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  2. LEGAL/CORPORATE STUFF
  3. Stock Options

Stock Options versus Stock Warrants – What’s the Difference?

May

5

2013

I frequently hear clients and some of their advisers talk about “stock options” and “stock warrants” and there is often considerable confusion between the two. In this post, I’ll briefly describe the major distinctions between these instruments and how each can be used in a privately held company. Stock options are issued to key employees, ...
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Stock Options

options · warrants

Valuation and Option Pool — Understand the trade off

May

16

2012

One of the more contentious things in the negotiation between an entrepreneur and a VC over a financing, particularly an early stage financing, is the inclusion of an option pool in the pre-money valuation. As my friend Mark Pincus likes to say, “it’s just another way to lower the price”. I’ll accept that critique. And ...
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Angel Primers · Stock Options · Valuation

option pool · post-money · pre-money

Vesting Calculator for Restricted Stock and Stock Options

May

15

2012

Options and restricted stock in a startup are subject to vesting. This is done to associate the rewards of equity ownership with the time and effort put into creating value for the company. Although vesting schedules can be infinitely flexible in theory, in practice they don’t vary that much. You’ll find that the majority of ...
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Employee Option Grants · Restricted Stock · Stock Options

option acceleration · vesting

Option Pool, Post-Money and True Pre-Money. Trade Pool for Valuation.

May

2

2012

One of the common areas of misunderstanding, and therefore conflict, in financing negotiations has to do with the relationship between the pre-money valuation and the option pool. Investors want the company to have an adequate option pool for future hiring and it is customary to include the pool in the pre-money valuation. Some entrepreneurs see ...
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Stock Options · Valuation

option pool · post-money · pre-money

Splitting the Founders Stock — Amount Depends on Contribution

Apr

20

2012

One of the first tough decisions that have to make is how to allocate or split the equity among co-founders. The easy answer of splitting it equally among all co-founders, since there is minimal value at that point, is usually the worst possible answer, and often results in a later startup failure due to an ...
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Founder Agreements · Restricted Stock · Stock Options

founders stock · vesting

Venture Hacks Series A Cap Table, with Note Conversion and Option Pool

Apr

17

2012

This is a Youtube video explanation of a cap (capitalization) table example that is available online. It may take a while get your head around the terminology and concepts involving the option pool and note conversion, and their impact on valuation. It is worth taking time to understand this if you want to see how ...
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Convertible Notes · Fundraising · Preferred Stock · Stock Options · Valuation

option pool · post-money · pre-money

Orrick – Start-Up Tool Kit – Term Sheet Creator – Start-Up Forms Library

Sep

26

2011

There are many items useful to entrepreneurs on the site including: Example cap (capitalization) table spreadsheet Term Sheet Creator Non-disclosure Agreements Employment Agreements Stock Option plans Confidential Information and Invention Assignment Agreement for Employees & Consultants and much more …..
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Capitalization Tables · Hiring The Team · Non-Disclosure Agreements · Stock Options · Term Sheets

forms · spreadsheet

Startup Stock Options Tax HOWTO

Sep

27

2008

Warning! I am not a lawyer, and I am not a tax accountant. The information in this document is correct, to the best of my belief, at this writing (2000). It’s distributed in the hopes that it will be useful, however, it shouldn’t be used as financial advice. You should see a professional tax or ...
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Stock Options

amt · compensation · iso · nso

Stock options, employee stock purchase plans, ESPPs, restricted stock, restricted stock units, RSUs, stock appreciation

Aug

26

2008

Making you smarter about stock options, incentive stock options, employee stock purchase plans, ESPPs, restricted stock, restricted stock units, RSUs, stock appreciation rights, SARs, performance shares, and other stock compensation for employees and executives.
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Stock Options

iso · nqo · options

Take Stock When Using Stock In Trade Part 2 — MIT

Aug

23

2008

Good short story on issuing options as opposed to plain stock. Discussion of incentive (ISO) and non-qualified (NQO) tyspes.
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Stock Options

options · stock · vesting

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