Generated by All in One SEO Pro v5.0.0.1, this is an llms-full.txt file, used by LLMs to index the site. # Startup Lawyer Startup law, venture capital, and M&A in plain English ## Posts ### [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) **Published:** April 25, 2026 **Author:** Ryan Roberts **Content:** **Table of Contents – Startup Equity 101: Splits and Vesting** - [Start here: what startup equity means](#aioseo-start-here-what-startup-equity-means-and-why-people-fight-about-it-3) - [What this startup equity guide covers](#aioseo-what-this-startup-equity-guide-covers-and-what-it-doesnt-8) - [How to split startup equity without setting your future self on fire](#aioseo-how-to-split-startup-equity-including-percentages-without-setting-your-future-self-on-fire-11) - [How your founder startup equity split affects governance (board seats, voting, and deadlocks)](#aioseo-how-your-founder-startup-equity-split-affects-governance-board-seats-voting-and-deadlocks-33) - [Founder startup equity vesting: standard schedules, cliffs, and the parts you can negotiate](#aioseo-founder-startup-equity-vesting-standard-schedules-cliffs-and-the-parts-you-can-negotiate-51) - [What happens to startup equity when a founder leaves](#aioseo-what-happens-to-startup-equity-when-a-founder-leaves-the-part-most-teams-avoid-57) - [Issuing founder stock: a checklist of what investors expect to see](#aioseo-issuing-founder-stock-restricted-stock-a-checklist-of-what-investors-expect-to-see-63) - [If you already promised startup equity but didn’t issue it: how to clean it up](#aioseo-if-you-already-promised-startup-equity-but-didnt-issue-it-how-to-clean-it-up-76) - [83(b) elections: how to decide, how to file, and how to avoid the common mistakes](#aioseo-83b-elections-how-to-decide-how-to-file-and-how-to-avoid-the-common-mistakes-87) - [Keeping your cap table investor-ready and diligence-proof before you need it to be](#aioseo-keeping-your-cap-table-investor-ready-and-diligence-proof-before-you-need-it-to-be-100) - [Dual-class common: should you choose a Class A high-vote and Class B low-vote structure for your startup equity?](#aioseo-dual-class-common-should-you-choose-a-class-a-high-vote-and-class-b-low-vote-structure-for-your-startup-equity-109) - [People confuse startup equity with…](#aioseo-people-confuse-startup-equity-with-120) - [The practical takeaway of startup equity](#aioseo-the-practical-takeaway-of-startup-equity-126) - [What you should do this week](#aioseo-what-you-should-do-this-week-128) - [Startup Equity FAQ](#aioseo-faq-136) - [Related Topics](#aioseo-related-topics-155) - [Questions About Founder Equity, Vesting, or Cap Table Cleanup?](#aioseo-questions-about-founder-equity-vesting-or-cap-table-cleanup-164) ## Start here: what startup equity means In this guide, “startup equity” means who owns what percentage of the company, under what conditions, and with what tax and paperwork consequences. It’s the cap table plus the legal documents underneath it, not just a spreadsheet with names and numbers. Here’s a decision rule you can use today: if you can’t explain, in one minute, (1) how your founders split was chosen, (2) what happens if a founder leaves, and (3) what your cap table looks like on a [fully diluted basis](https://startuplawyer.com/startup-law-glossary/fully-diluted-basis), you’re not “done” with equity yet. You’re just postponing a harder conversation. This matters because startup equity problems compound. A messy founder split creates resentment, which turns into departures, which turns into dead equity, which turns into a hiring problem, which turns into a financing problem. In diligence for a seed or Series A priced round, I keep seeing investors focus less on the exact split and more on whether the company can actually repurchase unvested shares cleanly and whether the paperwork matches the cap table. Quick analogy: startup equity is like a team’s playbook. The playbook matters most when the game gets stressful. If you wait until the fourth quarter to decide who’s allowed to call plays, you’re going to lose to a team that decided earlier. ## What this startup equity guide covers **This guide covers:** splitting startup equity; founder vesting and reverse vesting; issuing founder stock (restricted stock) and the key documents; filing an 83(b) election; and keeping a cap table investor-ready for SAFEs, notes, and priced rounds. **This guide doesn’t cover:** equity compensation strategy for non-founders in depth, international tax issues, or detailed valuation mechanics like [409A reports](https://startuplawyer.com/startup-law-glossary/409a-report) beyond what you need to avoid early mistakes. Those topics deserve their own articles because they have their own traps. ## How to split startup equity without setting your future self on fire Founders usually over-optimize the “perfect” startup equity split. In practice, the split matters less than whether the split is defensible, documented, and paired with vesting. The goal is a cap table that future hires and investors can look at without asking, “So who actually built this?” ### Deciding the actual percentages: a simple method that doesn’t pretend you can predict the future Start with a baseline split, then make a small number of explicit adjustments. The baseline can be equal, or it can reflect a clear asymmetry, like one founder going full-time now while the other stays part-time for six months. Then limit yourself to the variables that actually move outcomes: time commitment, role difficulty and replaceability, cash contributions, and who is taking personal risk. If you find yourself debating whether someone deserves 2% more for “the idea,” you’re in fake precision territory. Use vesting to handle uncertainty, and use a documented rationale to handle memories. Before you pick a number, agree on these inputs: - Who is full-time now, and when does everyone else go full-time? - Who is CEO, and what decisions are they expected to own? - What are the non-overlapping “must ship” responsibilities for each founder in the next 6–12 months? - Is anyone contributing cash, signing personal guarantees, or taking other asymmetric downside? - What happens if the company has to hire a replacement for one role in 9 months? - What vesting start dates and cliffs are you using to match the reality of who started when? Example: if Founder A is full-time today, is taking the CEO seat, and is responsible for fundraising and hiring, while Founder B is part-time for the next six months but owns the core technical roadmap, you might start at 50/50 and then adjust to something like 55/45 or 60/40. The point is not the exact ratio. The point is that the split matches the story you will tell later to your team and your investors about who carried what load, and that vesting keeps the split fair if reality changes. ### A practical framework: contributions, risk, and decision load If you’re pre-seed and you’ve got 2–4 founders, I like a three-bucket conversation: (1) time and opportunity cost, (2) what each person is uniquely responsible for shipping, and (3) who carries the ongoing decision load (CEO work is real work). Don’t treat “idea” as a separate bucket unless the idea comes with differentiated distribution or IP. Concrete example: if one founder is full-time for 12 months before anyone else can quit their job, that founder is taking more risk and usually deserves more equity. The clean way to do that is not a “forever premium,” but a split plus vesting terms that reflect the timing, such as an earlier vesting start date for the person who started earlier. ### Tie-breakers: what to do when everything feels subjective An equal startup equity split is fine when contributions and commitment are truly symmetrical and you have high trust. But if you’re already negotiating titles, who signs the leases, or who gets fired first if money runs out, you’re not symmetrical. Write down the rationale in plain English and keep it with your corporate records. You don’t need a 40-page founder agreement to do this, but you do need everyone to be able to say later, “Yes, we meant this.” A lot of litigation begins with “I thought we were doing something different.” Once you have a split you can defend, it’s worth sanity-checking what that split means for control, not just economics. Governance is where “we’re 50/50” can become a problem if you have no tie-breaker. After you’ve thought through control, founder vesting is how you keep the split fair if real life happens. ## How your founder startup equity split affects governance (board seats, voting, and deadlocks) Equity percentages are also voting percentages unless you intentionally change that with your charter or stockholders’ agreements. In a Delaware C-Corp, founders can usually elect directors and approve key actions by [stockholder