equity

Employee Equity: Options

A stock option is a security which gives the holder the right to purchase stock (usually common stock) at a set price (called the strike price) for a fixed period of time. Stock options are the most common form of employee equity and are used as part of employee compensation packages in most technology startups.

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The worst time to join a startup is right after it gets initial VC financing

One things I’ve noticed over the years is that equity grants given to new employees soon after Series A financings are generally a bad deal for those employees on a risk/reward basis.  (By a Series A financing I’m referring the first round of funding by VCs, where the amount raised is roughly $2M or more).

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Advice on equity

A friend asked me to help him think about how to split the equity in a company he was starting. His colleague is contributing office space and some key technology. My friend is responsible for where the business goes from here. I told him this:

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