Category: Incorporation
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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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Par Value for Startup Stock: What It Is, What to Set It At, and Why It Matters
Par value is one of those startup law concepts that feels like it should matter a lot—until you see how it actually shows up in real venture deals. Here’s the short answer: par value is a legal minimum price for stock, not a valuation, and for most early‑stage startups, it’s a formality you set low and move on…
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Multiple Classes of Common Stock: Power, Perception, and Practical Limits
Multiple classes of common stock often surface when founders start thinking seriously about control. This article explains how Class A and Class B structures work, how investors view them, and when they actually affect outcomes.
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How to Check Availability and Reserve Your Startup’s Name in Delaware
Luckily, and unlike most states, Delaware has a free online system for checking legal entity name availability. That system can be found here. It is relatively easy to use and will make your filing process more efficient. For example, if you file a certificate of incorporation with a name that is already taken, your filing…
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Sorry, Not Sorry: Still Delaware C Corporations for Early-Stage Tech Companies
Are you planning on getting venture funding or do you want to sell your tech startup for a big chunk of change one day? Then it’s extremely likely your startup should be a Delaware C-Corp. A disturbing trend has emerged in the last couple of years with “startup lawyers” recommending new startups incorporate as an…
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Voting Rights of Vesting Shares
One of the most asked questions I receive when setting up new startup companies is “Do my vesting shares have any voting rights?” Or in other words, does a stockholder only get to vote based on their amount of vested shares? Since most of the times a founder subjects their entire share amount to a vesting…
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Right of First Refusal in Company Bylaws
A Right of First Refusal provision provides a startup with the right to step in place of a prospective 3rd party purchaser when a current stockholder desires to sell their stock. That is, the startup has the right to purchase and redeem any of its stock prior to such stock being sold to another prospective stockholder. …
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Dual Class Common Stock Structure for Founders
A startup founder’s desire to hold equity better than plain-vanilla common stock isn’t new. Several years ago, Series FF stock for founders was all the rage when it came to founder liquidity at subsequent financing rounds. We implemented Series FF for a handful of clients back then but we haven’t done so recently. In the past couple years, we’ve been…
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Why Your Current Employer Invention Assignment is Key
Due primarily to monetary constraints, many founders maintain a separate job (i.e., “day job”) during the initial stages of their startup. This is usually the case whether or not the startup is incorporated, and is a common way for the co-founders to self-fund or otherwise hedge their bet prior to a startup’s seed round of financing. However,…
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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: Incorporation (1) When: As soon as I was serious about making my startup a business, but after I checked…