consent](https://startuplawyer.com/startup-law-glossary/stockholders-consent), so your startup equity split quietly sets the baseline for who can hire and fire the CEO, approve financings, and break ties. ### Board elections: why 50/50 can be fragile If you and a cofounder each own 50% of the voting power and you do not have a tie-breaker, you can lock the company on decisions that require stockholder approval, and you can also deadlock board elections. Deadlocks rarely show up when everyone is optimistic. They show up when you are under stress, like a down round, a founder exit, or a sale offer. A practical fix is to design governance so there is a path to a decision. Common early setups include a two-founder board plus an independent third director you both trust, or a board where one founder is designated CEO and has defined tie-break authority on a narrow set of operational decisions. If you plan to raise institutional capital, expect the board to change anyway, so your goal at formation is not perfection. It is avoiding a structure that can freeze the company before you get there. That being said, I’m not a big fan of bringing on a 3rd party who doesn’t have much skin in the game to be the deciding factor. Sure, there might be a deadlock, but a board deadlock doesn’t necessarily mean the founders can’t keep working on the company. Hopefully the founders can resolve the deadlock before material damage is done, as I feel that’s better than keep going to some 3rd party decision-maker each time there is a disagreement. ### What decisions your split can effectively control Even before investors show up, your split can determine who can approve or block things like: - Amending the charter or bylaws. - Authorizing new shares or increasing the authorized share count. - Issuing stock to a new founder or making a large equity grant. - Approving a merger, asset sale, or other change-of-control transaction. - Creating or expanding an equity incentive plan. - Electing directors and approving certain major board changes. ### How this changes after you take money After a priced round, governance is not just “who owns the most common.” Preferred stockholders often negotiate protective provisions, class votes, and board rights that can let a minority holder block specific actions. So your founder split is not the final word on control, but it is the starting point that affects your leverage and your ability to act before investors are in the room. That leads back to vesting. Governance is about who can make decisions today, while vesting is about making sure long-term ownership tracks long-term contribution. ## Founder startup equity vesting: standard schedules, cliffs, and the parts you can negotiate Founder vesting is the mechanism that keeps your split aligned with ongoing contribution over time. Vesting means you earn equity over time instead of owning it outright on day one. For founders, this usually shows up as restricted stock that is subject to the company’s repurchase right, sometimes called [reverse vesting](https://startuplawyer.com/startup-law-glossary/reverse-vesting). What is a standard startup vesting schedule? In most venture-backed startups, it’s 4 years with a 1-year cliff: nothing vests until month 12, then 25% vests, then the rest vests monthly through month 48. If a founder has already been full-time for a meaningful period before incorporation, you may start vesting earlier or credit time served, but investors will still expect the remaining unvested portion to create retention. ### The cliff and the vesting start date are doing different jobs The cliff is a cheap way to prevent a quick exit from creating permanent ownership. It is basically a built-in “try before we buy” period for the founding relationship, because it forces everyone to earn at least a year of real collaboration before they keep meaningful equity. Practically, it also creates a clean breakup story: if someone leaves at month 8, the cap table can reset without a permanent minority owner who did not stay through a full cycle of building. The vesting commencement date is where you capture real history. If someone truly started six months earlier, you can reflect that by setting their vesting start date to the earlier date in the original startup equity grant and board approvals, so the schedule matches what actually happened. What you want to avoid is “backdating” paperwork later to create a story after the fact, because investors will ask for the dated board consents, stock purchase agreements, and cap table support, and mismatches slow diligence and create credibility issues ### What happens to startup equity when a founder leaves In a typical founder restricted stock setup, if a founder leaves, the company can repurchase the unvested shares at the original purchase price. Practically, this usually means the leaver keeps only the vested portion, and the company “claws back” the unvested portion so it can be recycled. That returned equity is what you use to hire a replacement, refresh the option pool, or fix an ownership imbalance without inventing new shares out of thin air. Reality check: vesting is not just “for investors.” It is also for you, because it gives you a clean, pre-agreed answer when life happens, like burnout, a cofounder deciding to take a job, or a serious performance mismatch. If you have ever watched a cofounder relationship go sideways, you already know the alternative is not “everyone stays friends.” The alternative is months of negotiation while the company stalls, which is why vesting is insurance, not punishment. ### Acceleration: what’s market, what’s leverage [Acceleration](https://startuplawyer.com/startup-law-glossary/accelerated-vesting) means some unvested shares vest early on a company sale or other trigger. Single-trigger acceleration means vesting speeds up just because the sale closes, while double-trigger usually requires a second event like an involuntary termination or material role change within a set window after the sale. Early-stage investors often resist full [single-trigger acceleration](https://startuplawyer.com/startup-law-glossary/single-trigger-acceleration) because they want key founders to stay through integration, and because an acquirer may value retention as much as the product. What I see more often in priced rounds is partial double-trigger acceleration, like 25% to 50% accelerated if you are terminated without cause or constructively terminated within 12 months after closing. Vesting only works if the company actually has the right documents and approvals in place. That means the board has approved the issuance and the vesting and repurchase terms, the stock purchase agreement matches what you think you agreed to, and the cap table reflects the right dates and share numbers. In practice, the fastest way to turn vesting into a fight is to have a schedule in someone’s head that never made it into signed paperwork, because diligence and founder departures both force you to prove what the deal actually was. ## Issuing founder stock: a checklist of what investors expect to see “Founder stock” usually means common stock issued to you at or near incorporation, typically as [restricted stock](https://startuplawyer.com/startup-law-glossary/restricted-stock) with reverse vesting. It’s not a special legal class. It’s a timing and paperwork concept. At formation, an investor-ready founder stock setup usually includes: - Board approvals authorizing the issuance and the vesting/repurchase terms. - A Founder Stock Purchase Agreement (or Restricted Stock Purchase Agreement) that spells out the repurchase right and vesting schedule. - IP assignment so the company actually owns what you’re building. - Evidence the purchase price was paid (even if it’s nominal) and the shares were actually issued. - A cap table that matches the above, including vesting terms and dates. Founders often get hung up on par value and “how much should I pay per share.” Par value is a legal minimum price set in the charter, not your valuation, and many Delaware startups set it very low (often $0.0001 or $0.00001). The practical point is consistency: your charter’s par value, your purchase agreement price, and your payment evidence should all line up. ### Theory vs reality: “We’ll just paper it later” is not a plan If you skip founder paperwork early, you don’t avoid legal work. You just turn it into “cleanup,” which is slower, more expensive, and usually happens when you have the least time, like right before a financing closes. Investors don’t love surprises, and “we never actually issued the shares” is a surprise. One more reason to do the issuance cleanly is tax. If your founder stock is restricted and subject to repurchase, you may have a short clock to decide whether to file an 83(b) election. If you are still getting the company set up or need help with founder stock, vesting, equity