The financing locks in the price you set for common stock. You cannot give your employees common stock later at a lower price. Have preferred stock on hand so that in the event you are going to do a financing, you can use preferred stock. The fifth pitfall involves issuing significant grants early on of options or sales of stock to non-key employees. The number of shares granted should be matched with the employee's position in the company.
People get greedy.
They do not want to issue stock for outside money or to give to their employees. You should use stock to motivate people and to save cash and in the process spread it around in a judicious manner. All rights reserved.