Category: Employee and Contractor Equity and Hiring
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The Ultimate Startup Hiring Guide
Start here: If you want the broader overview, start with our Startup Legal Roadmap. How to use this startup hiring guide If you’re a founder hiring your first 1 to 20 people at a U.S. startup (assume Delaware C-Corp, venture-style expectations), this is the 80/20 startup hiring legal playbook. The goal is not to turn you into…
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409A Valuations: Why They Exist and What They’re Not
409A Valuations are Safe Harbors for Startup Companies
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When a Founder Is Also a Professor: Customizing a Confidential Information and Inventions Assignment Without Tripping Over University Rules
If you’re a startup founder who’s also a professor at a university (or several), a standard confidential information and inventions assignment agreement—your CIIAA—can quietly become one of the riskiest documents in your early legal stack. The short answer is simple: you almost never want to sign a plain‑vanilla CIIAA without customization if you hold an…
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Importance of Using Exact Share Numbers Instead of Percentages
Startup founders love talking about equity in percentages. It’s intuitive, fast, and sounds fair: “We’ll give you 2%.” The problem is that companies don’t legally issue percentages. They issue exact share numbers of exact options amounts, approved by the board and reflected on a cap table. Vague percentage promises are one of the most common sources of avoidable…
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Outsourcing Software Development: Riding the Elephant
“Technical co-founders are hard to find.” This is a phrase that is likely said daily in any startup ecosystem. Thus, many startups choose or are simply forced into outsourcing software development. But a startup’s outsourcing software development at such an early stage is like riding an elephant in a horseback polo match…sure, you are on a big beast, but…
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What is Four Years With a One Year Cliff?
Four Years with a One Year Cliff is the typical vesting schedule for startup founders’ stock. Under this vesting schedule, founders will vest their shares over a total period of four years. The one year cliff means that the founders will not get vested with regards to any shares until the first anniversary of the…
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The Entrepreneur Also Rises
I had some free time this weekend and watched “Empire of the Sun” starring Christian Bale and John Malkovich. The movie came out in 1987, but I saw it for the first time Saturday. The premise of Empire of the Sun is that an aristocratic British child is separated from his family (living in China)…
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You Can’t Polish a Sneaker
Why your startup may have the right employee incentive plan but the wrong employee
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Why Giving Your Employees Phantom Stock Can Boost Your Company
The problem of motivating and retaining key employees without giving away your company’s equity can be solved by the use of a phantom stock plan. Many company owners are hesitant to provide key employees with an actual company ownership interest. Such an ownership interest would likely entitle key employees to notice, inspection, and voting rights.…