Fred Wilson of www.avc.com gives a great presentation about equity on his first Livestream show. He divides equity up between founders, founder employees (who receive %ages) and employees (who receive value or number of shares). Always make the shares of founders vest so if they leave early, the company can retain some of their shares to attract good people.
So many points:
– in awarding equity to employees, the sooner you can stop talking about percentage and start talking about value ($,£) the more equity you will retain
– (47:04) award options as soon as possible so price is a as low as possible – larger gain to employees
– (48:00) remember you are competing with other start-ups for great people
– (50:24) award retention grants (without cliff) so that employees keep receiving options
The link to the talk:
http://new.livestream.com/Skillsharelive/MBAMondays/videos/490550
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