Category: Founder Equity, Vesting & Cap Table
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Online Cap Tables: Great Tools, Real Limits
If you’re looking at online cap tables like Carta, Pulley, Morgan Stanley’s Shareworks, or Fidelity’s Private Shares, the short answer is: they’re a helpful secondary record and workflow tool, not the actual “truth” of your capitalization. They can be great for issuing and tracking equity, running option exercises, generating certificates, and modeling financings. But the platform’s outputs…
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Founder Loans: How to Avoid Cap Table Poison
If you’re thinking about “loaning money to your startup,” the short answer is: founder loans can be totally fine as a temporary bridge, but they’re one of the fastest ways to create weird priority fights in a future venture financing if you paper them poorly (or pretend they’re “just informal”). The risk isn’t that investors…
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The Undercurrent of the Dallas Startup Ecosystem
The Dallas startup scene is often described as a great environment for tech startups because of (1) the relatively low cost of living (especially compared to California or New York) and corresponding quality of life, and (2) the high number of tech jobs. Those factors absolutely make Dallas attractive to larger tech companies. But they…
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Up Up Down Down Left Right Left Right B A Start
If you recognize this post’s title, then you are always welcome at my table. For those of you in the dark, the title of this post is the secret code from the video game Contra. The Contra secret code let the video game player begin Contra with 30 lives. 30 lives on Contra was virtual…
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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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Enthusiasm is Not a Substitute for Caution
This morning was my son’s first day of school and he was extremely excited to get going. In fact, he would have ran across the street to his school without looking if I hadn’t stopped him. His elation overtook his ability to evaluate peril. This reminded me of how entrepreneurs can rush into a startup…
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Keep Your Startup Co-Founder Closer
Why Your Co-Founder May Be Your Biggest Liability
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Funding Your Buy-Sell Agreement For All Scenarios
Before you execute a buy-sell agreement, make sure that you have adequately funded it. To adequately fund your buy-sell agreement, take each event that would trigger your buy-sell agreement (death, disability, retirement, etc.) and ask yourself “If this event happened tomorrow, would there be enough available funds to purchase the shares?” The most common mistake…
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Why Good Communication with Your Partner is Essential from the Start
Today I’ll get right to it: You need to have good communication with your partner from the start or else you’ll fumble your initial corporate documents. For example, if a multiple-owner corporation’s bylaws are less than 7 pages, that tells me the corporation’s co-founders did not have enough discussion about how their corporation should be…
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Buy-Sell Agreements: The Stock Redemption Plan
In a couple of previous posts, I discussed the value of buy-sell agreements for businesses with 2 or more owners and also one of the two major types of buy-sell agreements, the cross-purchase plan. This post is dedicated to the other main variation of the buy-sell agreement, the stock redemption plan. Under a stock redemption…