How to Value Startup Stock
If you’re a founder or startup employee, you have probably foregone a comfortable position with a big salary in favor of long hours for little pay to build a company you’re passionate about. From a financial perspective, you’re making a bet that, in the end, you’ll be able to sell your stake in the company…
Startup Equity Compensation: Everything You Need to Know
Startups use equity compensation to create an ownership culture, attract and retain top talent, and incentivize hard work and direct contributions to the company’s growth. This type of compensation can take the form of stock options, restricted stock or other equity-based incentives. Types of Startup Equity Compensation Equity compensation in startups can take various forms,…
Employee Stock Option Plan (ESOP): For Startups
The term employee stock option plan is a bit of a misnomer. It’s a pool of equity that a company reserves to issue stock options, in addition to stock grants and potentially even restricted stock units (RSUs). Perhaps a better name would be an equity incentive plan. For the purposes of this article, we’re going…
What Is Restricted Stock in a Startup?
Restricted stock (sometimes referred to as RSAs) is a common form of equity compensation in early stage startups. This article will help founders understand the advantages and disadvantages of restricted stock, as well as understand whether it’s right for you. Of course, every situation is unique, so it’s best to consult with an attorney before…
Stock Options: What They Mean for Your Startup
A stock option in a startup is a form of equity compensation that enables employees to buy company shares in the future at a fixed price, usually the current fair market value. This compensation is often given to motivate and reward employees, providing them with the opportunity to profit from any future growth in the…
NSO vs ISO: Key Differences for Startups
Issuing equity in a startup can be surprisingly complex. When discussing compensation, founders and employees often mention percentages, but they may not specify whether the equity is in the form of a stock grant or a stock option. Moreover, if it’s a stock option, they may not differentiate between an NSO and an ISO. There…
Early Exercisable Stock Option: What Startup Founders Should Know
An “early exercisable” stock option is an option that can be exercised by the holder before it has vested. This type of stock option allows the employee, consultant, advisor, or other service provider (collectively referred to as “employee” henceforth) to immediately exercise all or a portion of the option, including the unvested portion of the…
83(b) Election: What Startup Founders Should Know
If you’re involved in the startup world, you’ve likely come across the term “83(b) election.” However, you may not have a complete understanding of what it entails or why it’s important. While this article is not intended to provide tax advice, its objective is to help you comprehend the concept and how it may impact…
Stock vs Stock Options: What Startup Founders Should Know
Startup equity compensation can take many forms, but the most common are restricted stock and stock options. This article will help you understand the difference between the two. Startup Restricted Stock Restricted stock (sometimes called a restricted stock award or RSA) is a grant of common stock for a startup. It is often granted to…
Single Trigger vs Double Trigger Acceleration
Acceleration can be a significant factor in attracting and retaining top talent at startups. This is especially true for those that are growing rapidly and facing increased competition for skilled workers. But what exactly is acceleration and how does it impact founders and employees? This article will answer those questions and more. It’s important to…