paperwork, or 83(b) timing, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. ## If you already promised startup equity but didn’t issue it: how to clean it up A huge percentage of early equity problems start with a sentence like, “Don’t worry, we’ll paper it.” If you’ve promised someone shares or a percentage but nothing was ever approved and issued, you are not dealing with a moral issue. You are dealing with a governance and documentation issue that will surface the moment you raise money, hire seriously, or try to sell the company. ### The three questions to answer before you “make it official” Before you rush to “issue what you promised,” get clarity on three things: - What exactly was promised: a fixed number of shares, a percentage, or “equity that feels fair” after a funding round? - What was the deal supposed to be tied to: past work already done, or future service that should vest over time? - Who has the authority to grant it today: do you have the board and stockholder approvals in place to issue stock or options, and do your documents allow the grant you want to make? ### A pragmatic startup equity cleanup plan before you fundraise Start by getting the corporate basics clean: confirm who the current stockholders are, what has actually been issued, and what your cap table says today. Then decide whether the right instrument is stock (common for founders and very early contributors) or options (common for employees once you have an equity plan), and paper it with proper approvals so it shows up cleanly in diligence. If the promise was meant to reward work already done, you may be able to reflect that with an earlier vesting start date or partial vesting, but do it explicitly and document it, because “we all agreed” does not survive diligence. If you are about to fundraise, do this cleanup before the first serious investor conversation. Once a term sheet is on the table, every missing document becomes both a delay and a leverage point for someone else. If you have already made equity promises, issued stock inconsistently, or need to clean up cap table and founder paperwork before fundraising, you can also read more about my work on the [Startup Legal Cleanup Lawyer](https://startuplawyer.com/startup-legal-cleanup-lawyer) page. ## 83(b) elections: how to decide, how to file, and how to avoid the common mistakes An [83(b) election](https://startuplawyer.com/startup-law-glossary/83b-election) is a tax filing you make when you receive restricted stock so you can be taxed (if at all) on the value at grant, instead of being taxed later as the stock vests and hopefully becomes more valuable. If you’re issued founder restricted stock that is subject to repurchase, you almost always want to evaluate 83(b) immediately, because the deadline is unforgiving. ### Deadline: 30 days means 30 days You generally must file within 30 days after the stock is transferred to you. If you miss it, you can’t “fix it later” with a polite email to the IRS, and the tax consequences can be painful if the company succeeds. Practically, you want proof of timely mailing, and if you use a private carrier, use one of the IRS-designated services so you have a compliant postmark equivalent. ### How do you file an 83(b) election? A founder-friendly checklist - Confirm you actually received restricted stock (not options) and it is subject to vesting/repurchase. - Prepare the election form with the correct issuer information, share count, purchase price, and grant date. - Sign it and mail it to the correct [IRS address](https://www.irs.gov/filing/where-to-file-certain-elections-statements-returns-and-other-documents) for your residence (use trackable proof). - Send a copy to the company for its records, and keep a copy with your cap table and stock documents. - Calendar the deadline the day your shares are issued, not when you “got around to signing.” Common mistakes: mailing late, using the wrong date, mismatching the share count to the signed purchase agreement, or losing proof of mailing. Also, if the company is not actually issuing stock yet and you only have an “agreement to agree,” there may be nothing to file, so align the tax step with the real issuance. After you handle the legal and tax steps, you need a system that preserves them. That is your cap table, because it is where all of these decisions become visible to investors, hires, and future acquirers. ## Keeping your cap table investor-ready and diligence-proof before you need it to be Your cap table ([capitalization table](https://startuplawyer.com/startup-law-glossary/capitalization-table)) is the authoritative map of ownership: common, preferred, options, warrants, SAFEs, and notes. Investors will ask for it early, and they will compare it against your signed documents. If it doesn’t reconcile, diligence slows down and trust drops. What does fully diluted mean on a cap table? It’s the ownership picture assuming all outstanding rights to acquire stock are exercised or converted, often including the option pool reserved for future grants, and sometimes including SAFEs or notes depending on the context. There isn’t one universal definition, so you need to state what you’re including, especially when you’re negotiating valuation and option pool size. ### The option pool is a valuation term in disguise In term sheets, investors often ask for an option pool sized as a percentage of the post-money, fully diluted cap table, but they also require it to be created pre-money. Translation: the pool dilutes founders and existing holders, not the new investor. So you can “win” a higher valuation and still give up more ownership if you accept a needlessly large pool. A clean way to negotiate this is to build a 12–18 month hiring plan and translate it into an option budget. Then you can say, “Here’s what we need the pool for,” instead of negotiating an abstract percentage. ### Cap table hygiene for SAFEs and notes: track the terms, not just the dollars If you raise on [SAFEs](https://startuplawyer.com/startup-law-glossary/safe) or convertible notes, your future dilution depends on the conversion mechanics, not the amount of cash you took in. Track, at minimum, each instrument’s valuation cap, discount, MFN provisions, and whether it’s pre-money or post-money. Your future self will thank you, ideally quietly, with fewer spreadsheets. Once your ownership math is clean, you can decide whether you want to change the governance math. That is where dual-class common comes up, because it is about voting control rather than economics. ## Dual-class common: should you choose a Class A high-vote and Class B low-vote structure for your startup equity? Dual-class common means your charter authorizes two classes of common stock with different [voting rights](https://startuplawyer.com/startup-law-glossary/voting-rights). Economically, the shares are usually the same, but one class carries superior voting power so founders can keep voting control even after dilution. The common pattern is one class with 10 votes per share and one class with 1 vote per share, although the ratio is negotiable. ### How it works in practice and what has to be in your documents In a typical setup, founders receive the high-vote class (often called Class A), while employees and advisors receive the low-vote class (often called Class B). Investors usually buy preferred stock, which later converts into the low-vote common, so the founders keep voting control after preferred converts in an IPO or a later recap. Mechanically, this is a charter-level choice. You implement it by authorizing both classes in the certificate of incorporation and making sure your stock purchase agreements, cap table, and stock ledger reflect which class each person owns. If you try to add it later, you are often asking existing holders and investors to vote to give founders more control, which is why “we’ll add dual-class later” is usually not realistic. ### When it’s worth considering vs when it’s a red flag If long-term voting control is central to your company’s mission or execution, dual-class can be the cleanest tool because it separates economics from governance. In practice, it tends to be most viable when you have real leverage, such as exceptional traction, a category-defining product, or a credible IPO path, because many investors see dual-class as a governance risk. It can be a red flag when it looks like you are insulating yourself from accountability before the company has proven anything. If you do pursue it, the terms that usually reduce pushback are limits and conversion mechanics. Common examples include time-based sunsets, automatic conversion on transfer (so high-vote stock cannot be sold), and role-based conversion if the founder stops serving in an active leadership role. Those features keep founder control tied to active stewardship, while giving everyone else a clearer