One of the materials for My Entrepreneurial Journey (MEJ), an education program for aspiring entrepreneurs in Mawar Sharon Church (Surabaya, Indonesa). This is the material for Week 5 of a 10-week program. -- dated Apr 1, 2017
Learning how a VC firm works behind the scenes is a good way to gain important strategic insights on becoming a more attractive investment. But understanding the ins and outs of a VC firm can be easier said than done, even for entrepreneurs who spend a lot of time speaking to investors.
Emerging and high growth companies will have to navigate the complexities of early stage term sheets on their way to raising capital. In order to get to a term sheet, it’s crucial for you to focus on building and developing relationships with your investors right from the beginning.
One of the materials for My Entrepreneurial Journey (MEJ), an education program for aspiring entrepreneurs in Mawar Sharon Church (Surabaya, Indonesa). This is the material for Week 5 of a 10-week program. -- dated Apr 1, 2017
Learning how a VC firm works behind the scenes is a good way to gain important strategic insights on becoming a more attractive investment. But understanding the ins and outs of a VC firm can be easier said than done, even for entrepreneurs who spend a lot of time speaking to investors.
Emerging and high growth companies will have to navigate the complexities of early stage term sheets on their way to raising capital. In order to get to a term sheet, it’s crucial for you to focus on building and developing relationships with your investors right from the beginning.
How to define and position your VC brand to attract funding and dealflow.
* note: more recent updated version below:
https://www.slideshare.net/dmc500hats/branding-strategies-for-better-dealflow-and-fundraising-aka-the-helpful-vc
Startup Valuation: from early to mature stagesTatiana Siyanko
Methods and approached to startup and company valuations.
Please be free to send me any additions/correction proposals.
Prepared for Startup&co lecture in Freud cafe, Kyiv, April 30, 2014
Topics Discussed:
- What is Venture Capital
- Overview of VC Funds
- VC Investment Process
- VC Investing Strategies
- Other Investors
- VC Fundraising Materials
- Resources
Issuing Equity to Employees and Founders: Stock Options and Restricted StockDavid Ehrenberg
Before issuing equity to employees, you need to be aware of the potential consequences. Sure equity is a tool to hire top talent, but how much equity you give — and to whom — is not a decision to be entered into lightly.
For information about issuing equity — and help slicing up the equity pie — check out this deck from Annie Webber from Legal Hero (www.legalhero.com) and David Ehrenberg from Early Growth Financial Services (www.earlygrowthfinancialservices.com).
Basics on the startup process, raising capital, and thinking about valuation, especially for first-time entrepreneurs. Read my article at VentureBeat for details on this slide deck:
http://venturebeat.com/2016/09/05/startup-fundraising-101-revisited/
Know how venture capitalists value your deal....understand how they are compensated...see what creates value and how investors assess your "risk factors."
A great slide show presentation that provides solid answers to many of these essential questions Check out mikeklein2010.wordpress.com
How to VC: Creating a VC fund portfolio modelDave McClure
This article aims to help VCs figure out how to size a venture capital fund, how many companies to include in your portfolio, and when and how to do follow-on investments. Most VCs aim to make a 3X (net) return on initial fund capital, at a ~20% net IRR. Note however, likely less than 10% of most VC funds achieve that goal.
Understanding How Venture Capital Works | Kirsten Leute and John Lee | Lunch ...UCICove
About UCI Applied Innovation:
UCI Applied Innovation is a dynamic, innovative central platform for the UCI campus, entrepreneurs, inventors, the business community and investors to collaborate and move UCI research from lab to market.
About the Cove @ UCI:
To accelerate collaboration by better connecting innovation partners in Orange County, UCI Applied Innovation created the Cove, a physical, state-of-the-art hub for entrepreneurs to gather and navigate the resources available both on and off campus. The Cove is headquarters for UCI Applied Innovation, as well as houses several ecosystem partners including incubators, accelerators, angel investors, venture capitalists, mentors and legal experts.
Follow us on social media:
Facebook: @UCICove
Twitter: @UCICove
Instagram: @UCICove
LinkedIn: @UCIAppliedInnovation
For more information:
cove@uci.edu
http://innovation.uci.edu/
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & RosatiMark Davis
Slides from the Venture Capital Bootcamp event hosted by DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati at Columbia University on June 3, 2009. A video of the 3 hour event is available at www.dfjgotham.com.
