Paul Buchheit: Equity math for startups (sometimes 0.1% equals $138 million)

[paul]

http://paulbuchheit.blogspot.com/2007/03/equity-math-for-startups.html

[chandrab]

This is one of the better posts I've seen on the topic..If you want to dive in deeper Brad Feld's blog series on term sheets. Another good read is: http://www.fenwick.com/VC_Terms.htm. It covers nice things like liquidation preferences, rachet clauses and other things that will make your head spin!

[paul → chandrab]

That's a good page. The link is broken though (YC news picked up the period). Here it is again: http://www.fenwick.com/VC_Terms.htm

[nickb]

This is a great lesson. A small piece of something big is worth less than a large piece of nothing!

Now, what are the odds that there is gonna be another IPO this decade so that 0.1% of the pre-IPO stock ends up being worth $100mm+? And what are the odds that you'll be the part of it? :)

[zkinion]

Very nice blog posting. Its amazing how such a low percent can equal that amount of money.

[dougw]

Great post. Thanks paul!

[gustaf]

Great writing paul!

[patrick]

Very informative!