An option pool is a number of shares of stock reserved for issuance to service providers of a company pursuant to options and other equity incentives.
Many people think a high(er) valuation is the Holy Grail. Those people are (often) wrong. In pursuit of a high(er) valuation, founders often unwittingly give up valuable ownership percentage points…
Maybe you’ve been granting options and restricted stock from your equity incentive plan for a while now. Perhaps you and your team have developed a good process – you renew…
When talking to people about option grants, refer to “fully diluted” and always promise a share amount not just a percentage. I often get asked: “When I tell a new hire…
Most startups offer equity participation in their company to people providing services to the company, whether as employees, consultants, advisors or otherwise (which we will call “service providers” in this…
What is a Down Round? A “down round” is a financing in which a company sells shares of its capital stock at a price per share that is less than…
One decision to make when incorporating is “How many shares do you want to authorize?” A common misconception is that the number of authorized shares (which appears in the certificate…
Ready for show time? Is your story compelling enough to interest venture capital investors? Some businesses, even if they succeed, simply will not get large enough to deliver the kind…
You and your co-founders are getting your company off the ground. Everyone is excited and in perfect alignment. You have many people to be appreciative of as you launch your…
Ready for prime time? Is your story compelling enough to interest venture capital investors? Some businesses, even if they succeed, simply will not deliver the kinds of returns that venture…
Focus on what’s important, negotiate and resolve the important points early, get the deal closed as quickly as possible and get back to growing the company. When you receive a…
As a result of changes in US law, most newly formed companies, as well as many existing companies, will need to comply with the beneficial ownership information (BOI) reporting rule
“Fully diluted” shares are the total common shares of a company counting all currently issued and outstanding, plus shares that could be issued through the conversion of convertible preferred stock or through the exercise of outstanding options and warrants.
Not Just a Question for Founders One question I get asked all the time by a team founding a startup is how to allocate stock among the two or three…
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