Perfect Equity Splits for Startup CompaniesMike Moyer
Learn how to create a perfect equity splits for early stage companies. Contrary to popular belief, there is a way to determine exactly how much equity each person in your company deserves. Based on the book, Slicing Pie (SlicingPie.com), by Mike Moyer (mikemoyer.com)
Startany.com. Remote Acceleration Program.
---------------------------------------------------------------
The Founder’s Guide to Early-Stage Valuation
Presented by Stephen R. Poland, co-founder 1x1 Media.
For many early-stage entrepreneurs assigning a valuation to your startup is one of the more intimidating tasks encountered during the fundraising quest. Based on the popular Founders’ Pocket Guide: Startup Valuation, this webinar provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by- step examples for several valuation methods.
This webinar helps startup founders learn:
What a startup valuation is and when you need to start worrying about it.
Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.
How investors view the valuation task and what their expectations are for early-stage companies.
How the valuation fits with your target raise amount and resulting founder equity ownership.
How to do the simple math for calculating valuation percentages.
How to estimate your company valuation using several accepted methods.
Stephen R. Poland
Stephen R. Poland has worked with hundreds of startups and entrepreneurs, mentoring them on startup mechanics, funding plans, pitch decks, financial models, and due diligence documentation for the angel funding process.
Steve brings more than 20 years' experience in startups and entrepreneurship to his career. Leveraging leadership roles with the Walt Disney Company, MacMillan Publishing, and Bertelsmann, Steve co-founded startups in the digital music and on-demand media manufacturing sectors, as well an early days anti-virus product.
Along with being co-founder of 1x1 Media, Steve works as a venture growth advisor in Western North Carolina.
Basic concepts of marketing and branding for venture capital. Emphasis on competitive differentiation (aka "How are you different/better than other VCs in your category?"). Specific focus on defining areas of "value add" that aren't BS.
VC Fundraising Deck Template: Carta x Kauffman FellowsNihar Neelakanti
Carta and Kauffman Fellows present a venture capital fundraising deck template highlighting the various components a GP should include as part of their fundraising story to attract limited partners.
How to define and position your VC brand to attract funding and dealflow.
* note: more recent updated version below:
https://www.slideshare.net/dmc500hats/branding-strategies-for-better-dealflow-and-fundraising-aka-the-helpful-vc
Startup Valuation: from early to mature stagesTatiana Siyanko
Methods and approached to startup and company valuations.
Please be free to send me any additions/correction proposals.
Prepared for Startup&co lecture in Freud cafe, Kyiv, April 30, 2014
Topics Discussed:
- What is Venture Capital
- Overview of VC Funds
- VC Investment Process
- VC Investing Strategies
- Other Investors
- VC Fundraising Materials
- Resources
Issuing Equity to Employees and Founders: Stock Options and Restricted StockDavid Ehrenberg
Before issuing equity to employees, you need to be aware of the potential consequences. Sure equity is a tool to hire top talent, but how much equity you give — and to whom — is not a decision to be entered into lightly.
For information about issuing equity — and help slicing up the equity pie — check out this deck from Annie Webber from Legal Hero (www.legalhero.com) and David Ehrenberg from Early Growth Financial Services (www.earlygrowthfinancialservices.com).
Basics on the startup process, raising capital, and thinking about valuation, especially for first-time entrepreneurs. Read my article at VentureBeat for details on this slide deck:
http://venturebeat.com/2016/09/05/startup-fundraising-101-revisited/
Know how venture capitalists value your deal....understand how they are compensated...see what creates value and how investors assess your "risk factors."
A great slide show presentation that provides solid answers to many of these essential questions Check out mikeklein2010.wordpress.com
How to VC: Creating a VC fund portfolio modelDave McClure
This article aims to help VCs figure out how to size a venture capital fund, how many companies to include in your portfolio, and when and how to do follow-on investments. Most VCs aim to make a 3X (net) return on initial fund capital, at a ~20% net IRR. Note however, likely less than 10% of most VC funds achieve that goal.
Understanding How Venture Capital Works | Kirsten Leute and John Lee | Lunch ...UCICove
About UCI Applied Innovation:
UCI Applied Innovation is a dynamic, innovative central platform for the UCI campus, entrepreneurs, inventors, the business community and investors to collaborate and move UCI research from lab to market.