long-term governance story. Practical next step: decide whether you want a single-class “default” governance setup, or whether control is important enough that you are willing to trade off investor and hiring optics to preserve it. If you choose dual-class, do it at formation and write down why, because you will be asked to justify it in your first serious financing conversation. At this point, you have most of the core pieces. The remaining confusion usually comes from vocabulary, because founders use a few terms interchangeably even though they drive very different outcomes. ## People confuse startup equity with… Par value vs. price per share: par value is a charter concept and usually a tiny number; price per share is what investors pay in a financing and reflects negotiated valuation. Restricted stock vs. stock options: restricted stock is issued now but can be repurchased if you leave before vesting; options are the right to buy later at an exercise price. Fully diluted vs. outstanding: outstanding is what’s actually issued today; fully diluted is a model that assumes future exercises and conversions, and it depends on the definition used in your deal. Vesting vs. lock-up: vesting controls what you’ve earned; a lock-up limits when you can sell shares, usually around an IPO or financing. If you keep those distinctions straight, the rest of startup equity becomes much easier to reason about. ## The practical takeaway of startup equity If you remember one thing, make it this: you don’t want “perfect” startup equity. You want equity that survives real life, meaning it’s tied to ongoing contribution (vesting), cleanly documented (issuance and 83(b)), and easy for a third party to diligence (cap table hygiene). ## What you should do this week - If you are pre-incorporation: write down your proposed split and the reasons, then decide whether you want vesting to start on incorporation or credit pre-incorporation time. - If you incorporated but haven’t issued founder stock: fix that before you raise money, because your first investor will ask for it. - If you already issued restricted stock: confirm whether an 83(b) election was filed on time and whether you can produce proof. - If you raised SAFEs or notes: build a fully diluted pro forma that states what’s included (pool, SAFEs, notes) so you can answer investor questions quickly. - If you plan to hire in the next 12 months: build an option budget so you can defend your option pool size in a term sheet discussion. If you still have edge-case questions after the checklist, the FAQ below covers the ones I see most often in real financings and founder breakups. ## Startup Equity FAQ ### How do you split startup equity with a cofounder? Start with a simple model: time commitment and opportunity cost, unique responsibilities, and who carries the ongoing decision burden. Then pressure test it with one scenario: “If one of us leaves in 9 months, does the outcome still feel fair?” If not, the fix is usually vesting, not a more complicated split. ### What is a standard startup equity vesting schedule? The most common schedule is 4 years with a 1-year cliff, with monthly vesting after the cliff. If a founder has already been full-time for a meaningful period before the grant, teams sometimes credit time served through an earlier vesting start date, but you should still expect a meaningful unvested portion if you plan to raise venture capital. ### How do you file an 83(b) election? You prepare and sign the election and mail it to the IRS within 30 days of the stock transfer, then keep proof of timely mailing and a copy for your records. If you use a private carrier, use an IRS-designated delivery service so your mailing date counts. ### What does fully diluted mean on a cap table? It’s the ownership view assuming outstanding rights to acquire stock are exercised or converted, often including the reserved option pool. Because definitions vary, you should label your assumptions in writing, especially around valuation, option pools, and convertible instruments. ### Why do investors care so much about an “investor-ready” cap table? Because the cap table is the quickest way to see whether the company can issue preferred stock cleanly and whether everyone who claims to own equity actually has signed documents to support it. If it doesn’t reconcile, investors assume there are other hidden problems, and they price that risk into the deal or walk away. ### Should founder shares vest if we’re only two founders? Yes, vesting still matters with two founders because the risk is concentrated: if one person leaves, the remaining founder usually cannot recruit a replacement without equity to offer. A standard schedule can feel “investor-driven,” but it mainly prevents dead equity and makes a future financing cleaner. If you truly have years of prior work together and equal ongoing commitment, you can sometimes soften the cliff or credit time served instead of eliminating vesting. ### Does a one-founder startup need to vest their shares? If you’re a true solo founder and sole shareholder, I usually wouldn’t implement founder vesting on your startup equity on day one, because you’re not protecting another founder relationship and you’re not allocating equity across a team yet. Instead, you can wait until a financing or other third party requires vesting, and it’s often negotiable to credit your time served so the schedule reflects the work you already did. The key condition is fundraising: once you’re raising institutional money or bringing on other equity holders, expect vesting (or a similar retention mechanism) to become part of the conversation. ### Can we credit pre-incorporation work toward founder vesting? Often yes, by setting an earlier vesting commencement date to reflect when someone actually started contributing full-time. The key is doing it as part of the initial issuance and board approvals, not as a retroactive “paper fix” later. Investors usually accept reasonable credit if the remaining unvested portion still creates retention going forward. ### What if I missed the 83(b) deadline? If you missed it, assume you cannot simply “file late” and make it go away, because the 30-day rule is strict and the consequences can show up later as the shares vest. The practical next step is to talk to a startup tax professional quickly, confirm exactly what was issued and when, and model the potential tax exposure so you can make informed choices. If the company is still very early, you may have limited paths to restructure, but it depends on facts and timing. ## Related Topics If you are thinking through founder splits, vesting, cap table cleanup, or how equity decisions affect fundraising and hiring, these guides are a helpful next place to go. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Questions About Founder Equity, Vesting, or Cap Table Cleanup? If you would like to talk through founder equity, vesting, 83(b) issues, or cap table questions, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are still getting the company set up and need help with founder stock, vesting, and equity paperwork, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. If you are dealing with promised-but-unissued equity, mismatched paperwork, or cap table cleanup before fundraising, you can also read more about my work on the [Startup Legal Cleanup Lawyer](https://startuplawyer.com/startup-legal-cleanup-lawyer) page. And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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[What this startup incorporation guide covers](#aioseo-what-this-startup-incorporation-guide-covers-4) - [When should a startup incorporate?](#aioseo-when-should-a-startup-incorporate-6) - [Should a startup form an LLC or a C-Corp?](#aioseo-should-a-startup-form-an-llc-or-a-c-corp-10) - [How to incorporate a startup: Delaware C-Corp steps](#aioseo-how-to-incorporate-a-startup-delaware-c-corp-steps-16) - [What documents does a startup need after incorporating?](#aioseo-what-documents-do-i-need-after-incorporating-46) - [Common startup incorporation mistakes](#aioseo-common-startup-incorporation-mistakes-that-create-expensive-cleanup-61) - [Startup incorporation vs. formation, fundraising, and IP protection](#aioseo-startup-incorporation-vs-formation-fundraising-and-ip-protection-70) - [Startup incorporation FAQs](#aioseo-startup-incorporation-faq-73) - [If you remember one thing about startup incorporation](#aioseo-if-you-remember-one-thing-about-startup-incorporation-96) - [What founders should do this week after startup incorporation](#aioseo-what-founders-should-do-this-week-after-startup-incorporation-100) - [Related Topics](#aioseo-related-topics-104) - [Questions About Startup Incorporation or Formation?](#aioseo-questions-about-startup-formation-or-incorporation-113) This startup incorporation guide is for founders