Why Give Stock Options to Employees

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

Startups give stock options to employees as part of their compensation package.

Most startups create an options pool at the Series A fundraise.

A founder-friendly term sheet will have both the investors and the founders pay for the options pool.

In an investor-friendly term sheet, the founders will pay for the options out of their equity.

It's important to create an options pool as it provides incentive to the employees.

It allows the founders to provide another means of compensation.

Without it, the founders will need to compensate employees out of cash.

In a startup, cash is precious and should be conserved.

The options pool takes pressure off the cash reserves.

Options should be vested over a four-year timeframe.

This ensures the employees stay with the company long enough to earn the shares.

Consider creating a stock options pool for employees in your company.

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.

Allowing employees to sell stock on the secondary market

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

Startups that take a long time to reach an exit should consider allowing employees to sell stock on the secondary market.

While many startups launch an exit in the five to seven-year range, many more are still running well past this timeframe.

Founders compensated employees with stock options.

Employees signed up for the startup with the expectation that it will find an exit.

Employees selling their stock in the early days will receive scrutiny from the team.

Employees cannot sell their stock without support from the company due to rights of first refusal.

Companies can help employees sell their stock through a fundraise.

The advantage here is that the fundraise provides a valuation for the stock.

Employee stock sales are typically sold at a discount of ten to fifteen percent.

Series C fundraises and beyond are often set up to allow employees to sell their shares on the secondary market.

Existing investors often purchase these secondary offerings.

Companies should facilitate these sales to provide liquidity to their employees.

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.

On this episode of Investor Connect, Hall welcomes Brenda Hogan, CIO at Venture Ontario, to discuss how Venture Ontario operates like a sovereign-wealth-style investor focused exclusively on backing venture capital funds across general technology, life sciences/medical devices, cleantech, and climate tech.

Brenda explains how fund-of-funds and co-investment models help develop Canada's venture ecosystem over multiple fund cycles by bringing together institutional capital, governments, universities, corporates, and other partners to help companies move from product-market fit to true global scale. She shares what she looks for in consistently outperforming venture funds—strength and resilience of the team, clear thesis, disciplined decision-making, governance and board value-add, and the reality that due diligence begins long before a formal process.

The conversation also covers trends such as continued life sciences momentum, the shift toward deeper tech, common fundraising mistakes founders make, the importance of stage fit and risk management, how governance supports faster scaling rather than bureaucracy, the value of diversity for broader deal flow and talent access, and a life-sciences partnership model that brings universities, family offices, institutions, and a professional VC manager together; Brenda closes with advice on transparency, "skin in the game," and fit when raising from LPs, and notes she can be reached on LinkedIn.

Visit Venture Ontario at www.ventureontario.ca/

Reach out to at www.linkedin.com/in/brendamhogan/ , and on brenda.hogan@ontario.ca

________________________________________________________________________

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.