startup equity splitting the equity pie

Startup Equity: What Founders Need to Know about Splitting the Equity Pie

Peter StoneCounselHopkins & Carley

Glenn McCraeChief Strategy OfficerEGFS

#StartupEquityPie

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About Us

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Introduction• You're getting ready to raise capital … what do you need

to know? Who are the players? • Startups are equity plays • Key stakeholders and considerations• What’s included in “startup equity” and what’s not

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Getting Ready for the “First Real Round”

Have a capital strategy as part of your business plan• How much do you

need?• Where are you going

to get it? • What milestones are

you going to achieve?

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Sidebar – Anatomy of a Capital Structure

Authorized shares

Issued and outstanding

Fully diluted

Common stock

Preferred stock

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Founder Stock

• Starting with 100%• Co-Founders• Initial capital

contributions• To vest or not to vest?

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Seed Stage Investors • Profile of seed stage investors

• Friends and family • More sophisticated angels

• Negotiating the deal• Legal agreements• Convertible notes• Cap• Transition to next stage – impact on Series A

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Board of Advisors

• The role of a Board of Advisors• Stock compensation for Advisors• Sidebar – Advisors v. Directors

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Service Providers

Distinguish role from other early players

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Early Employees

• Startup employees are different • How employees look at equity:

the naïve and the savvy• The employee pool• Attracting talent: putting a

package together: options + cash

• Legal structures and issues for employee equity

• Contractors?

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Transitioning from Seed to Series A

• Every decision on equity affects Series A (and beyond)• Living with your early shareholders• Introducing your new shareholders

Seed Series A

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Thanks and Q&A

Hopkins & Carley, A Law Corporation200 Page Mill Road, Suite 200

Palo Alto, CA 94306T: (650) 804-7600

@HOPKINSCARLEY

Peter F. Stone, Esq., Of Counselpstone@hopkinscarley.com

Glenn McCraegmccrae@earlygrowthfinancialservices.com

2033 Gateway Place, 5th Fl.San Jose, CA 95110T: (415) 320-5753

@EARLYGROWTHFS