Welcome East Bay BioNetwork!
Attorney Mary Russell counsels individuals on startup equity, including:
You are welcome to contact her at (650) 326-3412 or at info@stockoptioncounsel.com.
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
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
Attorney Mary Russell counsels individuals on startup equity, including:
You are welcome to contact her at (650) 326-3412 or at info@stockoptioncounsel.com.
