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 … Continue reading
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. … Continue reading
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 … Continue reading
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, … Continue reading
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 … Continue reading
I typically advise issuing 50% to 80% of the authorized shares of Common Stock to the initial founders upon incorporation. Thus, if the certificate of incorporation authorizes 10,000,000 shares of Common Stock, an aggregate of 5,000,000 to 8,000,000 share should be issued at incorporation. If the startup plans to bring on additional founders in the … Continue reading
If you haven’t already received your Delaware franchise tax statement in the mail, then it’s probably on the way. You have to give credit to Delaware — they make paying your corporation’s franchise taxes “thrilling.” For example, if you authorized 10,000,000 shares of common stock in your certificate of incorporation, you will receive a franchise … Continue reading
I’ve noticed a lot of recent articles promoting that a startup can “skip the lawyer” and incorporate via an online service. These sites typically list about 20 incorporation tasks they’ll do for your startup for around $250 plus the applicable state filing fees. Sounds like a great deal, but there is more to a proper … Continue reading
In a recent post, I detailed some incorporation-related points of interest if I launched my own startup. The post presumed I made the decision to push forward with the incorporation of my startup. But how do you know when the time is right to incorporate your startup? Advice Varies There’s a wide range of counsel … Continue reading
Corporation. Because if you can log on to the Internet, you can handle the complexity of a corporation. Don’t be scurred.