No, revenue share will not work. Not only are the returns not that great. Why would you want to give away your precious cash when you give equity and stock options?
Thanks for you adding your thoughts. I wouldn't do that as a founder, but I'm sure investors would be all for it because it would lessen their dilution. The reality is savvy investors know that increasing the employee option pool increases retention which improves the odds of success.
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Insightful Brett. Just hearing refresh for the first time. Really helpful
Glad you liked it, Chike
These explanations always seem to come in at the correct time/phases in our company, tnx :).
Glad to be there at the right time!
Upon incorporation should the founders 1. authorize more than one class of stock 2. Authorize more than 10 million shares in total.
Neither, Peter. Founders should hire an attorney that has experience with equity plans and the articles of incorporation for startups.
Instead of Stock option, can Revenue Share be an alternative with allocation similar to what you describe?
No, revenue share will not work. Not only are the returns not that great. Why would you want to give away your precious cash when you give equity and stock options?
Oh, it's so difficult.
thanks for your thoughts
why wouldn't co-founders sell their shares to investors protecting the stock options pool? I think it will be fair.
Thanks for you adding your thoughts. I wouldn't do that as a founder, but I'm sure investors would be all for it because it would lessen their dilution. The reality is savvy investors know that increasing the employee option pool increases retention which improves the odds of success.