Welcome East Bay BioNetwork!

This is a "handout" for an event on October 12, 2017 for the East Bay BioNetwork. 

I’m Mary Russell and the founder of Stock Option Counsel, P.C. – Legal Services for Individuals. I serve as attorney counsel to individuals on their personal interests in startup equity including job offers, equity grants and employment agreements, founder interests at incorporation, financings, and exits, and executive compensation design.

Evaluating Startup Equity Offers

I regularly counsel individuals who are evaluating equity offers from venture capital backed startups. In our conversation today, we will discuss key factors in these evaluations. You can use this blog post to follow along and use the links below for further information. 

1.     How can I evaluate the number of shares in a startup equity offer? 

Early Stage (Seed): Percentage Ownership + Relative Ownership

Mid-Stage: Percentage Ownership + Recent Investor Value/Share + Leveling

Late-Stage (Unicorn): Recent Investor Value/Share + Public Company Comps

2.     What equity documentation requires review?

Equity Incentive Plan

Forms of Stock Option Grant Notice, Stock Option Agreement and Exercise Notice

Any other documents referenced therein

3.     What happens to my shares when I leave the company?

Assuming you own vested shares (i.e. you have exercised your stock options) or have time-vested RSUs:

Standard: You have the right to hold your shares or RSU rights until company acquisition or IPO

Value-Limiting: Company can force repurchase or forfeiture at termination (aka clawbacks)  

4.     What happens to the unvested equity at company acquisition? 

Best: Single Trigger Acceleration

Good: Double Trigger Acceleration

Neutral: Continued vesting of value of unvested equity if you stay in service after closing

Worst: Cancellation of unvested equity for no consideration even if you stay in service after closing

5.     Is this a favorable design for tax rates and tax and investment timing?

Early Stage: Restricted Stock or Early Exercise Stock Options

Mid-Stage: Stock Options with Extended Exercise Period

Late Stage: Restricted Stock Units

Market Research on Certification Program

We are developing a Stock Option Counsel – Approved – Startup Employee Equity certification program for companies to certify to their hires and employees that their equity terms meet our standards. We hope it will increase efficiency in the job search process and enthusiasm for startup equity. Let’s discuss!

Stock Option Counsel, P.C. - Legal Services for Individuals.  Attorney Mary Russell counsels individuals on equity grants, executive compensation design, employment agreements and acquisition terms. She also counsels founders on their personal interests  at incorporation, financings and exit events. Please see this FAQ about her services or contact her at (650) 326-3412 or by email.