About the Cove @ UCI:
To accelerate collaboration by better connecting innovation partners in Orange County, UCI Applied Innovation created the Cove, a physical, state-of-the-art hub for entrepreneurs to gather and navigate the resources available both on and off campus. The Cove is headquarters for UCI Applied Innovation, as well as houses several ecosystem partners including incubators, accelerators, angel investors, venture capitalists, mentors and legal experts.
Follow us on social media:
Facebook: @UCICove
Twitter: @UCICove
Instagram: @UCICove
LinkedIn: @UCIAppliedInnovation
For more information:
cove@uci.edu
http://innovation.uci.edu/
VC Bootcamp By DFJ Gotham Ventures and Wilson Sonsini Goodrich & RosatiMark Davis
Slides from the Venture Capital Bootcamp event hosted by DFJ Gotham Ventures and Wilson Sonsini Goodrich & Rosati at Columbia University on June 3, 2009. A video of the 3 hour event is available at www.dfjgotham.com.
Perfect Equity Splits for Startup CompaniesMike Moyer
Learn how to create a perfect equity splits for early stage companies. Contrary to popular belief, there is a way to determine exactly how much equity each person in your company deserves. Based on the book, Slicing Pie (SlicingPie.com), by Mike Moyer (mikemoyer.com)
Startany.com. Remote Acceleration Program.
---------------------------------------------------------------
The Founder’s Guide to Early-Stage Valuation
Presented by Stephen R. Poland, co-founder 1x1 Media.
For many early-stage entrepreneurs assigning a valuation to your startup is one of the more intimidating tasks encountered during the fundraising quest. Based on the popular Founders’ Pocket Guide: Startup Valuation, this webinar provides a quick reference to all of the key topics around early-stage startup valuation and provides step-by- step examples for several valuation methods.
This webinar helps startup founders learn:
What a startup valuation is and when you need to start worrying about it.
Key terms and definitions associated with valuation, such as pre-money, post-money, and dilution.
How investors view the valuation task and what their expectations are for early-stage companies.
How the valuation fits with your target raise amount and resulting founder equity ownership.
How to do the simple math for calculating valuation percentages.
How to estimate your company valuation using several accepted methods.
Stephen R. Poland
Stephen R. Poland has worked with hundreds of startups and entrepreneurs, mentoring them on startup mechanics, funding plans, pitch decks, financial models, and due diligence documentation for the angel funding process.
Steve brings more than 20 years' experience in startups and entrepreneurship to his career. Leveraging leadership roles with the Walt Disney Company, MacMillan Publishing, and Bertelsmann, Steve co-founded startups in the digital music and on-demand media manufacturing sectors, as well an early days anti-virus product.
Along with being co-founder of 1x1 Media, Steve works as a venture growth advisor in Western North Carolina.
Basic concepts of marketing and branding for venture capital. Emphasis on competitive differentiation (aka "How are you different/better than other VCs in your category?"). Specific focus on defining areas of "value add" that aren't BS.
VC Fundraising Deck Template: Carta x Kauffman FellowsNihar Neelakanti
Carta and Kauffman Fellows present a venture capital fundraising deck template highlighting the various components a GP should include as part of their fundraising story to attract limited partners.
Finding your way through the Venture Capital gauntletDigital Ignition
Learn about about Finding Your Way Through the Venture Capital Gauntlet with Steve Schilling, President of Convergent. In this one hour session Steve explores: The various types and sources of capital, how to determine when (and if) to raise capital, how to prepare, how the Venture Capitalist’s world works, the ins and outs of valuation and the importance of managing your Cap Table.
Tools and tips for simplifying startup formation.Alex Shoer
Models to help you setup your startup in the right way. With an equity structure that benefits all, vesting to ensure no one runs off with equity and advisor incentives to bring in the senior experts you need.
Many people consider executive compensation to be excessive, but is it really? The answer may lay in the eye of the beholder. A thought provoking discussion on the topic.
Maximise the value of your business - Business SuccessionCraig West
Business Succession and Exit planning - found out how to maximise the value of your business with our 21 step process, fund your retirement and make sure your business continues !
