founders

There are 11 posts tagged founders (this is page 4 of 4).

Founders & Funders – Feb 15, 2010

founders and funders Logo It’s time to for another Founders & Funders event in Toronto. I can’t believe it’s been 18 months since the last event in June 2008. The next event is scheduled for Februrary 15, 2010 in downtown Toronto. We’re looknig for a few good startups and a few good investors. We’ll be sending out invitations early in the new year, but we want to start with an open call for participation.

What is Founders & Funders?

Founders & Funders is an invitation only social event for people that start high potential growth companies and the people that fund them. This means entrepreneurs. This means angel investors. This means venture capitalists. This means government funders. It is a curated dinner party. The idea is to get stuck at a table with others interested in emerging technology, growth companies. Have meaningful conversations beyond the usual conference hallway chatter or pitch sessions. The goal is to create stronger, more relevant connections between individuals in this community.

Who should attend?

Founders of high potential growth companies. This means companies that are at varying stages of corporate development, ranging from the very new to the more established. Digital media. Internet. Software applications. Enterprise applications. Infrastructure. Data centre automation. Mobile. Clean tech. Yes, you should consider attending. However, you should be looking to raise capital in near future.

Funders of high potential growth companies. Venture capitalists in Ontario, Quebec, New York, Boston, California, and around the globe. There are attendees that are actively seeking capital, with outstanding track records and attractive valuations. Angel investors, definitely. You’re the backbone of Canadian deal. We’re reaching out separately to National Angel Capital Organization and to Maple Leaf Angels to invite investors (by active I mean that you’ve written an investment cheque in the past 18 months).

How can I participate?

We’re asking everyone interested in participating complete an application. The goal is to gather enough details that we can share with others, i.e., founders details will be compiled and shared with investors, investor details will be shared with founders. (Yes, I know that form doesn’t specify this use of the data, each invited attendee will be asked this question and given the opportunity to revise their details. If we don’t invite you, the information will be purged after the event).

Founders versus early employees

Not everyone can be a founder. We talk about the founders of startups and companies. We focus on the founders. The founders get press coverage. They get invited to speak at events. Sometimes they get rich. But for every founder, there is an early employee that takes near equal risks in joining an early-stage company.

Steve Blank divides the individuals associated with startups as:

  • Founders
  • Early Employees (Employees # 1-25)
  • Later Employees (Employees # 26-125)

The majority of his division is about the temperament of the individual as related to risk and dealing with chaos and uncertainty. Not every one can be a founder, i.e., can you imagine trying to start a company with 10,000 people? It’s just unfeasible.

“Being an early hire at a startup gives an individual the ability to make tremendous impact on an organization as it grows – and both the founders and those hires should know it.” David Beisel

We need to celebrate the employees at startups. We need to make sure that early employees are compensated, incented and rewarded for their decisions to join startups. Early employees have a huge impact on the growth and culture of a company.

How do you compensate early employees? Paul Graham provides a model for calculating value. As Naval points out that you still need to pay employees market rates, but with all employees you need to ask yourself “whether she [a new hire] is likely to increase the next round’s share price”. This should force companies to think about building value with each early hire, and not just filling a position.

Title Range (%)
CEO 5 – 10
COO 2 – 5
VP 1 – 2
Independent Board Member 1
Director 0.4 – 1.25
Lead Engineer 0.5 – 1
5+ years experience Engineer 0.33 – 0.66
Manager or Junior Engineer 0.2 – 0.33

Table 1: Options Grants in Silicon Valley for Series A from VentureHacks

The numbers from VentureHacks are guidelines. They are rough estimates.Any one have sample option grants in Canada? Are the percentages different? I would assume that they are very similar but given the lower valuations and this may change the salary/options mix.

Remember the goal is to incent early employees to have an emotional ownership of the product and company they are building. Equally said, potential employees need to understand what they are getting into. Darmesh Shah has a great list of insights for employees joining early stage companies. Early employees are critical for startups, and we need to recognize that not everyone can be a founder.

I would love to hear your thoughts on being a founder or an early employee.

 

Additional Resources