New answers tagged stock-options
Imagine this scenario: 10 years from now, you're working on getting funding for your 3rd startup and the VC asks you where you went to school. It just so happens that the cousin of his brother-in-law knows the neighbor of a professor there. So the VC sends a quick Linkedin message and asks about you. Now suppose the professor says "oh yeah, we remember him: ...
Would you take $100,000 for 10%? Many pre-revenue start-ups would and there are several incubators that provide funding in that range. Doesn't sound like a bad deal providing the terms aren't too onerous.
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 ...
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 ...
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