deciding how to incorporate a startup in the U.S., especially if they are aiming for a Delaware [C-Corp](https://startuplawyer.com/startup-law-glossary/c-corporation) and a venture-style cap table. I will assume U.S. norms and the common path where the company may raise a pre-seed or seed round, grant equity to teammates, and sign customer contracts. If you are asking when a startup should incorporate or whether to form an LLC or C-Corp, you are already focused on the right tradeoff: speed today versus friction later. Use this guide as a practical map. Start with the entity choice, then walk through the incorporation steps, and then use the checklists for what documents you need after incorporating. ## What this startup incorporation guide covers This is a practical guide to U.S. startup [incorporation](https://startuplawyer.com/startup-law-glossary/incorporation): picking an entity type, forming the company, setting up equity, and getting the investor-ready basics right. It is not tax advice for every edge case, and it is not a substitute for local counsel if you are outside the U.S., operating in a regulated industry, or doing something unusual such as a co-op or nonprofit. ## When should a startup incorporate? You should incorporate when the business has real-world risk or real-world upside that needs a legal wrapper. A simple rule of thumb is this: if you are about to sign a customer contract, hire someone, take money from anyone other than your co-founders, or build valuable IP, incorporate first. In theory, you can wait until you have traction. In practice, founders often wait until an investor asks for formation documents, then discover they have months of contractor work, open-source code, or co-founder contributions sitting in a legal gray zone. Fixing that under deadline is usually slower and more expensive than doing it calmly at the start. If you are truly pre-everything and only exploring, you can often wait a little. But once you are building, incorporating early is usually cheaper than the cleanup you would otherwise pay for later. ## Should a startup form an LLC or a C-Corp? If you are building a venture-scale startup that will likely raise outside equity, the market norm is a Delaware C-Corp. A C-Corp is built for issuing stock, granting options, and bringing in institutional investors who want clean corporate-law guardrails. An [LLC](https://startuplawyer.com/startup-law-glossary/limited-liability-company) is often a strong fit for cash-flowing businesses, real estate ventures, and closely held companies. But for high-growth startups, LLC tax allocations, K-1s, and investor preferences can create friction. Many venture funds simply will not invest in an LLC, or they will require a conversion first. The practical rule is simple: if you are raising a priced equity round, issuing stock options, or targeting institutional venture investors, start with a Delaware C-Corp. If you are bootstrapping, distributing profits, or expect the business to stay closely held, an LLC can be a reasonable fit. Yes, you can convert an LLC to a C-Corp later. But “we will convert later” has a way of becoming “we need to convert this week” the moment a term sheet appears, which is usually the worst time to discover that your accounting and ownership history are messy. If you are deciding how to form the company, choosing between an LLC and a C-Corp, or setting up founder stock and formation documents, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. ## How to incorporate a startup: Delaware C-Corp steps ### Step 1: Decide ownership and roles before you file anything Before you incorporate, align on who owns what and who is committing what. Your [cap table](https://startuplawyer.com/startup-law-glossary/capitalization-table) is the record of ownership, and it is easier to start clean than to renegotiate later. “Founder stock” is typically common stock issued to founders at formation, often with vesting so no one can walk away with a giant chunk of the company after two weeks. Get specific about contributions. Who is full-time on day one, who is part-time, and who is bringing prior code, customer relationships, or cash? If you cannot explain the deal in three sentences, you probably do not have a deal yet. Also decide how you will handle future changes. If one person wants to leave after three months, what happens to their equity. If someone wants to bring on a third co-founder later, is that coming out of the founders’ shares or a new allocation. Writing these answers down is not pessimism, it is basic risk management. ### Step 2: Pick the state for your startup incorporation (and understand why Delaware is common) Delaware is common because its corporate law is predictable and investors are comfortable with it. If you incorporate in another state and later raise venture capital, you may end up Delaware-flipping anyway, which adds cost and paperwork. That said, if you are not raising outside money, your home state can be perfectly workable. Two practical details matter more than the Delaware debate. First, Delaware incorporation does not automatically handle compliance where you actually operate. If you are hiring or signing contracts from California, New York, or another state, you may still need to foreign qualify there and pay local fees. Second, Delaware requires a registered agent. That is a person or company with a physical address in Delaware that can accept official mail and legal notices for your company, including service of process and notices from the Delaware Secretary of State. This sounds bureaucratic, but it matters. If your registered-agent information is wrong or you stop paying the agent, you can miss a lawsuit, miss state notices, fall out of good standing, and discover the problem only when a bank or investor asks for a certificate of good standing. Practically, most startups use a professional registered agent service, not a friend’s address. Pick one that is stable, responsive, and easy to update if you change your company name, do a financing, or move addresses. Expect an annual fee, and treat it like a compliance subscription that you keep current. Related: think through what address you will use as your company’s “mailing” and “principal office” address. A PO box can be fine for routine mail, but it will not work for your registered agent, and many banks and payment processors want a real physical address for identity verification and account opening. If you are remote, plan for this early so you are not scrambling mid-onboarding. The tradeoff is predictability for investors versus extra admin if you were never going to raise institutional money. ### Step 3: File the Certificate of Incorporation (charter) and set your authorized shares Your [Certificate of Incorporation](https://startuplawyer.com/startup-law-glossary/certificate-of-incorporation) (often called the charter) sets the basic structure, including the number of authorized shares and the par value. Most early startups authorize a large number of shares so they can issue founder stock and create an option pool without amending the charter immediately. Here is the part founders miss: authorized shares are not the same thing as issued shares. Authorized is the ceiling. Issued is what you actually give to founders, employees, and investors. You can authorize 10,000,000 shares and still issue only a portion at formation. At formation, you are almost always issuing common stock. Preferred stock shows up later when you raise a priced round. So do not try to draft your charter like a Series A document on day one. Keep it simple and consistent with your near-term plan. Founders commonly over-optimize the exact share count because it feels like math they can control. What matters more is keeping the cap table simple and making sure the documents match market expectations. The share count is mostly a unit choice, as long as you avoid creating rounding problems later. ### Step 4: Adopt bylaws, appoint the board, and approve formation actions After filing, you adopt [bylaws](https://startuplawyer.com/startup-law-glossary/bylaws), appoint your initial board of directors, and approve the key formation actions by written consent. This is the paper trail investors will later ask for in diligence, so clean minutes now save you awkward archaeology later. In practice, the initial board is often just the founders, or even a single founder if you are solo. The main point is that the company has a clear decision-maker who can approve stock issuances, sign important agreements, and later approve financing documents. This is also where you set officer roles, such as CEO and secretary, and make sure signature authority is clear. Many early contract problems are not really about the language. They are about whether the person who signed actually had authority to bind the company. If your