The Realities of Pay Performance for Alignment in 2014Pearl Meyer
Recent media coverage on both sides of the Atlantic has focused on how executive pay fails to align with company performance. It even goes as far as saying that pay and performance are inversely aligned, in other words, higher pay gets in the way of improved performance. Today we’ll look at this thorny topic from both a UK and U.S. perspective.
The discussion will be lead by Simon Patterson, a Managing Director in Pearl Meyer & Partners’ London office. Simon is joined by Ryan Compaan a Vice President in the firms Chicago Office.
For most companies, compensation is the costliest item on the P&L. And yet business leaders typically know little about their organization’s pay strategy. In today’s hyper competitive world, that’s not okay. Pay is a strategic tool that can either drive or diminish company profitability. It is a key to recruiting the kind of talent that can positively impact the trajectory of the business. Therefore, chief executives need to play a leading role in charting the compensation course their companies take. But, to do that effectively, they must become better informed about core pay issues. But which issues? What, exactly, do they need to know?
This webinar will answer those questions. It is designed for enterprise leaders who want to learn how compensation can play a more productive role in their businesses.
Valuation models for early-stage knowledge-based/technology companiesGregory Phipps
Slide deck on valuation models for early-stage knowledge-based/technology companies delivered to The Canadian Institute of Chartered Business Valuators - Sept 18, 2014
A crash course about startup valuation. Why is DCF difficult not to say useless for startups and better metrcis are comparables on profits, and even better sales (PE and PS°
University Equity in Start ups for IP Licensing - Lebret - nov 2013Hervé Lebret
How much equity universities take in start-ups for a license of intellectual property? It is sometimes not to say often a hot topic and information is not easy to obtain. Howeever there are some standards or common practice.
This study examines more than 2’700 companies founded by alumni of Stanford University or
having licensed a technology from this university. Stanford University is with MIT one of the
most entrepreneurial university in the world, and surprisingly not much data is available on its
spin-offs and start-ups. Some important features are described such as the use of venture capital,
the dynamics of growth and exits through acquisition or initial public offering. Some
characteristics of the founders are also considered such as the time lag between their academic
activity and the start-up creation as well as the characteristics of serial entrepreneurs.
Improving profitability for small businessBen Wann
In this comprehensive presentation, we will explore strategies and practical tips for enhancing profitability in small businesses. Tailored to meet the unique challenges faced by small enterprises, this session covers various aspects that directly impact the bottom line. Attendees will learn how to optimize operational efficiency, manage expenses, and increase revenue through innovative marketing and customer engagement techniques.
Unveiling the Secrets How Does Generative AI Work.pdfSam H
At its core, generative artificial intelligence relies on the concept of generative models, which serve as engines that churn out entirely new data resembling their training data. It is like a sculptor who has studied so many forms found in nature and then uses this knowledge to create sculptures from his imagination that have never been seen before anywhere else. If taken to cyberspace, gans work almost the same way.
Explore our most comprehensive guide on lookback analysis at SafePaaS, covering access governance and how it can transform modern ERP audits. Browse now!
Attending a job Interview for B1 and B2 Englsih learnersErika906060
It is a sample of an interview for a business english class for pre-intermediate and intermediate english students with emphasis on the speking ability.
RMD24 | Retail media: hoe zet je dit in als je geen AH of Unilever bent? Heid...BBPMedia1
Grote partijen zijn al een tijdje onderweg met retail media. Ondertussen worden in dit domein ook de kansen zichtbaar voor andere spelers in de markt. Maar met die kansen ontstaan ook vragen: Zelf retail media worden of erop adverteren? In welke fase van de funnel past het en hoe integreer je het in een mediaplan? Wat is nu precies het verschil met marketplaces en Programmatic ads? In dit half uur beslechten we de dilemma's en krijg je antwoorden op wanneer het voor jou tijd is om de volgende stap te zetten.
[Note: This is a partial preview. To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
To download the complete presentation, visit: https://www.oeconsulting.com.sg/training-presentations
3.0 Project 2_ Developing My Brand Identity Kit.pptxtanyjahb
A personal brand exploration presentation summarizes an individual's unique qualities and goals, covering strengths, values, passions, and target audience. It helps individuals understand what makes them stand out, their desired image, and how they aim to achieve it.
What are the main advantages of using HR recruiter services.pdfHumanResourceDimensi1
HR recruiter services offer top talents to companies according to their specific needs. They handle all recruitment tasks from job posting to onboarding and help companies concentrate on their business growth. With their expertise and years of experience, they streamline the hiring process and save time and resources for the company.
