Balderton

The Balderton Essential Guide to Employee Equity

NOV 24, 2017

Working with the entrepreneurs we back is at the heart of our work at Balderton.

Every day, we work with CEOs and their teams, weighing options on every aspect of their internal and external strategy. Many of these conversations are company-specific, but there are a number of key topics that focus on questions that every company has to answer. 

We have built large reserves of historical data and advice in these areas and — as we did last year with our internal Talent Ecosystem research — occasionally release some of these in a variety of formats — from books to interactive sites, events and more.

The Balderton Essential Guide to Employee Equity 

Today we are really excited to share the next instalment in this series - our report on Employee Equity.

You can download the report here.

Equity is at the heart of the technology ecosystem. The shared belief amongst a company’s founders, investors and employees is that it will leverage technology to build a rapidly growing company that will create enormous value. It is only fair for that value to be shared amongst those who created it. Done well, it can create life-changing moments of wealth creation for founders and employees while delivering loyalty and a highly incentivized workforce for a company and its investors. Getting this process of value sharing just right, however, is phenomenally complex. 

And that’s where the latest Balderton Essentials report, The Balderton Essential Guide to Employee Equity, comes in. The report covers everything you need to know — how equity compensation works, why it should be used, how to engineer a fair and efficient plan and, particularly relevant for the companies we work with, how to navigate the many complex issues that implementation entails in different European companies.

What's in the Guide:

Why give equity to employees

What is employee equity

How much equity is needed for the ESOP pool and how does it evolve

How much equity to give an employee

How to set a strike price for employee options

How to help employees understand and value their equity

Details of vesting, exercise, and refresh

Variations on stock options

Presenting to the board

Practical Spreadsheets and Worksheets

Associated with this 59-page long deck, we have also built practical spreadsheets that address many dimensions of such a program: 

  • How to evaluate and present the value of a given stock grant;
  • How to model the vesting of a grant;
  • How to establish a grant refresh program; and
  • How to present the equity program and gain approvals from the company board of directors. 

We have also compiled a full list of resources on the topic provided by other VCs and experts in the domain.

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