Startup Equity: 409A vs Investor Value (part 2 of an n part series)

untitledfWe have all seen the headlines, “XYZ receives $100M in funding at a $3B valuation.” We seldom see the “other” valuation showing the same company is worth $350M. For publicly-traded companies, value is determined by investors working as a group in a real-time market. They are generally purchasing the same kind of stock. Values are based on a combination of publicly disclosed information, supercool computer models and gut feel. But in the world of the pre-IPO start-ups, values take on a life of their own.

Investors in startups are buying stock with more risk and more upside potential. Companies only sell stock to investors on Continue reading

Broadway Acts on Sharing Success

untitled12You build it. You buy it. This may become the new mantra on Broadway. The original cast of Hamilton was recently followed by the new cast of Disney’s Frozen in receiving a share of the success of the shows they helped create. Similar to a great tech company building towards an IPO, a Broadway company has to do a whole lot of work before it ever gets to the starting line. Beyond the original idea, words and songs are the testing, tweaks, enhancements and embellishments that can make or break a show.

For years the formula worked like this. Continue reading

A Chrome Panda Predicts Demise of Stock Options

6a0134836082f8970c01b7c8585e9e970b-200wiOn May 7, 2016, it was reported that a giant chrome panda predicted the imminent crippling of stock options in the Silicon Valley. Dropbox has been a star of the unicorn sector. But, in October of 2015 and again in April of 2016, their value was written down by major mutual funds, including Fidelity. With their unicorn value and subsequent write down, they have become a high tech “canary in the coal mine” for employee stock options.

Just last month Dropbox moved into new digs in San Francisco. In their lobby, they installed a giant chrome panda (their mascot) that is meant to welcome guests with an iconic Bay Area flair of irreverence. The bad news is Continue reading