RMD24 | Debunking the non-endemic revenue myth Marvin Vacquier Droop | First ...BBPMedia1
Marvin neemt je in deze presentatie mee in de voordelen van non-endemic advertising op retail media netwerken. Hij brengt ook de uitdagingen in beeld die de markt op dit moment heeft op het gebied van retail media voor niet-leveranciers.
Retail media wordt gezien als het nieuwe advertising-medium en ook mediabureaus richten massaal retail media-afdelingen op. Merken die niet in de betreffende winkel liggen staan ook nog niet in de rij om op de retail media netwerken te adverteren. Marvin belicht de uitdagingen die er zijn om echt aansluiting te vinden op die markt van non-endemic advertising.
Putting the SPARK into Virtual Training.pptxCynthia Clay
This 60-minute webinar, sponsored by Adobe, was delivered for the Training Mag Network. It explored the five elements of SPARK: Storytelling, Purpose, Action, Relationships, and Kudos. Knowing how to tell a well-structured story is key to building long-term memory. Stating a clear purpose that doesn't take away from the discovery learning process is critical. Ensuring that people move from theory to practical application is imperative. Creating strong social learning is the key to commitment and engagement. Validating and affirming participants' comments is the way to create a positive learning environment.
Enterprise Excellence is Inclusive Excellence.pdfKaiNexus
Enterprise excellence and inclusive excellence are closely linked, and real-world challenges have shown that both are essential to the success of any organization. To achieve enterprise excellence, organizations must focus on improving their operations and processes while creating an inclusive environment that engages everyone. In this interactive session, the facilitator will highlight commonly established business practices and how they limit our ability to engage everyone every day. More importantly, though, participants will likely gain increased awareness of what we can do differently to maximize enterprise excellence through deliberate inclusion.
What is Enterprise Excellence?
Enterprise Excellence is a holistic approach that's aimed at achieving world-class performance across all aspects of the organization.
What might I learn?
A way to engage all in creating Inclusive Excellence. Lessons from the US military and their parallels to the story of Harry Potter. How belt systems and CI teams can destroy inclusive practices. How leadership language invites people to the party. There are three things leaders can do to engage everyone every day: maximizing psychological safety to create environments where folks learn, contribute, and challenge the status quo.
Who might benefit? Anyone and everyone leading folks from the shop floor to top floor.
Dr. William Harvey is a seasoned Operations Leader with extensive experience in chemical processing, manufacturing, and operations management. At Michelman, he currently oversees multiple sites, leading teams in strategic planning and coaching/practicing continuous improvement. William is set to start his eighth year of teaching at the University of Cincinnati where he teaches marketing, finance, and management. William holds various certifications in change management, quality, leadership, operational excellence, team building, and DiSC, among others.
As a business owner in Delaware, staying on top of your tax obligations is paramount, especially with the annual deadline for Delaware Franchise Tax looming on March 1. One such obligation is the annual Delaware Franchise Tax, which serves as a crucial requirement for maintaining your company’s legal standing within the state. While the prospect of handling tax matters may seem daunting, rest assured that the process can be straightforward with the right guidance. In this comprehensive guide, we’ll walk you through the steps of filing your Delaware Franchise Tax and provide insights to help you navigate the process effectively.
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4. A professor advises his PhD Student to create
a start-up as the results of the research are
promising. The professor knows an
experienced business person who is ready to
join.
How should they split equity?
A fictitious example
Another Case Study
5. Founders Equity Split
There is no single answer.
An equal split could be the initial idea, then should be taken
into account:
- past contribution,
- future commitment & expertise / credibility,
- reverse vesting should exist (i.e. if someone stops activity, he keeps a
pro-rata of a 4-5 year commitment),
- the money invested is a dangerous element and should be left to
future financing rounds,
- when IP belongs to a university, there will be a license which usually
includes some equity to academic institution
(see http://www.startup-book.com/2013/11/05/how-much-equity-universities-take-in-start-ups-from-ip-licensing/)
6. Founders Equity Split
There is no single answer, but there is a nice little
book, which introduces the concept of dynamic
allocation for the early phase
http://www.slicingpie.com
7. Founders Pie Calculator
Weight PhD Prof. Biz.
