Startup Funding Espresso The Founder's Exit
The Founder's Exit Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing. The cap table shows the ownership of the business. It\u2019s often the case in venture-funded startups that the founder ends up with less than double-digit ownership. There\u2019s the issue of liquidation preferences and other terms that pay investors before the founder. In fundraising, make sure the founder\u2019s position is covered and has a path to an exit. In negotiating the sale, beware of earn-outs in which case the company must meet certain goals to achieve the stated buyout. A typical earnout is ten to twenty percent of the buyout paid over the course of three years based on achieving sales targets. The funds used to pay the earn-out are held in a holdback account under escrow. The control conditions must also be negotiated as it determine who has control over the business and how much control during the earnout. It\u2019s important to understand earnouts as they impact the founder's exit.\xa0 Without a founder\u2019s exit, there\u2019s no motivation to carry the business forward. \xa0 Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding. Let\u2019s go startup something today. _______________________________________________________ For more episodes from Investor Connect, please visit the site at: \xa0 Check out our other podcasts here: \xa0 For Investors check out: \xa0 For Startups check out: \xa0 For eGuides check out: \xa0 For upcoming Events, check out \xa0\xa0 For Feedback please contact info@tencapital.group\xa0\xa0\xa0 Please , share, and leave a review. Music courtesy of .