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Comment: Re:Agree, talk with a lawyer (Score 3, Insightful) 315

by soap.xml (#26666905) Attached to: When To Consider Taking Shares In an IT Company?

Careful what you call this. It isn't backstabbing if you get X shares for your time with the company. You simply need to understand the amount of shares approved, issued and what happens to your shares if additional shares are issued.

Equity in a small private Corporation is basically the sames as in a large public Corp. Either one can issue, or approve additional shares. If you have common equity, your claim will be diluted.

The magnitude of your dilution will likely be higher with a small, growing firm. There are ways around it, just get a lawyer. You can bind in what you're really looking for, you just need to use the law to help you. IANAL

Comment: Re:Agree, talk with a lawyer (Score 1) 315

by soap.xml (#26666831) Attached to: When To Consider Taking Shares In an IT Company?

10% of shares outstanding doesn't mean much... A perpetual (or multi-year guarantee) 10% ownership claim, irregardless of shares outstanding would be much more powerful.

Example: Year 1 - Shares outstanding 10,000 10% = 1,000 issued to you.

Year 2-5, additional 990,000 shares issued (corporations can do this whenever they want, it is called raising capital and typically results in dilution of common equity holders).

Year 6 - Shares outstanding 1,000,000, you have 1,000 or less than 1% now.

That is why you may not like the lawyers, but you might as well get one involved quickly.

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