Idea for the solution 7 8 2
Bus. Plan 2 1 3 6
Expertise /Credibility 5 2 3 5
Commitment / Responsibilities 7 4 2 4
Risk 7 5 5
Total 280 131 49 100
Split 47% 18% 36%
http://www.andrew.cmu.edu/user/fd0n/35%20Founders'%20Pie%20Calculator.htm
This was an exercise only, and after a negotiation they
agree on the next table:
8. Founders Equity Split
Title Name Ownership Shares
Founder's Founder's
f CTO PhD 45.0% 4'500'000
f Chief Scientist Professor 25.0% 2'500'000
f VP Bus. Dev Biz 30.0% 3'000'000
Total 100.0% 10'000'000
Sometimes professors have too much power…
10. When there is a VC Round
The founders need resources and go to a VC they know.
The VC proposes $1M for 40% of the company and asks
also for a 20% ESOP plan. The VC will receive “preferred”
shares (i.e. with special rights).
ESOP is the employee stock option plan. When an
employee exercises his option, he receives “common”
shares (similar to founder shares). The company has
already 7 employees and some options are granted
(outstanding).
11. Equity Split post Round A
Title Name Ownership Number of shares/stock
Founder's Series A Founder's Series A
f CTO PhD 45.0% 18.0% 4'500'000 4'500'000
f Chief Scientist Professor 25.0% 10.0% 2'500'000 2'500'000
f VP Bus. Dev Biz 30.0% 12.0% 3'000'000 3'000'000
Officers & executives 100.0% 40.0% 10'000'000 10'000'000
Other common
Total common before options 100.0% 40.0% 10'000'000
Options-outstanding 4.0% 1'000'000
Options-Available 16.0% 4'000'000
Options-Total 20.0% 5'000'000
Total - company 54.6% 60.0% 15'000'000
Investors (VCs, not management) 40.0% 10'000'000
Investors (others)
Total- Investors 40.0% 10'000'000
Total 24.1% 100.0% 25'000'000
Number of employees 2 7
12. The B & C Rounds
It is very usual to see additional rounds of
financing called B and C rounds. Each round will
have its own size, valuation and price per share.
VC rounds Round Date Amount # Shares Price per
share
Ownership
(approx.)
Seed / A mai-07 $1'000'000 10'000'000 $0.10 40.0%
B jan-08 $10'000'000 9'090'909 $1.10 25.0%
C oct-09 $15'000'000 4'155'844 $3.61 10.0%
Total $26'000'000 23'246'753
13. Employee Stock
The CEO will usually be around 5-10% just before the IPO.
The VPs will be in the 0.5%-2% range.
The stock option plan is kept to a level which enables
attracting new managers & employees (usually 20-30%
including common shares of non-founders)
The vesting period is 4 years with 1 year cliff.
There may be a fiscal impact related to vesting and
exercise.
14. Equity Split post B-C Rounds
Remarks:
- The founder’s ownership numbers represent the ratio they own compared to other employees
on row Total-company and the ratio they own compared to employees and investors in Total-pre
IPO.
- Non-founder employee shares and options is maintained to 20% in this case.
Title Name Ownership Number of shares/stock
Founder's Series A Series B PreIPO /C Founder's Series A Series B PreIPO /C
f CTO PhD 45.0% 18.0% 12.4% 10.8% 4'500'000 4'500'000 4'500'000 4'500'000
f Chief Scientist Professor 25.0% 10.0% 6.9% 6.0% 2'500'000 2'500'000 2'500'000 2'500'000
f VP Bus. Dev Biz 30.0% 12.0% 8.3% 7.2% 3'000'000 3'000'000 3'000'000 3'000'000
CEO 8.3% 7.2% 3'000'000 3'000'000
VP S&M 1.9% 1.7% 700'000 700'000
VP Eng. 1.0% 400'000
VP Prods 1.0% 400'000
CFO 0.5% 200'000
Officers & executives 100.0% 40.0% 37.7% 35.4% 10'000'000 10'000'000 13'700'000 14'700'000
Other common -
Total common before options 100.0% 40.0% 37.7% 35.4% 10'000'000 13'700'000 14'700'000
Options-outstanding 4.0% 5.7% 6.0% 1'000'000 2'072'727 2'500'000
Options-Available 16.0% 4.1% 2.7% 4'000'000 1'500'000 1'111'688
Options-Total 20.0% 9.8% 8.7% 5'000'000 3'572'727 3'611'688
Total - company 54.6% 60.0% 47.5% 44.1% 15'000'000 17'272'727 18'311'688
Investors (VCs, not management) 40.0% 52.5% 45.9% 10'000'000 19'090'909 19'090'909
Investors (others) 10.0% 4'155'844
Total- Investors 40.0% 52.5% 55.9% 10'000'000 19'090'909 23'246'753
Total - PreIPO 24.1% 100.0% 100.0% 100.0% 25'000'000 36'363'636 41'558'441
Number of employees 2 7 25 70
15. When there is an IPO
The company goes public when revenues and growth are
steady. The company raises additional money to further
grow.
