Last year, Andreessen Horowitz managing partner Scott Kupor wrote a fantastic blog post seeking to inform startup founders about the economics behind startup options and how ownership works.
Included in Andreessen Horowitz’s roundup of its most popular blog posts from 2016, the article gives a breakdown of important topics like capitalisation, financing, dilution, liquidation and IPOs.
Kupor also gives insight into the unpredictable nature of startups, and how to navigate the risks and potential rewards.
As the a16z partner explains: “One of the things that struck me most during our recent pieces on startup employee option plans is how things that impact the value of those options aren’t well understood, even if communicated or known at the onset.
“Many people reported feelings of a sort of “sticker shock” (or reverse!) on leaving their first startup.
“Meanwhile, founders genuinely want to do right by their employees and other stakeholders — but owning part of a company isn’t a static, fixed thing; it’s fluid, and there are a number of factors that could change the overall ownership equation over time.”
Please click here to read the full article.