Some other terms' posts
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One of the more contentious things in the negotiation between an entrepreneur and a VC over a financing, particularly an early stage financing, is the inclusion of an option pool in the pre-money valuation. As my friend Mark Pincus likes to say, "it's just another way to lower the price". I'll accept that critique. And take it one step further. The option pool is absolutely a piece of the price negotiation.
Valuation and Option Pool
One of the better VC blogs out there is a newcomer, Mark Suster 's Both Sides Of The Table . Last week he asked the question, " Should Founders Be Allowed To Take Money Off The Table? " It's a good post and the comments are worth reading (as is the case on most VC blogs). When I first got into the VC business in the mid 80s, it was considered a non-starter that entrepreneurs would get liquid before the VCs. The mindset was "they get out when we get out". That was what I was taught and I felt pretty strongly about it until the late 90s.
Founder Liquidity