Author: Ryan Roberts
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Crowdfunding Should Be Used as a Last Resort
I recently wrote a commentary piece for the Dallas Business Journal regarding equity crowdfunding titled: “Here’s Why Crowdfunding Should Be Your Last Resort” I thought some of my readers would enjoy it. Some of the main take-homes from the article are: (1) It may not provide the boon of capital some predict Even if a startup is…
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Unintended Consequences of a Long Additional Closing Period
Some financing rounds close on one specific day. Meaning, all investors fund their full investment amounts on the same date. This is common when a round has a small number of investors who can coordinate with the startup on logistics (wires, signature pages, and final documents). As the number of investors increases, coordinating everyone for…
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Introducing the Startup Law Glossary
In case you didn’t know, this blog includes a growing Startup Law Glossary —a plain‑English guide to terms and concepts that founders and startup teams run into from incorporation all the way through fundraising, growth, and ultimately an acquisition or IPO. You can find it at the top of each page by clicking “Glossary”, or…
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Why Seed Round Due Diligence Should Not Start Too Early
Occasionally, early-stage investors will send a startup an extensive seed round due diligence request far too early, sometimes an 8+ page list, before they’ve made any real commitment to invest. That “too early” diligence request is problematic for a few reasons. By “extensive,” I mean requests that go well beyond basic founder diligence (a pitch…
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Why Your Current Employer Invention Assignment is Key
Due primarily to financial constraints, many founders keep a separate job (a “day job”) during the early stages of a startup. This is common whether or not the startup is incorporated, and it is often how co-founders self-fund or reduce risk prior to a seed round. What many founders overlook is that a document from…
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When Majority of the Board Doesn’t Mean Board Control
TL;DR: Giving up “only one board seat” doesn’t automatically mean you kept control. In venture deals, board control often shows up through approval rights (who must say “yes”) and stockholder class votes, even when founders still hold a board-seat majority. The misconception: “We kept the board, so we kept board control” I hear this a…
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If I Launched a Startup in 2014
I thought I would expand upon and update my “If I Launched a Startup” post from 2010 to include recent issues such as incubators and crowdfunding. So in 2014, here’s what I’d do in the beginning: Startup Incorporation (1) When: As soon as I was serious about making my startup a business, but after I…
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How Many Shares Should be Issued to Founders at Incorporation?
TL;DR: A clean, common starting point is issuing about 50% to 80% of your authorized shares of common stock to the founders at incorporation. The rest stays authorized but unissued so you have room for an option pool, future founders, and other equity grants without immediately paying to amend your charter. The baseline: issue 50%…
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Startup Advisor Agreement: A Primer on the Basics
TL;DR: If you are giving a member of your advisory board equity, you should also sign an Advisor Agreement (sometimes called an Advisor Letter) between the advisor and your startup. It protects your company, clarifies expectations, and closes the two biggest gaps: confidentiality and intellectual property. Why an Advisor Agreement matters when you grant advisor…
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Advisor Stock Option Grants
Advisors are one of the few “force multipliers” a startup can add early without committing to a full-time hire. The right advisor gives you judgment you have not earned yet and introductions you cannot manufacture on a cold email. The wrong advisor gives you calendar invites. You can usually find strong advisors through incubators, operator…