company needs broader ongoing support with governance, board and stockholder approvals, compliance, hiring, contracts, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### Step 5: Issue founder stock and set vesting in writing Vesting is the mechanism that says you earn founder equity over time instead of owning all of it outright on day one. In practice, a standard structure is four-year vesting with a one-year cliff, although the details can vary based on what has already been built and how the team came together. Mechanically, this usually shows up as a [stock purchase agreement](https://startuplawyer.com/startup-law-glossary/stock-purchase-agreement) plus a separate vesting schedule. The company has a right to repurchase the unvested shares if you leave. That sounds aggressive until you see the alternative, which is a co-founder who stops contributing but still owns a large percentage. If you are joining a company that already has product or customers, talk about whether vesting should start with credit for prior work. There is no universal right answer. But there is a universal mistake, which is not discussing it and hoping everyone stays aligned forever. If your founder stock is subject to vesting and you want to start the holding period for capital gains, you will often file an [83(b) election](https://startuplawyer.com/startup-law-glossary/83b-election) with the IRS shortly after the stock is issued. Miss the deadline and you can create a painful tax outcome later, so treat it as a formation checklist item, not something to get to eventually. ### Step 6: Get your EIN, open a bank account, and keep finances clean Get an [EIN](https://startuplawyer.com/startup-law-glossary/ein), open a company bank account, and keep business funds separate from personal funds. This is basic hygiene, but it is also how you avoid having your lawyer and accountant reconstruct expenses later when you are trying to close a financing. Set up simple bookkeeping early, even if it is just one software tool and a monthly habit. Track founder reimbursements, contractor payments, and any cash that comes in. When you later raise money, you will be asked for financial statements, and “we think it is about this much” does not age well. If you are taking payments, pick a payment processor and make sure the account is in the company’s name. Also, do not use personal credit cards as a long-term operating strategy. You can reimburse founders, but you want a clear record so there is no question about what the company owes whom. ## What documents does a startup need after incorporating? Right after you incorporate, you want a tight packet of documents that proves three things: the company exists, the right people approved the right actions, and ownership and IP are clean. If you later raise money, these are some of the first things counsel will request. - Filed charter and stamped approval - Bylaws - Initial board and stockholder consents - Founder stock purchase agreements (with vesting terms) - IP assignment agreements (founders and contractors) - EIN confirmation - Cap table snapshot and stock ledger Think of the document packet in three buckets: governance, equity, and IP. Governance is the proof the company can act. Equity is the proof you issued ownership correctly. IP is the proof the company owns what it is selling. **Governance:** The filed charter and bylaws are the baseline rules. The initial consents and minutes are the receipts showing that you followed those rules. If you later sign a major customer contract or open a bank account, someone may ask for these documents as proof that the company exists and the signatory has authority. **Equity:** Founder stock paperwork should be signed, dated, and consistent with the cap table. Keep a stock ledger and make sure issuances were approved by the board. If you are using an option plan, keep grant approvals and signed option agreements together so you can answer diligence questions quickly. **IP:** Your IP assignments should cover founders and anyone who wrote code, designed product, or created brand assets. If you used contractors, check that the agreement actually assigns IP to the company, not just a “license to use.” Investors tend to treat missing IP assignments like a hidden lien on your most valuable asset. If you plan to hire, you will also want an equity incentive plan and an [option pool](https://startuplawyer.com/startup-law-glossary/option-pool) before you start making offers. In practice, founders wait too long on this, then end up making verbal promises that do not match what the board can legally approve. ## Common startup incorporation mistakes The most common startup incorporation cleanup work I see is not that the charter was wrong. It is that the company history is undocumented. Emails instead of signed agreements, equity promises without board approval, and contractors building core product without an IP assignment are the classics. Another common pattern is “we will paper it later.” Later usually arrives during diligence, when everyone is tired and investor counsel is asking basic questions like who owns the code. A signed [IP assignment](https://startuplawyer.com/startup-law-glossary/inventions-assignment) turns that conversation from drama into a PDF. Founders also over-optimize the perfect incorporation date, jurisdiction trivia, and exact share math, then under-invest in basics like vesting and clean signatures. It is like arguing about the font on a map while you are lost. The boring steps are often the ones that keep a deal from stalling later. A third category of mess is equity that was promised but never documented. For example, you tell an advisor they have “0.5%,” then six months later you cannot agree on whether that was options, restricted stock, or a future grant. If you are making an equity promise, tie it to a real plan and a board-approved grant. I also keep seeing open-source and contractor issues show up late. You can use open-source software, but you should know what you are using and whether the license terms fit a commercial product. And if a contractor built core code before you incorporated, make sure you have a signed assignment so the company owns the work, not the individual. Finally, do not treat the company bank account like a personal Venmo buffer. Keep receipts, document founder reimbursements, and pay attention to taxes early enough that you are not reconstructing the story later. ## Startup incorporation vs. formation, fundraising, and IP protection **Incorporation vs formation:** People use these interchangeably. Practically, a startup “incorporation” is filing the charter, while “formation” usually means the whole setup, including bylaws, equity issuance, and consents. **Incorporation vs registering to do business:** You can incorporate in Delaware and still need to register as a “foreign” corporation in the state where you actually operate. This is a filings-and-fees issue, not a second incorporation. **Incorporation vs fundraising:** Incorporation sets up the company so you can legally issue equity and sign deals. Fundraising adds investor rights and usually new documents. You can incorporate without fundraising, but you cannot do a clean venture financing without a cleanly formed company. **Incorporation vs “protecting your idea”:** Incorporation does not create IP rights by itself. It helps you assign and hold IP in the company. Trademarks and patents are separate processes. ## Startup incorporation FAQs ### How do you incorporate a startup? Pick the entity type and state, file the charter, then adopt bylaws, appoint the board, and issue founder stock with vesting. Then get your EIN, open a bank account, and put IP assignments and equity-plan documents in place so the paper trail is complete. That is startup incorporation at a high level. ### When should a startup incorporate? Incorporate before you sign real customer contracts, hire, take outside money, or create meaningful IP. If you are building a venture-scale company, earlier is usually cheaper because it avoids under-deadline cleanup later. ### Should a startup form an LLC or a C-Corp? If you expect venture financing, stock options, or institutional investors, a Delaware C-Corp is the market norm. If you plan to stay closely held and distribute profits, an LLC can work, but many startups end up converting under pressure when fundraising. ### What documents does a startup need after incorporating? You need your filed charter, bylaws, initial consents, founder stock paperwork, and signed IP assignments for a proper startup incorporation. You also want an EIN confirmation, a basic stock ledger or cap table snapshot, and an equity plan if you will grant options soon. ### Does a startup have to incorporate in Delaware? No, but Delaware is common for venture-backed startups because investors value predictability. If