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- Do you vest? - If you vest, what metrics determine if your vesting stops? Can they do it arbitrarily, etc - what if you finish your work in less than 1000 h
by jaltucher 16y ago
- Do you vest?
- If you vest, what metrics determine if your vesting stops? Can they do it arbitrarily, etc
- what if you finish your work in less than 1000 hours?
- you should have some benefit if you finish the work and then continue with the company.
- Does the 5% already have a value? In which case, if you get your stock up front you might have a tax implication.
- whats your anti-dilution rights? You should have the opportunity to participate pro-rata in any dilutive event (eg. a fundraising)
- the other founders should have a non-compete (so they cant sell the assets to a brand new company)
- if vesting, they should vest immediately on any change of control
- what if your responsibilities change so you are not doing development but some other work (biz dev, sales, etc.
- i would do basic due diligence on founder and current investors. background checks, etc.
- what does "5%" mean? Do they have an option pool set aside already? Can they issue arbitrarily more options?
If you have any questions on these I'll check back and answer.
- hellocoins 16y agoNot sure I understand vesting in general, but I will do some research to have the questions you have here answered. Thanks!
- jaltucher 16y agoVesting means that you get your shares over time. there's several things that can be happening in your deal: 1) you get your shares right away but they are restricted until you put in your 1000 hrs (this might be best because it starts the long-term cap gains clock ticking) 2) you get your shares in 1000 hrs (i dont like this. what if he raises money at a 20mm valuation. you might have a serious tax implication). This is a form of vesting. 3) the 1000 hours happen and then you get your shares over time (vesting) after that 4) all of the above, but you get options instead of shares. Not sure if I like this either but depends. But all the other things I mention (anti-dilution rights, non-competes, change of control, change of responsibilities, etc) are all very important. you can't do a deal without everything spelled out.
- chopsueyar 16y agoCan you provide a bit more info on the tax implications of #1 versus #2?
- jaltucher 16y agoIf the company raises money 900 work hours from now at $1 per share and they have 20 million shares then 1% of the company is worth $200,000 then. If he is granted the shares then he has to pay taxes on that (he can get away with a discount to that but he still has to pay taxes of some sort). Right now the shares are probably worth zero. So if he's granted stock now there are no tax implications.