Monthly Archives: October 2008

Equity split in start-ups

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Following a few case studies I posted earlier this year (Kelkoo, Skype, mysql), here is a more generic analysis about the process of equity splitting. The document is a pdf file I have used a number of times with students, entrepreneurs and I think it is helpful even if not new. At the end, there are also cap tables of other famous and less famous start-ups.

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From the inception where a few founders share the initial equity between them to the exit (IPO or M&A) through a possible number of financing events, shares of a start-ups will be shared, distributed among founders, employees and investors. It is one of the most important decisions in a company’s life and should be handled with care.

US and UK Biotech: Growth and Form

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Another interesting illustration about the differences between America and Europe: growth in the US and UK biotech. The full account can be found in Nature Biotechnology and my friend Andre mentioned the blog Corante where he read about it.

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The conclusion of this blogger is:

“What I found interesting about the editorial, though, wasn’t these conclusions per se – after all, as the piece goes on to say, they aren’t really a surprise […] No, the surprise was the recommendation at the end: while the government agency that ran this study is suggesting tax changes, entrepreneur training, various investment initiatives, and so on, the Nature Biotechnology writers ask whether it might not be simpler just to send promising UK ideas to America.

Do the science in Great Britain, they say, and spin off your discovery in the US, where they know how to fund these things. You’ll benefit patients faster, for sure. They’re probably right about that, although it’s not something that the UK government is going to endorse. (After all, that means that the resulting jobs will be created in the US, too). But that illustrates something I’ve said here before, about how far ahead the VC and start-up infrastructure is here in America. There’s no other place in the world that does a better job of funding wild ideas and giving them a chance to succeed in the market.”