How Funding Works - Splitting The Equity With Investors - Infographic. A hypothetical startup will get about $15,000 from family and friends, about $200,000 from an angel investor three months later, and about $2 Million from a VC another six months later. If all goes well. See how funding works in this infographic: First, let’s figure out why we are talking about funding as something you need to do. This is not a given. If you know the basics of how funding works, skim to the end.
Every time you get funding, you give up a piece of your company. Splitting the Pie The basic idea behind equity is the splitting of a pie. When Google went public, Larry and Sergey had about 15% of the pie, each. Funding Stages Let’s look at how a hypothetical startup would get funding. Idea stage At first it is just you. Co-Founder Stage As you start to transform your idea into a physical prototype you realize that it is taking you longer (it almost always does.) Soon you realize that the two of you have been eating Ramen noodles three times a day. Registering the Company. 5 Key Books Every Entrepreneur Should Read. When I sat down to write my book, An American Hedge Fund (which I now make free to the public), I wrote it with one key goal in mind, to provide entrepreneurs like me with access to the information they need to be as successful as possible.
I honestly believe that reading books is one of the best ways to gain insight on the world and to learn more not only about others but also about business. I realized that without some of these influential titles, I never would have gotten to the level of success I am today or be in a position to share my stories of success with others. This is why I have complied a list of the five key books I believe every entrepreneur should read. They have helped me along on my journey and I believe they will help any entrepreneur looking to get a leg up in today’s fast-paced market. Losing My Virginity by Richard Branson. There are very few entrepreneur’s in today’s market that are as successful and as eccentric as Richard Branson.
Zero to One by Peter Thiel. Panama Papers Show How Rich United States Clients Hid Millions Abroad. “Our significantly expanded compliance office today not only evaluates new client candidates, but also existing accounts, and especially those that were established prior to the new international regulatory regime coming into effect,” a spokeswoman said in a written statement, referring to a 2010 law passed by Congress. “It wasn’t always this way.” The firm’s American client list does not appear to include the sort of high-profile political figures who have emerged from reporting on the Panama Papers in many other countries around the world. But the services offered by Mossack Fonseca, with 500 employees in more than 30 offices worldwide, were in high demand by the rich and famous in the United States. In 2001, Sanford I. Weill, then the chief of Citigroup, set up an offshore account called April Fool for his yacht. A spokesman for Mr. OPEN Document Document: William Ponsoldt and Mossack Fonseca “You deserve the best Mr.
Black Hole for Assets With this legal structure in place, Mr. Photo Mr. How to Start a Startup. Sign Up. 10 Reasons Why IPO Is No Longer A Good Startup Exit. Что я рассказал бы себе о стартапах, если бы мог вернуться на 5 лет назад. Вот что я бы рассказал себе о стартапах, попади я в прошлое на пять лет назад, когда только начинал. По сути это то, чему я научился за прошедшее время. И уж точно это никакие не рекомендации или советы, а «ты» здесь обращено к себе самому, так что читайте как «я». Стиль изложения вольный (прим. переводчика — как и стиль перевода). 1. 2. 3. 4. 5. 6. 7. 8. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62.
Примечание переводчика: О найденных ошибках прошу в личку. Freelancers: Bad Time Estimates Are Killing Your Profits. Ever had one of those weeks where you’re working around the clock, and when you finally get to the end of the week run your invoices, you look at the numbers and think, “… wait, that’s it?! “ As a freelancer, you’re almost always trading time for money. Which isn’t necessarily a bad thing in and of itself, but it can definitely take a turn for the worse when your time estimates are inaccurate. Luckily, bad estimates can be fixed–read on to find out how. Why are we so bad at time estimates? You know how when you’re working, you can sometimes get immersed in a particular project, and then you look up and three hours have flown by? The reason that happens is because you’re in a flow state.
Being in flow state is a really good thing overall–it’s similar to meditating in that it can help decrease anxiety levels and increase overall feelings of well-being. The downside is that we lose track of time. The other factor we forget to take into account when estimating is “switching cost.” Systematize. How to Build a Freelance Business in 90 Days. Unofficial CS 183B mp3s. The Pmarca Guide to Startups, part 2: When the VCs say “no” | pmarca-archive. This post is about what to do between when the VCs say “no” to funding your startup, and when you either change their minds or find some other path. I’m going to assume that you’ve done all the basics: developed a plan and apitch, decided that venture financing is right for you and you are right for venture financing, lined up meetings with properly qualified VCs, and made your pitch. And the answer has come back and it’s “no”. One “no” doesn’t mean anything — the VC could just be having a bad day, or she had a bad experience with another company in your category, or she had a bad experience with another company with a similar name, or she had a bad experience with another founder who kind of looks like you, or her Mercedes SLR McLaren’s engine could have blown up on the freeway that morning — it could be anything.
