Q: Can the founders sell off their shares to the company and get paid from the investment which has come in the company at the valuation rate of the round? A: (Jason). Most likely, not. VCs are reluctant to allow founders to cash out, as the money going into the company is normally needed to […]
Q: My question is “What is a reasonable compensation package for a startup lawyer/firm”? I’m now starting a company in Seattle and have been talking with an attorney in Seattle. After 2-3 meetings, we got around to his compensation proposal and I was a bit shocked. I thought it would be a reasonable equity piece […]
As we continue our series on Compensation, let’s look at some recent compensation trends. In general, while compensation is on the rise, the rate of increase slowed between 2005 and 2006. Founder compensation (in whatever role they play) is rising faster than non-founder compensation. There are some theories on this including (a) founders are becoming […]
Q: Have you experienced a company which grows along nicely, but does not offer a liquidity event? In the funding agreement, there is a clause for redemption rights. Is this used so that the VC can get out of the investment? A: (Jason). Yes, we’ve experienced companies growing nicely without liquidity events. And yes, we […]
Q: When performing diligence on a new investment I will dig through management’s projections. Even though I am a finance guy I try to understand the costs associated with the software development. Probably needless to say, I have been burned by cost overruns quite a few times. The Companies burn through our cash on development […]
Will Price from Hummer Winblad has today’s great VC post up titled Decision Making and the Venture Capital Process. I’m certain that every entrepreneur that has ever raised money from a VC has experienced this phenomenon.
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