity granted, typically earned 25 percent per year over a four year period of time, starting at the end of the first year of the grant.

Cofounder 136

Cofounder Equity Founder Seed Stage 136

The Startup Magazine

FEBRUARY 21, 2024

As an investor, these experiences have honed my ability to see beyond spreadsheets and valuations, to the core of what makes businesses thrive: the people, the vision, and the relentless pursuit of excellence. They offer expertise, industry connections, and operational guidance to foster growth and stability.

Technical Review 158

Technical Review Due Diligence Bankruptcy Intellectual Property 158

www.paulgraham.com

APRIL 28, 2010

Another concept we need to introduce now is valuation. I say "in theory" because in early stageinvesting, valuations are voodoo. As a company gets more established,its valuation gets closer to an actual market value. As a company gets more established,its valuation gets closer to an actual market value. Better how?

Technical Review 76

Technical Review Startup Software Review Angel Investor 76

Steve Blank

MAY 19, 2015

While he kept bringing the conversation back to their big valuation I tried to steer the conversation back to how they were going to deal with: training the influx of new hires – in both culture and job specific tasks. They had doubled headcount from 100 to 200 in the last year and were planning to double again.) the company had.

Technical Review 120

Technical Review Salary Early Stage Software Review 120

www.avc.com

SEPTEMBER 22, 2011

This is NOT your 409a valuation (we call that "fair value"). This "best value" can be the valuation on the last round of financing. Startups should be able to dramatically increase the value of their equity over the four years a stock grant vests. Or it can be the discounted value of future cash flows.

Equity 64

Equity Employee CTO Hire Fractional CTO 64

Startup Professionals Musings

JANUARY 22, 2013

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Vesting 245

Vesting Common Stock Stock Founder Vesting 245

thinkspace.com

SEPTEMBER 7, 2012

How long should people vest – four years? Investors routinely subject founder shares to vesting, but there is no rule that says that founders cannot, or should not, impose vesting on themselves. And the vesting doesn’t necessarily need to be time-based either. Five years? Buffer Pin It Digg Digg.

Equity 62

Equity Employee Founder CTO Hire 62

Startup Professionals Musings

MARCH 23, 2014

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Stock 256

Stock Vesting Common Stock Founder Vesting 256

Both Sides of the Table

SEPTEMBER 18, 2014

Me: There is no rational explanation for valuations of A round companies by ANY objective financial measure. If you’re wildly successful early on or if they help you achieve a great valuation they actually pay a significant price for their eventual stock even though they took much more risk than a future investor and backed you early.

Venture Capital 417

Venture Capital Liquidation Preference Valuation Term Sheet 417

Altgate

JUNE 25, 2012

We took the percentage of equity held by former employees and founders and multiplied it by the startup’s valuation during its most-recent round of financing. About three-quarters of this change in the value of dead equity is due to an increase in the percentage of dead equity; the rest is due to changes in company valuations.

Equity 44

Equity Vesting Cap Table Technical Review 44

Startup Professionals Musings

APRIL 11, 2021

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the Founders, with normal vesting and other participation rules. Trouble with the IRS over Founders stock value. Many startups delay incorporation until the first formal round of financing, which is too late.

Cost 363

Cost Non-Compete Accredited Investor Cofounder 363

www.paulgraham.com

OCTOBER 23, 2010

If you get an offer from a reputablefirm at a reasonable valuation with no unusually onerous terms,just take it and get on with building the company. [ It happens so oftenthat weve reversed our attitude to vesting. We still dont requireit, but now we advise founders to vest so there will be an orderlyway for people to quit.

Startup 108

Startup Software Review Hiring Silicon Valley 108

Startup Professionals Musings

OCTOBER 7, 2010

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting starts now.

Stock 214

Stock Vesting Common Stock Founder Vesting 214

Both Sides of the Table

NOVEMBER 4, 2009

Let’s assume that the company raised it at a normal VC valuation, which means it gave up 33% of the company and thus $5 million / 33% = $15 million post-money valuation. Stock vests for 4 years. OK, you would own 0.25% of the stock. They raised $5 million in their B round. you won the lottery). Wait a second. Sorry bud.

Stock Options 418

Stock Options Stock Liquidation Preference Option Pool 418

Both Sides of the Table

JULY 16, 2013

It goes like this, “If your next round investor can see how fast you’re scaling then you can raise money based on your user traction and your valuation can hit the sky. For all others please know that your VC has a vested interest in your trying to go big or go home. I understand the logic. Your VC is right.