It also brings liquidity to founders and investors.
In 2000 (and over the past 22 years), if the IPO is successful,
the average gave:
- a CEO stock value will be $6-8M.
- a VP stock is around $1M
- and employees have in average $100k.
The investment bank takes a 6-8% fee on the amount raised.
16. A useful Rule of Thumb
A quick way to synthesize common stock split is given by a
5x hierarchical scale:
- The CEO gets 5-10%
- The VPs get 1-2%
- The directors / senior people get 0.2%-0.4%
- The junior people get 0.04-0.08%...
Position
ind. % # total % ind. % # total % ind. % # total %
CEO 10% 1 10% 7.5% 1 8% 5% 1 5%
VP 2% 2 4% 1.5% 7 11% 1% 10 10%
Senior 0.4% 2 1% 0.3% 17 5% 0.2% 50 10%
Junior 0.08% 15 1% 0.06% 75 5% 0.04% 440 18%
Total 20 16% 100 28% 501 43%
Small size Midsize Large size
17. Appendix: ESOP Value Curve
Foundation
10% of Series A
($0.01 / share)
30% of Series B
($0.33 / share)
70% of Series C
($2.52 / share)
100% of IPO
($20 / share)
A B C IPO
Ratio
ESOP Price/ Share Value
18. IPO Capitalization Table
Activity High-Tech Company CS Incorporation
Town, St Lausanne, CH IPO date State CH
f= founder Price per share $200 Market cap. Date oct-06
D= director Symbol CSSA URL www.cs-sa. years to IPO 3.7
Title Name Value
Founder's Series A Series B PreIPO /C Post IPO Founder's Series A Series B PreIPO /C Post IPO
f CTO PhD 45.0% 18.0% 12.4% 10.8% 9.9% 450'000 450'000 450'000 450'000 450'000 $90'000'000
f Chief Scientist Professor 25.0% 10.0% 6.9% 6.0% 5.5% 250'000 250'000 250'000 250'000 250'000 $50'000'000
f VP Bus. Dev Biz 30.0% 12.0% 8.2% 7.2% 6.6% 300'000 300'000 300'000 300'000 300'000 $60'000'000
CEO 8.2% 7.2% 6.6% 300'000 300'000 300'000 $60'000'000
VP S&M 1.9% 1.7% 1.5% 70'000 70'000 70'000 $14'000'000
VP Eng. 1.0% 0.9% 40'000 40'000 $8'000'000
VP Prods 1.0% 0.9% 40'000 40'000 $8'000'000
CFO 0.5% 0.4% 20'000 20'000 $4'000'000
Officers & executives 100.0% 40.0% 37.7% 35.4% 32.3% 1'000'000 1'000'000 1'370'000 1'470'000 1'470'000 $294'000'000
Other common - -
Total common before options 100.0% 40.0% 37.7% 35.4% 32.3% 1'000'000 1'370'000 1'470'000 1'470'000 $294'000'000
Options-outstanding 4.0% 5.7% 6.0% 5.5% 100'000 207'273 250'000 250'000 $50'000'000
Options-Available 16.0% 4.1% 2.7% 3.3% 400'000 150'000 111'168 150'000 $30'000'000
Options-Total 20.0% 9.8% 8.7% 8.8% 500'000 357'273 361'168 400'000 $80'000'000
Total - company 54.6% 60.0% 47.5% 44.1% 41.1% 1'500'000 1'727'273 1'831'168 1'870'000 $374'000'000
Investors (VCs, not management) 40.0% 52.5% 45.9% 42.0% 1'000'000 1'909'091 1'909'091 1'909'091 $381'818'200
Investors (others) 10.0% 9.1% 415'584 415'584 $83'116'886
Total- Investors 40.0% 52.5% 55.9% 51.2% 1'000'000 1'909'091 2'324'675 2'324'675 $464'935'086
Total - PreIPO 24.1% 100.0% 100.0% 100.0% 92.3% 2'500'000 3'636'364 4'155'843 4'194'675 $838'935'086
IPO 7.7% 350'000 $70'000'000
Option (underwriters) 0.0% $0
Total outstanding 22.0% 100.0% 3'636'364 4'155'843 4'544'675 $908'935'086
Number of employees 2 7 25 70 200
* The difference between common shares IPO Total cash before fees $70'000'000
and options is very small. In this case, Paid to underwriters $4'900'000 Revenues 2009 2008
the number of non-founder shares Others $600'000 Amount $100'000'000 $20'000'000
and ESOP is maintained to 20% Net $64'500'000 Growth 400%
of the company at each VC round sold by company 350'000 Number of employees 200
