ownership casey mcglynn. ownership corporation vs. partnerships common vs. preferred stock...

OwnershipOwnership

Casey McGlynnCasey McGlynn

OwnershipOwnership

• Corporation vs. Partnerships• Common vs. Preferred Stock

– Rights, vesting, cost

• Ownership and control

• Corporation vs. Partnerships• Common vs. Preferred Stock

– Rights, vesting, cost

• Ownership and control

Cost of StockCost of Stock

• Common Stock for– IP, compensation, cash

• Preferred Stock for– CASH

• Mechanisms for setting price

• Common Stock for– IP, compensation, cash

• Preferred Stock for– CASH

• Mechanisms for setting price

Typical Stock Ownership for Venture Backed Companies

Typical Stock Ownership for Venture Backed Companies

President 4.0-6.0%

COO 1.5-2.0%

Vice President

1.0-1.25%

CFO 1.0-1.25%

Director Level

0.25-0.50%

Board Member 0.50-1.00%

DilutionDilution

• Why does my % ownership keep getting smaller?

• What is a common dilution during funding– Cap Table Example

Smaller slice of a bigger pie

• Why does my % ownership keep getting smaller?

• What is a common dilution during funding– Cap Table Example

Smaller slice of a bigger pie

Typical Valuations by StageTypical Valuations by Stage

# Shares $/Share $ Million

s

Ownership

PreMoney Management 2.8 35%

Option Pool 1.2 15%

TOTAL 4.0 $1.00 $4.0

Preferred A 4.0 $1.00 $4.0 50%

Post Money 8.0 $1.00 $8.0

START-UP

Typical Valuations by StageTypical Valuations by Stage

# Shares $/Share $ Million

s

Ownership

PreMoney Management 4.0 28%

New Option Pool 1.5 10%

Preferred A 4.0 28%

TOTAL 9.5 $2.00 $19.0

Preferred B 5.0 $2.00 $10.0 34%

Post Money 14.5 $2.00 $29.0

EXPANSION

Typical Valuations by StageTypical Valuations by Stage

# Shares $/Share $ Million

s

Ownership

PreMoney Management 5.5 27%

New Option Pool 1.1 5%

Preferred A & B 9.0 43%

TOTAL 15.6 $3.50 $54.6

Preferred C 5.0 $3.50 $17.5 25%

Post Money 20.6 $3.50 $72.1

MEZZANINE

Typical Valuations by StageTypical Valuations by Stage

# Shares $/Share $ Million

s

Ownership

PreMoney Management 6.6 23.0%

New Options 1.0 3.5%

Preferred A, B & C 15.0 52.0%

TOTAL 22.6 $8.00 $180.80

IPO 6.25 $8.00 $50.00

21.5%

Post Money 28.85 $8.00 $230.80

IPO