Monday, January 05, 2015
If you are a startup and aren't using eShares, use eShares
One of the great things about being in the Foundry Group family again is the mailing list they provide for all their founders. It's such a great way to share ideas, and ask questions of other founders. And it's so simple.
Today someone asked about 409a valuations at the seed level and my answer was basically, "do not pass GO, just start using eShares" to manage your cap table, shares and option grants, as well as your 409a valuation.
For those of you who don't know what a 409a valuation is - when you issue options to employees, the board has to agree on a strike price for the options that are granted. It's usually equal to the fair market value of your common stock. Here's another definition. Sure, they can look at comps and come up with the number themselves, but in my experience, it's much better to have a third party do this. It makes the number non-negotiable, and well, it's CYA.
Normally, when you raise money you will get 900 emails from some of these firms offering to do your 409a valuation. Ignore them all, and go to eShares. They do the same thing as a service based on a monthly fee, and I think it's much cheaper in the long run than continuing to get this done.
They also do a number of other things, such as making sure your cap table is in order. When you investors ask for your cap table, you just export and send. Done.
You can also play with "what if" scenarios in your cap table as you are figuring out how to raise your next round.
Anyway, if you couldn't tell already - I'm a big fan of eShares being on the list of SaaS companies I use on a daily basis. For a few hundy a month, it's totally worth your time as a startup CEO or COO.