Q: In our startup we have 4 founders, two of whom are not full time. We've all put in a good sum of cash thus far. The two founders with the least equity happen to be the two tech founders. Some of us feel that we made a mistake when allocating shares in the beginning ...

Tags: Equity / Mistakes / Share:

Via: Ask The VC Written by Brad Feld I'm a managing director at Foundry Group. I live in Boulder,

One question I really like to ask idea stage entrepreneurs is how they've split up their equity. Now, for a startup with traction, investors, etc that question can be like asking how much money someone makes, so take it lightly. For two entrepreneurs that are just getting started on their idea, it's usually no big deal. Almost always the answer to that question is that the equity has been split ev ...

Tags: Co-founders / Equity / How To / Share:

Via: David Cummings Written by David Cummings 10-20 tweets per week. Tech entrepreneur who enjoys family,

Equity incentives are a major form of compensation for most emerging growth and technology companies. Without them, most start-ups cannot afford critical labor, let alone a board of directors or advisors. ...

Tags: Equity / Team / Share:

Via: The Startup Garage

When convertible debt first started being introduced as a "faster, cheaper way to get startups funded" they didn't have pricing built into them. A standard entrepreneur retort I heard back then (2008-09) was "I don't know what my company is worth now. By doing a convertible note we can delay the discussion until we figure out how big this is going to be." ...

Tags: Equity / Funding / Share:

Via: Both Sides of the Table Written by Mark Suster 2x entrepreneur. Sold both companies (last to http://salesfo

0.5-2% seems to be normal, trending toward the high end if you're pre-funding and the low end if you've already raised a decent round. Those numbers get completely thrown out when the adviser is your distribution channel. ...

Tags: Advisers / Equity / How To / Share:

Via: The Startup Toolkit Written by Rob Fitzpatrick Founder at http://dex.io (get more speaking gigs). I talk &

If you are good enough to be that first employee, you are a very small step away from being a co-founder. You're an essential part of the mix, and that will substantially alter the chances of this start-up succeeding or failing, you are sharing in the risk and you should be compensated accordingly. ...

Tags: Co-founders / Equity / Hiring / Share:

Via: jacquesmattheij.com Written by J Mattheij techie, coder, troubleshooter (maker ;) ), outspoken, always

I've been on both sides of this event, and believe me, it is not fun. But it is, unfortunately, a virtually inextricable part of the entrepreneurial life, and what matters most is how you deal with it. I am one of the more upbeat, positive-thinking people on the planet, but when my first venture-backed company went into Chapter 11 it was perhaps the most traumatic day of my life. I felt that I ha ...

Tags: Equity / Failure / Share:

Via: Gust Blog Written by David S. Rose Venture capitalist, entrepreneur, angel investor

The interesting step to figure out, is how you setup the co-founding group both in terms of number of co-founders, titles and equity allocations. It's all too common for startups to blow up before they've left the launchpad due to disagreements and poor arrangements among the initial team. Here are some "best practices" if they can be called such in my opinion related to the founding team: ...

Tags: Advise and Tips / Co-founders / Equity / Share:

Via: Nat Turner Written by Nat Turner Co-founder of Flatiron Health. Previously Co-Founder/CEO of

On the surface it might not seem that big of a deal, raising money at a lower valuation than the previous round. In reality, most investments have anti-dilution provisions such that if another round of capital is raised at a lower valuation, then the previous investor gets their original number of shares increased to equal out to the previous investment amount but at the new, lower per share price ...

Tags: Equity / Funding / Share:

Via: David Cummings Written by David Cummings 10-20 tweets per week. Tech entrepreneur who enjoys family,

Warren Buffet once said: Buy into a business that's doing so well an idiot could run it, because sooner or later, one will. This is a useful way to understand the meaning of "equity value". ...

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Via: chris dixon's blog Written by Chris Dixon Founder & investor

The following is a guest post written by Joe Faris, CPA is founder of Accountalent Management Corp (www.accountalent.com). Joe can be reached at jfaris @ accountalent . com or Twitter at@accountalent.  In our work at venture-backed startups, we are amazed at how hard new employees will negotiate pay, benefits, workspace, duties, titles, etc. and just totally accept their equity compensation. So ...

Tags: Equity / VCs / Share:

Via: Bostinnovation Written by Paul Hlatky Executive Director @GreenhornBoston. Comedian/ Manager. Inte

I told him, "Trust me. Every great entrepreneur has been turned down dozens of times. Laugh it off! Wear it like a badge of honor! Hell, most entrepreneurs who were funded by VCs were probably told 'no' by that exact same VC one time before! ...

Tags: Equity / Persistance / Share:

Via: Both Sides of the Table Written by Mark Suster 2x entrepreneur. Sold both companies (last to http://salesfo

Setting the early equity split in stone is one of the biggest mistakes founders can make. With their confidence in their startup and themselves, their passion for their work and their mission, and their desire not to harm the fragile dynamic within the nascent founding team, co-founders tend to plan for the best that can happen. ...

