Author: Ryan Roberts
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White-Label is the New Black for Startups
I’ve been seeing a lot of white-label deals for startup clients in the past couple months. A white-label product or service is a product or service produced by one company (the startup) that another company rebrands for their own use or distribution. The company desiring to rebrand the startup’s product or service may just want…
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Is a Term Sheet Binding?
A term sheet is an outline of the deal terms that helps frame the contemplated transaction for both parties. Term Sheets for financings and acquisitions are usually not binding. However, it is quite common to see various sections of the term sheet binding, including: –No Shop or Go Shop Clauses: Can a party shop the…
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How to Split the Startup Founder Equity Pie
Founders frequently ask me to provide guidance on how their startup should split equity between co-founders. My answer is always: (1) It Depends, and (2) Quickly. (1) IT DEPENDS If you’ve ever hired a lawyer, you will (unfortunately) hear the phrase “it depends” several times. In this situation, the “it depends” hinges on the respective…
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How to Handle Startup Idea Theft
Have you ever been jacked? The only time I recall being a victim of theft was during undergrad at USC. Someone broke into my car while it was parked in the garage of my downtown L.A. apartment complex and the bandit(s) made off with my CD collection. While I was relatively unscathed by the theft…
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5 Common Founder Mistakes
This is a re-post of an article that I wrote about common founder mistakes for StartupLucky.com and Killerstartups.com (not sure if it went out yet). 1. Spending Too Much Time Keeping Your “Unique” Idea Top Secret. Some founders attempt to have everyone within 25 feet of them sign an NDA. Instead of spending time drafting…
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Is Your Startup’s Name Available in Delaware?
Delaware has a pretty sweet Name Availability Search Tool via their Division of Corporations. If your desired entity name isn’t available to reserve, then that name isn’t available for a new corporate entity filing in Delaware. If your startup name is available, you can reserve the name online for $75. Finding out whether you can…
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Don’t Create an “Issuance Pool”
“We want to have 30% of the startup company at exit.” -Anonymous Startup Founders Occasionally, founders will plan out their startup’s lifespan to the point of pre-determining their final equity figure after all hires and investments have been made. Usually, a set of founders want to end up with a final equity percentage in the…
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Should Your Startup Hire a Finder?
Raising capital is not easy. While startup entrepreneurs usually have a strong network of people within their own industry, many entrepreneurs lack contacts at venture capital firms and other angel groups. And even if the entrepreneur knows about such funding sources, it’s difficult to get solid intros to such people. Sometimes startups will run into…
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What is an Option Pool?
An option pool is an amount of a startup’s common stock reserved for future issuances to employees, directors, advisors, and consultants. The option pool is created pursuant to a written plan in order to satisfy Rule 701 which provides a registration exemption from Section 5 the 1933 Securities Act. Via the written plan, a startup…
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You Can’t Spell Corporation Without “IP”
I watch “Shark Tank” on ABC. I hope one day they get pre-money and post-money right. A segment on Sunday’s episode did manage to highlight a key point for startups: TRANSFER THE INTELLECTUAL PROPERTY TO YOUR STARTUP COMPANY In the episode, Coverplay Inc., was looking to raise about 350k from the show’s angel investors. A…