Does this sound ok as a seed deal?
They also want single trigger acceleration.
I’m assuming there’s really no scope to negotiate any of this with the investor.
Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
1–10 of 18 posts
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#2What does 15% esop mean that you carve out an esop, who takes the esop, you and your team?
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#3What does 15% esop mean that you carve out an esop, who takes the esop, you and your team?
Hmm I’m not sure I can’t see it explained on their website, presumably for employees.
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#410-15% carve out for ESOP is pretty standard from what I’ve seen. 15% for $2MM also is giving you a $13.3MM (repeating of course) valuation which no one can really speak to without further knowledge of your metrics.
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#510-15% carve out for ESOP is pretty standard from what I’ve seen. 15% for $2MM also is giving you a $13.3MM (repeating of course) valuation which no one can really speak to without further knowledge of your metrics.
But on the face of it these terms don’t seem onerous or unusual or would raise a red flag for the founder?
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#6ESOP is often at least loosely correlated with round size. You can always increase it, but there's some dilution benefits to pushing for a smaller obligation. I would probably go back (given the target ownership) asking for higher cap and 10% esop. Everything is negotiable.
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#7What does 15% esop mean that you carve out an esop, who takes the esop, you and your team?
Hmm I’m not sure I can’t see it explained on their website, presumably for employees.
You will be expected to give early hires equity, this is the pool for that and is very normal. It usually comes before the investor such that ESOP allotment does not dilute their shares in the given round. 10% ESOP allotment per round is a good rule of thumb
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#810-15% carve out for ESOP is pretty standard from what I’ve seen. 15% for $2MM also is giving you a $13.3MM (repeating of course) valuation which no one can really speak to without further knowledge of your metrics.
But on the face of it these terms don’t seem onerous or unusual or would raise a red flag for the founder?
Not particularly raising any red flags from this but there’s still a ton of stuff not mentioned. Some questions the founder should ask themselves: Are they asking for a board seat? Are they going to be able to help out beyond just money? Do they want pro rata for follow on rounds? What’s the liquidation preference? Are there other strategic investors you’d want in on this round?
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#9$2m for seed seems like a good deal for any amount of equity. At least for software.
Re: Ask HN: Seed investor wants 15% plus 15% esop for $2m. Thoughts?
#10Earlier quoted context omitted.
But on the face of it these terms don’t seem onerous or unusual or would raise a red flag for the founder?
Not particularly raising any red flags from this but there’s still a ton of stuff not mentioned. Some questions the founder should ask themselves: Are they asking for a board seat? Are they going to be able to help out beyond just money? Do they want pro rata for follow on rounds? What’s the liquidation preference? Are there other strategic investors you’d want in on this round?
A noob question: what does "Do they want pro rata for follow on rounds?" mean?
Please could you give some examples?