Tags: Co-founders / Equity / Team / Share:

Via: Startup Lessons Written by Eric Ries Trying to change how startups are built.

I've been invited to join as startup as employee #1. They're giving me a salary and an OK stock grant, but I want more stock. I have $95,000 saved from a previous exit. I don't need the money in savings because I've been making $150/hour as a consultant so my "plan B" is fine. Should I invest my $95k at a $1m valuation to bring my total stock allocation into the double-digits? Or should I keep th ...

Tags: Equity / Funding / Hiring / Share:

Via: A Smart Bear Written by Jason Cohen Keyword, buzzword, half-truth, adjective, hey look at me!

Here's the thing about startups: from the outside looking in, they seem sexy and fun. But once, you work for a startup, it doesn't take long to realize they're also all-consuming. Working for a startup is not a 9 to 5, punch the clock job. It can be a 24/7 thing. This is one of the reasons why I think it makes sense to offer every startup employee the opportunity to have a stake in the action ...

Tags: Equity / Team / Share:

Via: Mark Evans Tech Written by Mark Evans Startup marketer, conference organizer, hockey player, dad,

Question: I am one of three founders of a company.  Up until now we have been bootstrapping the company from our own funds and working part time on the company while having full time jobs. One of us will be transitioning to the first full time paid employee of the company. The question is, does being the first full-time paid employee affect that founder's equity in the company? ...

Tags: Co-founders / Equity / Team / Share:

Via: Ask The VC Written by Brad Feld I'm a managing director at Foundry Group. I live in Boulder,

One of the first tough decisions that startup founders have to make is how to allocate or split the equity among co-founders. The easy answer of splitting it equally among all co-founders, since there is minimal value at that point, is usually the worst possible answer, and often results in a later startup failure due to an obvious inequity. ...

Tags: Co-founders / Equity / Share:

Via: Gust Blog Written by Martin Zwilling Veteran startup mentor, executive, blogger, author, tech pro

I'll write soon on my views of why I believe Instagram took off as a social network and what I think comes next. Instagram happens to be one of the few social networks I regularly use along with Twitter. I use it much more frequently than I've ever used Facebook and have done so since inception.... ...

Tags: Equity / Funding / Share:

Via: Both Sides of the Table Written by Mark Suster 2x entrepreneur. Sold both companies (last to http://salesfo

Vesting in general (and founder vesting in particular) is an oft-misunderstood tool that has a tendency to really screw up young companies.  There are some deep misconceptions at work here that often cause founders all sorts of grief.  Most of it comes from the simple fact that stock grants are, at their heart, a crude hack to avoid taxes. Vesting is a hack to the hack - and one almost every fo ...

Tags: Co-founders / Equity / Share:

Via: Dan Shapiro Written by Dan Shapiro Google acquired @sparkbuy, so I now work on www.google.com/a

An entrepreneur pointed out to me that some startups choose a middle ground between bootstrapping and raising institutional money: exclusively raising angel money. Comparing angel investors to VCs is relatively straightforward but there isn't much talk about startups that only raise money from angels. ...

Tags: Angel Investors / Equity / Valuation / Share:

Via: David Cummings Written by David Cummings 10-20 tweets per week. Tech entrepreneur who enjoys family,

As with most things, there are philosophical differences in the approach to founder equity. One camp believes that founder equity should never be evenly split because it can result in stalemates, which can kill a company fast. The other camp believes that fairness should prevail and if an even split seems fair, then it’s appropriate. ...

Tags: Co-founders / Equity / Share:

Via: Daily Muse Written by John J Egan Start-up and tech lawyer; aspiring craft distiller

If you follow startups at all, you'll likely notice that there are precisely two camps when it comes to raising venture funding of any sort: those who trumpet each new round as if the company won the Super Bowl and those who believe bootstrapping is the only legitimate way to build a business. ...

Tags: Equity / Funding / Share:

Via: stu.mp Written by Joe Stump Co-founder of @sprintly, @attachmentsme, and @simplegeo. Cyc

When entrepreneurs ask me about raising money I like to ask them: what's your founder math for VC money to make sense? I believe entrepreneurs should build their business to last with no exit strategy, but if you do have a goal of selling it in 5-10 years some founder math related to equity is in order. If you take a look at founder equity at time of IPO you'll see it's in the 4-15% range and only ...

Tags: Equity / Funding / VCs / Share:

Via: David Cummings Written by David Cummings 10-20 tweets per week. Tech entrepreneur who enjoys family,

One of the many fascinating aspects of Facebook’s S-1 filing for its $5-billion IPO was how it handed options to employees, freelancers and contractors. This included graffiti artist David Choe, who accepted options rather than a few thousands dollars for painting Facebook’s first office. It put the spotlight on the question about how generous startups should ...

Tags: Equity / Share:

Via: Mark Evans Tech Written by Mark Evans Startup marketer, conference organizer, hockey player, dad,

In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. A liquidation preference is the amount that must be paid to a preferred stock holder before any sale proceeds may be paid to the holders of common stock (i.e., founders, option holders, etc.). The amount of the [...] ...

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Via: Startup Lawyer