Continuations

One of the nearly routine items at startup board meetings is the discussion and ratification of option grants for new employees and possibly refresh grants for existing employees. Too often unfortunately this information is presented to the board in a way that requires way more time than should be necessary because critical pieces are missing. Here is what you should always include as a bare minimum when presenting option grants to the board 1. Employee name 2. Title/role at company 3. Absolu...

There is something frequently missed in thinking about the value of common shares in startups. These shares are actually options! The Theory A common share in a startup has the same payout structure as a call option. There is a range of outcomes in terms of total enterprise value at exit for which common shares are worth exactly zero. This range is from no enterprise value (shutdown) to the aggregate value of preference (including, if applicable, participation multiples and dividends) plus an...