A startup founder’s guide to allocating equity grants

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By Walter Thompson and Ram Iyer

Friday, January 14, 2022

Welcome to TechCrunch+ Friday

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Image Credits: Ri Fotoproducto / Getty Images

Early-stage startup founders have just a few ways to recruit and retain employees:

  • offer a competitive salary
  • put them in a role best suited to their interests/talent
  • give them a stake in the company.

In most cases, equity will not leave employees with substantial wealth. But even the most embittered worker will think twice about walking away from a job before they’re fully vested.

In a TC+ guest post, Kirsten Prost, vice president at VC/PE firm Tercera, lays out detailed steps for designing your equity program.

Her guide includes brackets and multipliers for contributors at different levels, along with fictional examples founders can use for modeling and tips that will help employees understand the value of their stake.

Speaking as a veteran of many early-stage startups: entrepreneurs love to be seen talking about fostering an ownership mentality, but if that’s going to be more than happy talk, you’ll first need a transparent equity program.

We’ll be off on Monday, January 17 to celebrate Martin Luther King Jr. Day.

Thanks very much for reading, and have an excellent weekend!

Walter Thompson
Senior Editor, TechCrunch+
@yourprotagonist

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Dear Sophie: Do we need a visa to explore the US market?

Dear Sophie: Do we need a visa to explore the US market? image

Image Credits: Bryce Durbin/TechCrunch

Dear Sophie,

My husband and I plan to visit our daughter during her spring break. (She’s an F-1 international student at a U.S. university.)

In between spending time with our daughter and sightseeing, we’d like to explore the feasibility of expanding our business in the United States.

Do we need to get a special visa to do that?

— Multitasking Mom

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DeFi and the Future of Programmable Money

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Unicorn exits augur poorly as Justworks delays IPO, citing ‘market conditions’

Unicorn exits augur poorly as Justworks delays IPO, citing ‘market conditions’ image

Image Credits: Bryce Durbin/TechCrunch

There’s a growing rift between the public and private markets’ valuation of tech startups, and Justworks’ decision to delay its IPO may well be a bellwether of what’s to come, writes Alex Wilhelm.

Software companies are getting hammered on the public markets, while the private markets continue to retain their enthusiasm for tech startups.

This difference in opinion, writes Alex, could turn out poorly richly valued startups that want to exit this year.

“Justworks’ IPO delay indicates that the enthusiasm gap between private markets and their public analog is wide. And for pricey unicorns still bleeding cash, that’s terrible news.”

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Blockchain gaming survey: 7 investors discuss regulation, opportunities and NFT hype

Blockchain gaming survey: 7 investors discuss regulation, opportunities and NFT hype image

Image Credits: Bloomberg / Getty Images

Game distribution platform Steam banned blockchain-based games in October 2021: Any titles that incorporate NFTs or cryptocurrency were summarily booted from the service.

Meanwhile, within Axie Infinity, an NFT-based online game, new players are paying hundreds of dollars to acquire mythical pets and love potions.

Blockchain gaming is making inroads with some consumers, but given the lack of regulatory guidance and the speculative nature of many crypto holdings, what do investors think?

To find out, we surveyed seven who are active in the space:

  • Anton Backman, principal, and Kenrick Drijkoningen, general partner, Play Ventures
  • Banafsheh Fathieh, head of investments, Americas, Prosus Ventures
  • Josh Chapman, managing partner, Konvoy Ventures
  • Eddie Thai, general partner, 500 Startups and general partner, Ascend Vietnam Ventures
  • Beryl Li, co-founder, Yield Guild Games
  • Rajul Garg, founder and managing partner, Leo Capital

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Setting up high-conversion lead magnets that deliver value

Setting up high-conversion lead magnets that deliver value image

Image Credits: erhui1979 / Getty Images

It’s one thing to get a prospective customer to visit your site, but convincing them to reach for their wallet or share their phone number is a stretch.

As consumers gain greater control over their privacy, Aleksandra Korczynska, CMO of GetResponse, says marketers who align lead generation with the goals of their prospective customers will gain a significant advantage.

“The key is building a foot-in-the-door technique for continuous engagement — lead magnets,” she says.

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The SPAC boom was a failure, yeah?

The SPAC boom was a failure, yeah? image

Image Credits: Nigel Sussman

Special purpose acquisition companies took 2020 and 2021 by storm, enabling a large cohort of companies to go public.

But, as they say: if something seems too good to be true, it probably is.

Disappointment isn’t limited to a single industry, writes Alex Wilhelm in The Exchange. Property tech, fintech, media, and personal mobility companies have all seen big drop-offs since their debut.

“I would hazard that we’ve collected enough data to call the SPAC boom a failure.”

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Despite blockchain gaming’s play-to-earn angle, I prefer to pay

Despite blockchain gaming’s play-to-earn angle, I prefer to pay image

Image Credits: Gunes Ozcan / Getty Images

Paying users to play is part of blockchain gaming’s unique selling proposition, but is that the purpose of entertainment?

Senior Editor Alex Wilhelm says he enjoys the fun and excitement associated with playing against others online, but “I am bearish on crypto games as they currently exist for a few reasons, even if the incentives are more aligned than they appear in traditional gaming.”

Read More

Why CNET founder Halsey Minor is bullish on NFTs

Why CNET founder Halsey Minor is bullish on NFTs image

Image Credits: Shannon Minor / Wikimedia Commons under a CC BY 4.0 license.

Halsey Minor is best known as a co-founder of CNET and early Salesforce.com investor, but for the last several years, he’s been working in crypto.

After three decades developing content, he’s now leading Vivid Labs, which operates a proprietary NFT publishing platform.

“Much like I recognized the massive explosion of the internet many years ago, I see crypto and NFTs as the technology of the future,” said Minor in a TC+ interview that includes advice for founders hoping to raise capital for web3 projects.

Read More

Data show 2021 was a bonkers, record-setting year for venture capital

Data show 2021 was a bonkers, record-setting year for venture capital image

Image Credits: Nigel Sussman

Next week, Anna Heim and Alex Wilhelm plan to file a series of stories for The Exchange examining sectors and trends in different regions. To build a foundation for that reporting, this week, they looked back at a record-setting year for venture capital.

In 2021, VC investment totaled $621 billion, an increase of 111% from the year before, according to CB Insights. Crunchbase pegs the figure at $643 billion.

“Regardless of which number we choose, it’s clear that well north of half a trillion dollars was invested into high-growth private companies last year – a rough doubling of what the same asset class managed in 2020.”

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