startup equity: what founders need to know
Post on 17-Oct-2014
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If you’re going to raise capital, you have to be thinking about equity. But, what exactly do you need to know? In this presentation, Peter Stone, of Counsel in Hopkins & Carley’s Corporate, Tax & Business Transactions department, and Glenn McCrae, Chief Strategy Officer for Early Growth Financial Services (EGFS) will dig into the nitty gritty of startup equity and how it’s a huge key to your startup success story. Topics include anatomy of a capital structure, priced vs unpriced rounds, how much equity to incent with, and more.TRANSCRIPT
STARTUP EQUITY: WHAT FOUNDERS
NEED TO KNOW
Peter StoneCounselHopkins & Carley
Glenn McCraeChief Strategy OfficerEarly Growth Financial Services
#StartupEquity
2
About Us
3
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
4
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?
5
Sidebar – Anatomy of a Capital Structure
Authorized shares
Issued and outstanding
Fully diluted
Common stock
Preferred stock
6
Founder Stock
Starting with 100% Co-Founders Initial capital
contributions To vest or not to vest?
7
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
8
Board of Advisors
The role of a Board of AdvisorsStock compensation for AdvisorsSidebar – Advisors v. Directors
9
Service Providers
Distinguish role from other early players
10
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?
11
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
12
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