Go meet with more VCs. If you meet with three VCs and they all say “no”, it could just be a big coincidence. Go meet with more VCs. There is something wrong with your plan. The Pmarca Guide to Startups, part 1: Why not to do a startup | pmarca-archive. In this series of posts I will walk through some of my accumulated knowledge and experience in building high-tech startups. My specific experience is from three companies I have co-founded: Netscape, sold to America Online in 1998 for $4.2 billion; Opsware (formerly Loudcloud), a public software company with an approximately $1 billion market cap; and now Ning, a new, private consumer Internet company. But more generally, I’ve been fortunate enough to be involved in and exposed to a broad range of other startups — maybe 40 or 50 in enough detail to know what I’m talking about — since arriving in Silicon Valley in 1994: as a board member, as an angel investor, as an advisor, as a friend of various founders, and as a participant in various venture capital funds.
Finally, much of my perspective is based on Silicon Valley and the environment that we have here — the culture, the people, the venture capital base, and so on. However, there are many more reasons to not do a startup. Startup Employees Think They Are Going To Get Rich — Then A Horror Story Like This Happens. Universal You think these masks are scary? You should hear about 2X liquidation preferences. Here's a horror story every startup employee should be aware of.
Earlier this week, we published a story about the three ways VCs and CEOs screw-over startup employees. One of those three ways is through the difference between "preferred stock," which investors get, and "common stock," which employees get. Among other special rights, the owners of preferred stock get "liquidation preferences. " What that means is that when the startup sells, or liquidates, the owners of preferred stock get a guaranteed amount of money from the sale. Often, the owner of preferred stock gets a guaranteed return of 1X their investment. Imagine a VC that buys 50% of a company for $50 million, for a $100 million post-money valuation. That's a 1X liquidation preference. A 1X liquidation preference isn't unfair. Where startup employees can get really screwed is when preferred stock owners have 2x or 3x liquidation preferences. The Startup Book List: What Every Startup Founder & Early Employee must read. 57 startup lessons.
I am a cofounder of RethinkDB — an open-source distributed database designed to help developers and operations teams work with unstructured data to build real-time applications. There are already very good lists of startup lessons written by really talented, experienced people (here and here). I’d like to add another one.
I learned these lessons the hard way in the past four years. If you’re starting a company, I hope you have an easier path. People If you can’t get to ramen profitability with a team of 2 – 4 within six months to a year, something’s wrong. Fundraising If you have to give away more than 15% of the company at any given fundraising round, your company didn’t germinate correctly. Markets The best products don’t get built in a vacuum. Products Product sense is everything. Marketing Product comes first. Sales Sales fix everything.
Development Development speed is everything. Company administration Personal well-being Thanks to Michael Glukhovsky for reviewing this post. An Engineer’s guide to Stock Options. There’s a lot of fear, uncertainty and doubt when it comes to stock options, and I’d like to try and clear some of that up today. As an engineer, you may be more interested in getting on with your job than compensation. However, if you’re working at a fast growing startup, with a little luck and the right planning you can walk away from a liquidity event with a significant amount of money. On the other hand I have friends who have literally lost out on millions of dollars because the process of exercising stock options was so complicated, opaque and expensive. Believe me, you’ll be kicking yourself if this happens to you, so why not arm yourself with some knowledge and make informed decisions.
This guide is an attempt to correct some of the imbalance in information between companies and employees, and explain in plain English the whole stock option process. Shares 101 I like thinking about shares as a virtual currency. Stock Options You can think of a stock option as a Future. Exercising. Investors don’t want to meet you. They wanted to be introduced to you. - 42Floors. I remember when I first started fundraising for my first company, my investor network was pretty weak. Not only did I not know many investors, I also didn’t really know how to pitch them. I‘d basically take any meeting I could with any investor at any time. I went to conferences, meet-ups, pitch competitions. Every investor was an opportunity for an elevator pitch. I was doing whatever I could, trying everything to succeed.
I figured this it what it took. This was hustle. It was also stupid. One day, I met a prominent VC at a conference. Here I had thought this man with deep pockets of other people’s money was evaluating me and my pitch. Investors don’t want to meet you. It’s a huge difference. It makes sense. This little insight should dramatically change how you raise money. Get Intros to Your Friends’ Investors If you’re working in any startup hub, you almost certainly have friends that are working on their own startups. Get Introductions from Entrepreneurs That Are Not Yet Your Friends.