The Importance of Vesting Shares

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Vesting shares means taking shares granted to an employee and having them earned over time.

A typical vesting schedule is four years with a one-year cliff.

This means the employee granted shares will not have ownership of the shares for the first year.

At the end of the first year, the employee now owns 25% of the shares granted.

After that, the employee earns another 25% each year, and after four years from the start, the employee owns 100% of the shares granted.

It's important to apply vesting to shares to incentivize the employee to stay long enough to accomplish the work at hand.

Co-founders without vesting can leave at any time and take their shares with them.

Their equity is no longer working for the company.

Investors often unvest founders' shares and require a vesting schedule to earn them back.

This incentivizes the founder to stay with the company.

If a founder leaves the company early, then there's equity to compensate those who take their place.

Consider applying vesting to the founders in startups you fund.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

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What Is Reverse Due Diligence

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Due diligence is the process of reviewing the condition of a company to be acquired.

The purpose is to understand the company's current status, including risks, assets, liabilities, and potential opportunities.

Reverse due diligence is when the company being acquired reviews the condition of the acquirer.

Here are several reasons why one would execute reverse due diligence:

This validates the financial stability of the acquirer.

The acquisition process takes at least six months and requires a substantial amount of time.

It's important to know that the acquirer has the capability and resources to make the acquisition.

The acquirer has several options for how to manage the acquisition.

The acquired company could be integrated into the acquirer company, or it could be kept separate.

A reverse due diligence could help make that determination.

A reverse due diligence also determines the best placement of the acquired company's team into the acquiring company.

Reverse due diligence is as important as the diligence of the acquired.

Consider running a reverse due diligence on your next acquisition.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

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The Importance of a Data Room

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

A dataroom is a collection of the key documents of a startup for a fundraise.

The dataroom can be kept in software specifically designed for dataroom access or in a simple storage folder.

These documents include legal entity filings, patents, financials, forecasts, cap table, contracts, and more.

A well-organized data room is a must-have component of a fundraise.

Here are several reasons why the founder needs a good dataroom.

Provides a single location for all the documents of a startup raising funding.

This prevents the fundraise from becoming a paper chase for the investor.

Gives the founder a method for communicating a potentially large amount of data to the investor.

Provides a source of information for all the investors in a fundraise.

A well-organized data room inspires investor confidence in the company.

Provides transparency of the company to the investor, which builds even more investor confidence.

Can be useful to the investor and founder post-fundraise by providing the historical documentation.

Consider building out the data room before launching a fundraise.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let's go startup something today.

_________________________________________________________

For more episodes from Investor Connect, please visit the site at: http://investorconnect.org

Check out our other podcasts here: https://investorconnect.org/
For Investors check out: https://tencapital.group/investor-landing/
For Startups check out: https://tencapital.group/company-landing/
For eGuides check out: https://tencapital.group/education/
For upcoming Events, check out https://tencapital.group/events/

For Feedback please contact info@tencapital.group

Please follow, share, and leave a review.

Music courtesy of Bensound.