GETTING MONEY TO GROW
- “The Founder’s Guide to Raising a Series A Venture Financing” by Justin Kan. This long article is a very explicit playbook of how to raise a Series A from VCs. Series A (in 2017) means you are well beyond establishing product/market fit, you have figured out and proven how to scale your sales & marketing engine, you are above $1-3 mm ARR (depending on where you are in the U.S., the investors involved, your growth trajectory, and your market), you just need more cash to grow, and the check you are seeking is $3-$5 mm. Yes, the definition of a Series A is a moving and evolving target. Anyway, I finished this article thinking it is probably one of the best and most complete I’ve ever read about the subject. Further, it is written by the fellow who started Justin.tv and founded Twitch.tv (later bought by Amazon). He knows what he is talking about!
DISTRIBUTING EQUITY TO TEAM MEMBERS
Note: this section is for articles and resources about distributing equity to employees of your company – not investors, advisors, board members, or other non-employees. There are different frameworks used for those equity recipients.
- “Crash Course: Offering Equity to Your Employees” by Gusto. This guide is a good place to start your reading because it will explain what terms mean and give you some general philosophy when it comes to granting equity to team members.
- “Employee Equity: How Much?” by Fred Wilson of Union Square Ventures. Fred lays out a logical and fair framework for figuring out how much equity to give team members when they are initially hired. The implicit assumption in his framework is that you are paying your folks at or fairly close to market rate for cash compensation. This is a reasonable expectation in markets today (2017). Use Fred’s framework in conjunction with the Andy Rachleff’s framework (in this list of resources) on reloading team members with equity to retain them.
- “The Right Way to Grant Equity to Your Employees” by Andy Rachleff (CEO of Wealthfront; formerly of Benchmark Capital). The beauty of Andy’s framework for ongoing grants is when you combine it with Fred Wilson’s framework for initial grants, you will have a solid system for recruiting and retaining team members. I recommend reading both frameworks, including Andy’s slideshow, and then playing around with scenarios in a spreadsheet. The general overview of Andy’s framework is to methodically reload team members so they are getting equity compensation in-line with the market after the passage of time, a promotion, or a period of strong performance. You can use Fred Wilson’s framework to estimate the amount of the grants.