Vesting schedule question

[bmag777]

I’m bringing a new CFO to my company with over 35 years of experience as a finance leader. We’re negotiating the vesting schedule and we’re talking about a 7% with 30% immediate vesting and 70% after we close our first deal.

I’m not sure if this vesting schedule would be good but at the same time, he has a very good experience in the area. Don’t wanna lose the guy, I’m trying to negotiate with him a 2 years vesting schedule with a 30% immediate vested and the 70% over the next 2 years but he doesn’t wanna do this way. He wants the way I said before.

My CTO accepted 4% of the company with 4 year vesting period with 1 year cliff normally(Yes, I’m not following YC advice about the CTO equity)

I’m thinking about the possibility of the CFO just get this part and don’t work or just leave for any reason and then I’ll not have enough equity to hire a new CFO.

Any suggestion about it?

Thanks in advance

 

[sandra0003]

@bmag777 You gave the CTO 4% but the CFO gets 7%? Interesting priorities.

Also why is the CFO so interested in getting equity immediately. Isn’t building a startup a 10+ year commitment? Why would 4 year vesting be an issue for someone who’s going to stick around 10 years?

It seems like you’re experiencing pressure to not lose the guy. Like you’re doomed if you don’t give the guy the 7% and secure the deal. Is your startup doomed without him?

I’m wondering how many employees you have and what your revenue/traction is

 

[bmag777]

@sandra0003 I’m not building a startup in a “traditional way”. I’m kinda building my board of directors and the main idea is buy a company and grow from there

 

[sandra0003]

@bmag777 So you’re building a board and not an actual product or tool or solution. Weird

 

[bmag777]

@sandra0003 Yes, correct. I’m following a methodology. I know what we’re trying to build, so I’m building the board and with the board ready we’re going to raise money from investment banks to buy companies and grow them.

 

[talita]

@bmag777 Dude you're M&Aing your way up. Unless you know exactly what you are doing and have lots of man years running these types of companies that you are Acquiring.....it's a tough one.

 

[bmag777]

@talita I don’t have these years of experience but my board have. That’s the main idea. That’s why I’m hiring the board, I can’t do it by myself.

 

[talita]

@bmag777 Instead of actually M&Aing - build an M&A SaaS.

 

[bmag777]

@talita Being honest my man, it’s better and easier M&Aing than building my M&A SaaS from scratch.

 

[brenmurt]

@bmag777 Do you have any example where this ideology worked?

This is new. Usually you want to build a product.

I am assuming you are building saas. Regardless, CTO is your main asset. Till the time you have your CTO you guys can build anything.

 

[bmag777]

@brenmurt Of course, I know many cases of literally teenagers who got very successful applying this. He became a multi millionaire at 17. The best part is that you don’t need to know stuffs to apply this.
The methodology is all based on commercial debt, M&A and a lot of deals. You can do this in any industry and country. I applied the YC startup method last year and didn’t work for me but this is working pretty well so far

 

[brenmurt]

@bmag777 I see. My 2 cents are, this might not be the best sub Reddit to get advice for you. Try to post r/ entrepreneurship or startup. Maybe try discord group.

My assumption is that this sub Reddit is majority of people who build using start from idea, build product, test, learning and reiterate.

 

[spiritfilled_lovefilled]

@bmag777 Hey curious to hear more about what this methodology is

 

[bmag777]

@spiritfilled_lovefilled Dan Peña QLA Methodology. It’s all for free on YouTube and on his website. Best methodology ever. If you can start this with basically 0 bucks and still get a bunch of very successful guys to work with you.

 

[scottfree00]

@bmag777 Dan Pena? Really? No offence but you might as well join an MLM OR hustlers university because the outcome will be the same.

 

[spiritfilled_lovefilled]

@bmag777 Interesting, I have a load of follow up questions so sent you a DM

 

[bluesky123]

@bmag777 why? Do you have capital already? What is your CTO doing if you don't have a business or product?

 

[bmag777]

@bluesky123 I don’t have capital but we’ll raise it. We’re looking for a tech company with specifics requirements and then we’ll buy the company and grow. The real work will start after we close our first deal

 

[bluesky123]

@bmag777 Are you paying a lawyer to draw up vesting schedules? Why don't you consult them?

This whole concept and equity split seems fraught to begin with in my opinion. It sounds like you're trying to take a PE approach to startups and tech companies. I wish you well, but a CTO with 4% of a non-capitalized business is not going to stick around when the going gets tough, and unless this CFO is bringing cash with him, everything you've described screams red flags.

best of luck

 

[bmag777]

@bluesky123 A lot of people are saying the same thing to me about the CFO, thanks for the feedback. I’m really thinking about increasing the CTO equity in the company. I put 4% thinking that he would ask for more but he actually didn’t and I was like “what?”. The CFO thing seems strange, not gonna lie.

I’ve added a lawyer in my board but she is pretty bad and doesn’t do the job. I’m gonna fire her and consider getting a new CFO who is willing to do a normal vesting schedule.

Thanks for the advice