Burn Rate 412

Burn Rate Dilution Revenue Valuation 412

David Teten

DECEMBER 3, 2019

The reports showcase raw data, analytics, visualizations, and benchmarking statistics on the company from dozens of sources, including team, intellectual property, technology, product, financial, banking, marketing, customer, risk, valuation, and investment information.”. If you have one, please contact me. 7) Negotiate .

Technical Review 78

Technical Review Software Review Analytics Private Equity 78

Gust

MARCH 16, 2014

These shares are allocated and committed, but not really issued and owned (vested) until later. Typically, vesting in startups occurs monthly over 4 years, starting with the first 25% of such shares vesting only after the employee has remained with the company for at least 12 months (one year “cliff”). Vesting with no cliff.

Stock 175

Stock Vesting Common Stock Founder Vesting 175

venturehacks.com

MARCH 21, 2008

The options typically vest monthly over 1-2 years with 100% single-trigger acceleration and no cliff. Although the advisor is on a vesting schedule, you should expect them to add most of their value up-front—that’s normal. Does this stake need to have vesting schedule? Out of these, only fund raising is critical for us.

Advisory Board 44

Advisory Board Cap Table Vesting Equity 44

Startup Professionals Musings

JULY 10, 2012

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the founders, with normal vesting and other participation rules. Trouble with the IRS over Founders stock value. Many startups delay incorporation until the first formal round of financing, which is too late.

Non-Compete 249

Non-Compete Accredited Investor Cofounder Startup 249

Gust

NOVEMBER 4, 2011

Entrepreneurs and investors who have spent any time dealing with convertible debt seed financing transactions are likely to have encountered the subject of valuation caps. Valuation caps can come into play in settings other than seed-stage convertible note financing rounds. Read on for a fuller explanation. by February 2006).

Valuation 98

Valuation Pre-Money Valuation Merger Vesting 98

Startup Professionals Musings

MAY 2, 2011

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the founders, with normal vesting and other participation rules. Trouble with the IRS over founders stock value. Many startups delay incorporation until the first formal round of financing, which is too late.

Non-Compete 246

Non-Compete Accredited Investor Entrepreneur Cofounder 246

Ben's Blog

APRIL 28, 2010

Looking across these nearly 50 companies, the study finds that founding CEOs consistently beat the professional CEOs on a broad range of metrics ranging from capital efficiency (amount of funding raised), time to exit, exit valuations, and return on investment. Investments in innovation do not pay out in the current quarter.

Technical Review 78

Technical Review Cofounder Technical Cofounder Software Review 78

Startup Professionals Musings

AUGUST 7, 2013

This problem can be avoided by incorporating immediately after early discussions, and issuing shares to the Founders, with normal vesting and other participation rules. Trouble with the IRS over Founders stock value. Many startups delay incorporation until the first formal round of financing, which is too late.

Non-Compete 235

Non-Compete Accredited Investor Startup Cofounder 235

Altgate

AUGUST 25, 2012

We took the percentage of equity held by former employees and founders and multiplied it by the startup’s valuation during its most-recent round of financing. About three-quarters of this change in the value of dead equity is due to an increase in the percentage of dead equity; the rest is due to changes in company valuations.

Equity 28

Equity Vesting Cap Table Technical Review 28

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

www.inc.com

SEPTEMBER 24, 2011

As you think about how much equity to offer, have a reasonable valuation in mind thats been determined using professional advice. He suggests granting the options on day one but making sure they vest only upon satisfactory completion of the project. That way, he says, "Vesting is an encouragement for the project to be completed.".

Fractional CTO 40

Fractional CTO Equity Iowa Technical Cofounder 40

Both Sides of the Table

MAY 13, 2013

Chief Vesting Officers)? If you give $2 million for 20% of a company ($8 million pre + $2 million investment = $10 million post-money valuation) that has no product and no customers and it turns around 3 months later and sells for $5 million it would hardly be fair for investor to get $1 million back (20% of the proceeds).

Liquidation Preference 357

Liquidation Preference Early Stage Retention Lock-up Period 357

Start Up Blog

APRIL 28, 2011

Probably as a function of the gold standard (global price of gold as the trading valuation mechanism) with some form of digital instant and unseen conversion from our home currency into some quantum derived from gold. A community who vest their interests in each other. So the alternative of a global currency will emerge.

Moldova 91

Moldova Internet Australia Libya 91

ithacaVC

NOVEMBER 1, 2011

I am a big fan of change of control option vesting acceleration, particularly for the executive team. Normally employee options vest over 4 years, with 25% vesting after year 1 and then the balance pro rata (monthly or quarterly) over the remaining 3 years. Going public does NOT equal a change of control.

Vesting 60

Vesting Pre-Money Valuation Liquidation Preference Stock Options 60