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