startup equity splitting the equity pie
DESCRIPTION
How much equity should be given to early employees? What is the best way to distribute equity among a founding team? What's the exact difference between unrestricted and restricted stock? What do investors think about convertible notes? If you have questions, like these, about startup equity, join Peter Stone, Counsel for Hopkins & Carley and Glenn McCrae, Chief Strategy Officer of Early Growth Financial Services (EGFS) for this in-depth look at startup equity.TRANSCRIPT
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 [email protected]
Glenn [email protected]
2033 Gateway Place, 5th Fl.San Jose, CA 95110T: (415) 320-5753
@EARLYGROWTHFS