you incorporate elsewhere and later raise VC, you may be asked to convert or reincorporate into Delaware anyway. ### How much does startup incorporation cost? At minimum, you will pay state filing fees and registered-agent fees. If you use a lawyer, you are also paying for speed, correctness, and a clean paper trail that matches venture norms. Costs vary by complexity, number of founders, and whether any cleanup is involved. Some founders handle a straightforward formation themselves, while others want help getting the documents and equity setup right from the start. ### Can a solo founder incorporate and add a co-founder later? Yes, but be careful about making informal equity promises before you have board-approved documents in place. If you add a co-founder later, treat it like issuing equity for new value and use vesting so the equity tracks ongoing contribution. ### Do founders need to file an 83(b) election after incorporation? You often do if you receive restricted stock that is subject to vesting and you want to be taxed based on the low early value. The key is timing, because the IRS deadline is short and missing it can create a bad outcome later. Talk to a tax advisor for your specific facts. ### Do you need a lawyer to incorporate a startup? No. Many founders use a startup incorporation service for a straightforward Delaware C-Corp. But if you have multiple founders, unusual equity promises, prior contractor work, or fundraising on the horizon, a lawyer can be worth it because the real value is not just filing the charter. It is getting the equity setup and paper trail right. ### Does a Delaware startup also need to register in its home state? Often, yes. If you are physically operating, hiring, or signing contracts from another state, that state may require you to register as a foreign corporation and pay local fees. Incorporating in Delaware does not automatically cover your compliance everywhere you do business. ### Can a startup change its entity later? Usually, yes. You can often convert an LLC to a C-Corp or reincorporate into Delaware, but the cost and friction go up if you have multiple owners, existing contracts, or messy accounting. If you expect venture financing, it is often easier to start with the structure investors expect instead of converting under deadline. ## If you remember one thing about startup incorporation Incorporation is not just a filing. It is the moment you create a clean story of ownership, authority, and IP. If you do the unglamorous documents early, everything else you do, hiring, contracting, and fundraising, gets easier because you are not fixing history under pressure. ## What founders should do this week after startup incorporation - **If you are pre-seed and building with a co-founder:** agree on the equity split, put vesting in place, and sign IP assignments before you ship meaningful product. - **If you are about to take outside money:** incorporate first, issue founder stock, and make sure your consents and cap table are clean before you talk to investors. - **If you already incorporated but feel “paperwork debt”:** do a one-hour doc audit and fix the missing signatures, IP assignments, and equity approvals now, not during diligence. ## Related Topics If you are thinking through formation, founder equity, governance setup, or how early legal decisions affect fundraising and growth, these guides are a helpful next place to go. - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Questions About Startup Incorporation or Formation? If you would like to talk through startup incorporation, formation timing, founder stock, or other early company setup issues, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are deciding how to form the company, choosing between an LLC and a C-Corp, or setting up founder stock and formation documents, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. If you are getting the company ready to raise outside capital, you can also read more about my work as a [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer). If your company needs broader ongoing support with governance, approvals, hiring, contracts, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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[How to use this seed funding guide](#aioseo-how-to-use-this-seed-funding-guide-4) - [What this seed funding guide covers and what it doesn’t](#aioseo-what-this-seed-funding-guide-covers-and-what-it-doesnt-10) - [Seed funding instruments, in one screen](#aioseo-seed-funding-instruments-in-one-screen-16) - [How SAFE conversion math works](#aioseo-how-safe-conversion-math-works-28) - [Seed funding with SAFEs: what’s actually being sold](#aioseo-seed-funding-with-safes-whats-actually-being-sold-35) - [Seed funding with convertible notes: the maturity date is the whole point](#aioseo-seed-funding-with-convertible-notes-the-maturity-date-is-the-whole-point-48) - [Accelerators and seed funding: don’t ignore the “small print”](#aioseo-accelerators-and-seed-funding-dont-ignore-the-small-print-56) - [“Light preferred” seed rounds: when a priced round is worth it](#aioseo-light-preferred-seed-rounds-when-a-priced-round-is-worth-it-60) - [Seed funding red flags and what to do instead](#aioseo-seed-funding-red-flags-and-what-to-do-instead-65) - [Cap table hygiene: how seed documents become a diligence problem](#aioseo-cap-table-hygiene-how-seed-documents-become-a-diligence-problem-90) - [Seed funding edge cases: down rounds, small exits, and “we never raised again”](#aioseo-seed-funding-edge-cases-down-rounds-small-exits-and-we-never-raised-again-98) - [Seed funding closing checklist](#aioseo-seed-funding-closing-checklist-105) - [People confuse these seed funding matters…](#aioseo-people-confuse-these-seed-funding-matters-121) - [A founder’s seed funding negotiation playbook](#aioseo-a-founders-seed-funding-negotiation-playbook-125) - [The practical takeaway on seed funding](#aioseo-the-practical-takeaway-on-seed-funding-136) - [Seed Funding FAQs](#aioseo-seed-funding-faqs-144) - [Related Topics](#aioseo-related-topics-155) - [Questions About Seed Funding, SAFEs, or Convertible Notes?](#aioseo-questions-about-seed-funding-safes-or-convertible-notes-190) If you’re raising seed funding, you’ll almost always hear some version of: “Should I raise on a SAFE or a convertible note?” The honest answer is that either can work, but they fail in different ways. A SAFE ([Simple Agreement for Future Equity](https://startuplawyer.com/startup-law-glossary/safe)) means an investor pays you now for the right to receive equity later. A [convertible note](https://startuplawyer.com/startup-law-glossary/convertible-note) is a loan that is designed to convert into equity later, usually in your next priced round, and it often has the same conversion economics as a SAFE: a [price cap](https://startuplawyer.com/startup-law-glossary/price-cap) and/or a [discount](https://startuplawyer.com/startup-law-glossary/conversion-discount)). **Decision rule**: in most seed funding situations, you should start from a post-money SAFE and make someone tell you why you need something more complicated. It’s usually the cleanest option when you’re taking multiple small-to-medium checks, because you can model dilution with less guesswork and you avoid a maturity deadline showing up at the worst time. A convertible note can still be the right tool if the investor requires a maturity date, you’re doing a true bridge where time pressure is part of the bargain, or you’re in a context where debt-like terms are the only way to get the round done. You’re trading speed and simplicity for either (a) a maturity clock that can turn into leverage against you, or (b) more documentation and negotiation in a priced round. If you are actively raising a seed round and deciding between SAFEs, notes, or a priced seed financing, you can also learn more about my work on the [Seed Funding Lawyer](https://startuplawyer.com/seed-funding-lawyer) page. ## How to use this seed funding guide If you’re skimming, read the “Seed funding instruments, in one screen” table, then jump to the section that matches what you’re doing next. If you’re mid-raise, focus on the negotiation playbook and the side-letter sections. If you’re about to sign a term sheet for a priced seed round, read the light preferred section and the option pool callouts twice. - **Start here if you’re raising your first $250k–$1.5m:** Read “Seed funding instruments, in one screen,” then the SAFE sections (post-money vs pre-money, cap/discount, side letters). - **Start here if you already have SAFEs/notes outstanding:** Read “Cap table hygiene” and “Seed funding edge cases” before you sign anything else. - **Start here if a lead wants a small priced seed round:** Read “Light preferred seed rounds” and the option pool and protective provisions callouts. ## What this seed