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Angels, Dragons and Vultures: How to Tame Your Investors And Not Lose Your Company by Simon Acland

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EQUITY AND OPTIONS

That brings me on to the most difficult area of all. It is the most difficult area because it is potentially the most valuable, and thus the one that in financial terms matters most. It also probably matters most in emotional terms. Yet it is also the most clearly defined by finite barriers: there can only ever be 100 percentage points of equity. Awarding one individual a salary of $200,000 does not necessarily reduce his colleague’s $200,000. But of course, giving one individual a 5% option grant does reduce his colleague’s existing 5% – by 5% – and your own stake. It also reduces your Angel, Dragon, or Vulture’s stake by 5%. So if you thought he was oversensitive in the salary and bonus discussion, just wait until you start ...

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