Spiegel Sohmer

Spiegel Sohmer is a firm of attorneys offering state-of-the-art expertise to a diversified business clientele seeking solutions that are innovative, concrete, and pragmatic. Our firm groups some forty five attorneys who concentrate principally within three broad specialties: business law (including Intellectual Property), tax law and litigation.  Spiegel Sohmer has extensive experience representing companies at all stages of their life cycle, from start up through to exit, and also represents a wide array of investors.
www.spiegelsohmer.com

National Bank

National Bank helps home-grown businesses expand by offering them personalized service and banking solutions adapted to their needs. We strive to develop integrated, diversified and innovative business solutions that will meet the needs of your business at every phase of its existence. We offer a full range of financial services to individual clients, SMEs and large companies. Whatever your sector of activity, our team of experts will be able to advise you and assist you with every stage of your business growth. www.bnc.ca

What is the Bonus Pool?

Posted by Adeo Ressi on 2011-02-10

Below is an answer that I recently gave to a question about the Bonus Pool. It is not uncommon for applicants to misunderstand the Bonus Pool and therefore look at the Pool like a cost, rather than an innovative benefit. I hope that the answer is helpful.

If an enrolled Founder chooses to join the Bonus Pool, then the Founder contributes 3.5% of their company in the form of warrants to a Bonus Pool. In exchange, the Founder receives a share in the cash returns of the Pool.

If one Graduate sells for $200 MM, this may return $4 MM to the Bonus Pool after some dilution and purchasing the warrants. In such a circumstance, another Graduate from the same semester might receive a Bonus Pool check for $80,000. This return is not an investment. It's a personal bonus. It's cash to use for anything you want, from groceries to servers.

All Founder Institute stakeholders share in the Bonus Pool, including local Mentors and local Directors, and there is a separate Pool for each graduating semester. Founders get 30% of the Pool, Mentors get another 30%, local Directors and partners get 25% and the Institute keeps 15% as a long-term management fee. The indivual portion that each Mentor receives depends on the anonymous ratings they receive from the Founders. The point here is that everybody's interests are aligned in creating the best possible pool of companies. 

Graduates share in the upside from the success of their peers through the Bonus Pool. This creates an unusual level of camaraderie. It also reduces the risk of creating a startup. Any one startup has a high chance of failure, but there is much greater odds for success across 10, 15 or 20 Graduates. You can fail and still see upside from your efforts in the Institute.

Ultimately, the 3.5% and the Bonus Pool are a benefit that is unique to the Founder Institute. Instead of selling equity for a few thousand dollars, you are personally participating in the long-term success of your peers. You get upside once reserved for savvy investors.

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