Hot answers tagged equity
4
If I were the other members of the team I would be interested in buying you out.
A reasonable number might be $30,000?
You could have earned $60,000 at a normal job, but instead you took a risk and you are now folding your hand - so I wouldn't expect you to get paid more than you would have if you took the safe route.
Also, you are leaving the company ...
3
I see two huge warning flags -- and will get to them in a second.
Jordan Cooper once wrote a very informative blog post with the valuation ranges he saw in NYC. Quoting his post:
Still at your old job
You have an idea you’ve been thinking about, been working on it nights and weekends and maybe you’ve pulled together some folks to help you work on ...
2
So, did this person actually write your software or did they outsource it to this other developer? I don't think I would want to bring in a "technical" partner who isn't actually the programmer on the product. He will still have to pay his developer and if the future work is sweat equity then that probably won't work out very well because he still has to ...
2
Perhaps you could calculate the percentage based on what it would be if you did include vesting from day one. Considering that you left after six months typically you would get nothing because most vesting kicks in after one year. (E.g. 25% after first year and 25% each additional year prorated monthly.) However, you could consider a vesting schedule, e.g. ...
1
Costs, and earnings projections are likely to make you seem
amateurish to a VC or an Angel, so drop those, when talking to
serious people :) (You may want to consider pitching anyway). Web
based business is anything but predictable.
The single most important thing a VC, and Venture funds look for is
the team, so you better put together one. Again, you ...
1
A few things you must know:
As frenchie said - nobody will invest if they see that none of the founders are full-time on this regardless of the investment.
This may sound a bit weird but - don't start developing the product just yet. Sometimes its better to sell the dream on presentation rather then a half baked product. Some investors might just say ...
1
In Ontario, for example, you can set up a company with multiple classes of shares. One class may have voting rights, another not. Within the class that has voting rights, votes are split proportionally.
BUT you can also set up a shareholder's agreement that states what percentage of votes is needed to make changes, how many seats on the board of directors ...
1
You got $10k. Not $1. They are taking a big risk. There is a time limit so I don't see the problem.
You can walk away from it - that's your choice.
Worst case scenario for you is that you have to give up 1% of your company after it is worth billions.
Is that a bad scenario?
Keep taking a 0 off the end of the valuation. Are there ANY scenarios ...
1
That sort of arrangement is actually pretty typical from universities, but it usually happens in licensing deals: "We give you this technology, and you give us an undiluted 2% of your company until X happens." And, 'X' is usually something like the passage of time, an equity round of $5M or more, etc....
It's not that onerous if it's 1% of the common (or ...
1
You made a mistake. But it's not too late to change. What you need is a dynamic equity split that will allocate equity based on actual contributions to the company. Your 30% grant to this guy was given in hopes that he would contribute something of value. If he doesn't you will have to try and get the equity back which will be a long painful process.
A ...
1
Whatever you do, come to a legal contractual agreement; get a lawyer.
Since your partner wants the company to succeed and increase his percentage, the terms need to address both. For example: set a sales goal where if he reaches it, he gets the 40%. I know you gave him too much already, but in the long-run having a successful marketing person is going to ...
1
Remember that a board (aka investors) is supposed to provide support, advice, and perspective to the company. They want to make money which only happens if the team is successful.
When there are "significant" changes to the direction of the company, it should be brought to the board, discussed, and agreed upon but that doesn't always happen.
But at the end ...
1
This is a common concern for entrepreneurs. However, virtually nothing in a start-up company is handled by majority vote. If you are at a point where you have to disagree with 49% if your stakeholders you're company is probably in some serious trouble.
The investors can force an unpleasant liquidation of the company if they have a majority share. This is ...
1
is demanding that everything be split 50/50 from the very first check we get. Which goes against his written agreement.
The usual rule of thumb is that reward should match risk. The issue is the division between equity (dividends from profits after expenses) and operations (salary/expenses). There are 2 ways of negotiating
positional - ie only ...
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