Business 101 for startups by Fred Wilson
This is the first post on the “acquisition finance” series we started last week in MBA Mondays. I am going to try to lay out the basics of mergers and acquisitions in this post. Then we can move on to some details.
As the term M&A suggests, there are two types of deals,…
Continue readingM&A Fundamentals
It’s monday and it’s time to move on from the MBA Mondays series on Employee Equity. We did nine posts on employee equity and hopefully we moved the needle a bit on understanding that complicated topic.
I’d like to switch topics now and talk about acquisition finance. The other day Chris Dixon said…
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The most common comment in this long and complicated MBA Mondays series on Employee Equity is the question of how much equity should you grant when you make a hire. I am going to try to address that question in this post.
First, a caveat. For your first key hires, three, five, maybe as much as ten, you…
Continue readingEmployee Equity: How Much?
We had a bunch of questions about vesting in the comments to last weekโs MBA Mondays post. So this post is going to be about vesting.
Vesting is the technique used to allow employees to earn their equity over time. You could grant stock or options on a regular basis and accomplish something similar, but that has all sorts of…
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For the past six weeks, we’ve been talking about employee equity on MBA Mondays. We’ve covered the basics, some specifics, and we’ve discussed the main form of employee equity which are stock options. Today we are going to talk about two other ways companies grant stock to employees, restricted stock and restricted stock units (RSUs).
Restricted stock…
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A few weeks back we talked about stock options in some detail. I explained that the strike price of an option is the price per share you will pay when you exercise the option and buy the underlying common stock. And I explained that the company is required to strike employee options at the fair market value of the company…
Continue readingEmployee Equity: The Option Strike Price
We’re five posts into this MBA Mondays series on Employee Equity and now we are going to start getting into details. We’ve laid out the basics but we are not nearly done. I am just starting to realize how complicated the issues around employee equity are. That’s not good. It’s like paying taxes. Everybody does it and nobody…
Continue readingEmployee Equity: The Liquidation Overhang
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.
If you are a…
Continue readingEmployee Equity: Options
Continue readingEmployee Equity: Appreciation
Last week I kicked off my MBA Mondays series on Employee Equity. Today I am going to talk about one of the most important things you need to understand about employee equity; it is likely to be diluted over time.
When you start a company, you and your founders own 100% of the company. That…
Continue readingEmployee Equity: Dilution