sold by shareholders 100'000 Avg. val. of stock per emp $250'000
Total shares sold 450'000
Option to underwriters -
6-juin-10
$908'935'086
Ownership Number of shares/stock
! : note the 10-1 stock split inducing 10x fewer shares (and an equivalent $20 share prior split)
19. More quotes
“How to be Silicon Valley?”
Few startups happen in Miami, for example,
because although it's full of rich people, it has few
nerds. It's not the kind of place nerds like.
Whereas Pittsburgh has the opposite problem:
plenty of nerds, but no rich people.
Paul Graham (Y-combinator)
http://www.paulgraham.com/
“Look around who the heroes are. They aren’t
lawyers, nor are they even so much the financiers.
They’re the guys who start companies”
Robert Noyce (founder of Intel)
20. The Five Dysfunctions of a Team
by Patrick Lencioni, Copyright 2002
Team culture
Inattention to
Results
Avoidance of
Accountability
Lack of
Commitment
Fear of
Conflict
Absence of
Trust
The Five Dysfunctions of a Team
21. The 5 Dysfunctions of a Team
1. The first dysfunction is an absence
of trust among team members.
Essentially, this stems from their
unwillingness to be vulnerable within
the group. Team members who are not
genuinely open with one another about
their mistakes and weaknesses make
it impossible to build a foundation for
trust.
Absence of trust
Absence of
Trust
22. 2. This failure to build trust is
damaging because it sets the tone for
the second dysfunction: fear of conflict.
Teams that lack trust are incapable of
engaging in unfiltered and passionate
debate of ideas. Instead they resort to
veiled discussions and guarded
comments.
The 5 Dysfunctions of a Team
Fear of Conflict
Absence of
Trust
Fear of
Conflict
23. 3. A lack of healthy conflict is a
problem because it ensures the third
dysfunction of a team: lack of
commitment. Without having aired
their opinions in the course of
passionate and open debate, team
member rarely, if ever, buy in and
commit to decisions, though they may
feign agreement during meetings.
The 5 Dysfunctions of a Team
Lack of Commitment
Absence of
Trust
Fear of
Conflict
Lack of
Commitment
24. 4. Because of this lack of real commitment and buy-in, team
members develop an avoidance of accountability, the fourth
dysfunction. Without committing to a clear plan of action, even the
most focused and driven people often hesitate to call their peers on
actions and behaviors that seem counterproductive to the good of
the team.
The 5 Dysfunctions of a Team
Avoidance of Accountability
Absence of
Trust
Fear of
Conflict
Lack of
Commitment
Avoidance of
Accountability
25. 5. Failure to hold one another accountable creates an
environment where the fifth dysfunction can thrive.
Inattention to results occurs when team members put
their individual needs (such as ego, career development,
or recognition) or even the needs of their divisions above
the collective goals of the team.
The 5 Dysfunctions of a Team
Truly cohesive teams are obvious
1. They trust one another
2. They engage in unfiltered
conflict around ideas
3. They commit to decisions and
plans of actions.
4. They hold one another
accountable for delivering against
those plans.
5. They focus on the achievement
of collective results.
Inattention to Results
Absence of
Trust
Fear of
Conflict
Lack of
Commitment
Avoidance of
Accountability
Inattention to
Results