funding guide covers and what it doesn’t - How SAFEs and convertible notes work in seed funding, including conversion triggers, caps, discounts, and MFN. - How to compare a SAFE, a note, an accelerator deal, and a “light” priced preferred seed round. - The few terms that actually drive founder outcomes: dilution mechanics, maturity pressure, pro rata, and side-letter creep. - A practical negotiation playbook: what to push on, what to accept, and what to model before you sign. ## Seed funding instruments, in one screen At seed, you’re usually trying to do two things at once: buy time (runway) and buy credibility (a cap table and story that supports the next round). The instrument you pick changes how much time pressure you’re under, how predictable dilution is, and how messy your next financing becomes. **Instrument****What it is****Founder upside****Founder risk**[SAFE](https://www.ycombinator.com/documents)Contract right to future equity (not [debt](https://startuplawyer.com/startup-law-glossary/debt-financing)).Fast closes, low friction, usually no maturity pressure.Cap table surprise if you stack SAFEs or misunderstand post-money dilution; side letters can add friction.Convertible noteDebt that converts to equity on a trigger ([qualified financing](https://startuplawyer.com/startup-law-glossary/qualified-financing)).Can satisfy investors who want “real paper”; maturity can motivate a priced round.Maturity date becomes leverage against you; interest increases conversion amount; defaults create ugly negotiations.Accelerator dealUsually a small investment plus program terms; often equity or a SAFE plus rights.Signaling and network can help you raise the rest of the seed round.Terms can include information rights, MFN, or pro rata that complicate later rounds.Light preferred seed roundA priced round selling preferred stock (often “Series Seed” or even “[Series Pre-Seed](https://startuplawyer.com/startup-law-glossary/series-pre-seed)“).Clarity: you set a valuation now and clean up the cap table.Higher legal cost and more negotiation: liquidation preference, protective provisions, option pool, etc.### A quick seed funding decision tree - If you want speed, minimal negotiation, and no maturity pressure, start with a post-money SAFE. - If an investor insists on a maturity date or you’re doing a bridge where time pressure is part of the deal, consider a convertible note. - If you have a true lead, you want to clean up multiple SAFEs/notes, or you need valuation clarity now, consider a priced seed round. - If the “value” is the program and network, not the check, an accelerator can be worth it, but treat side-letter rights like real deal terms. ### What investors optimize for in seed funding In a SAFE, most investors are optimizing for clean economics and “no regrets” protection if you raise at a much higher price later. That’s why caps, discounts, and MFN show up early, even when nobody wants to negotiate governance yet. In a note, investors are also buying leverage. The maturity date gives them a conversation starter if the next round slips, and the qualified financing definition gives them a say in what “counts” as a real priced round. In a priced seed round, investors are explicitly buying governance and downside protections, so it’s normal to spend time on boards, vetoes, and liquidation preference. ## How SAFE conversion math works A SAFE converts by translating the investor’s purchase amount into a number of shares at a conversion price set by the next priced round, but adjusted by the SAFE’s economics. Practically, you can think of it as the investor getting the better of two deals: the deal implied by the valuation cap, or the deal implied by the discount. One nuance: post-money SAFEs make it easier to estimate ownership sold at signing, but the final number of shares can still move based on the priced round’s terms, especially if the round valuation is at or near the cap and you also change the option pool right before closing. The point is not perfect precision early. The point is avoiding surprise dilution and making sure you understand which levers can still move later. ### Mini-example: valuation cap conversion using a post-money SAFE If you invest $500k on a $10m post-money cap, your back-of-the-napkin ownership estimate is about 5% ($500k ÷ $10m), before the next round’s new money and any option pool increase. That “ownership sold is transparent” feature is the core reason post-money SAFEs became the default form. ### Mini-example: discount vs cap and which one wins Say your SAFE has a 20% discount and a cap. If the [Series A](https://startuplawyer.com/startup-law-glossary/series-a-round) price is high, the cap usually produces a lower conversion price than the discounted Series A price, so the cap drives. If the Series A price is modest and below the cap, the discount can be the better deal. Either way, most forms are built so the investor converts at the lower price per share (which means more shares). ## Seed funding with SAFEs: what’s actually being sold A SAFE is not equity today and it’s not a loan. It’s a promise that the investor will receive shares later if a defined trigger happens, usually an equity financing where you sell [preferred stock](https://startuplawyer.com/startup-law-glossary/preferred-stock). That design is why SAFEs are fast. They intentionally avoid negotiating the “full stack” of preferred terms until a priced round. ### Trigger events: priced round, liquidity event, dissolution Most founder attention goes to the next priced round, but don’t ignore the other triggers. In an acquisition (a “[liquidity event](https://startuplawyer.com/startup-law-glossary/liquidity-event)”), SAFEs may convert or pay out under formulas that can surprise you if the exit is small. In a wind-down, SAFEs sit behind creditors, so “we’ll just return the money” can be unrealistic if the company has real liabilities. ### Post-money SAFE vs pre-money SAFE (why it matters) With a post-money SAFE, you can usually estimate dilution at signing because the investor’s ownership is measured after the SAFE money is counted, but before the next round’s new money. With a pre-money SAFE, each additional SAFE can dilute earlier SAFEs as well as you, so the final ownership math stays uncertain until conversion. Example: if you raise $500k on a $10m post-money cap, you’re selling roughly 5% on that SAFE ($500k ÷ $10m), before you account for the option pool and the next round’s dilution. The mistake I see is founders negotiating the cap for weeks, then casually letting investors use a pre-money template or stacking multiple capped SAFEs without re-running the cap table model. That’s how “we sold ~10% at seed” turns into “we sold ~20% before the Series A term sheet even arrived.” ### Valuation cap, discount, and MFN: the 3 SAFE terms that matter A valuation cap is the maximum valuation used to set the SAFE’s conversion price, so a lower cap generally means more shares for the investor at the next priced round. A discount is an alternative conversion mechanism, typically a percentage off the next round’s [price per share](https://startuplawyer.com/startup-law-glossary/price-per-share). If a SAFE has both, the investor usually converts at whichever is better for them. An MFN ([most favored nation](https://startuplawyer.com/startup-law-glossary/most-favored-nation-clause)) clause lets an early investor opt into later, more favorable terms you offer to someone else. Investors ask for this because they know the “round” can stretch for months, and they don’t want to be punished for moving first. From your side, MFN becomes dangerous when it’s vague, when it applies to side-letter rights (not just economics), or when you’re issuing multiple instruments and nobody can tell what “more favorable” means. ### Side letters: where a “simple” SAFE round stops being simple In practice, I keep seeing founders treat side letters like a minor add-on. They’re not. Side letters are where investors request pro rata rights, information rights, or even board observer rights long before a priced round. If you grant pro rata, try to tie it to the next equity financing only (not every future round), and define who gets it (for example, only investors above a “major investor” threshold). If you grant information rights, keep them lightweight and aligned with what you already produce. You’re trading fundraising speed for future allocation and admin burden, so the right question is: “Will this make my Series A harder to lead?” If you are using a SAFE and need help reviewing, structuring, or negotiating one, you can also read more about my work on the [SAFE Lawyer](https://startuplawyer.com/safe-lawyer) page. ## Seed funding with convertible notes: the maturity date is the whole point A convertible note is debt. That sounds obvious, but it’s the source of most of the leverage. Economically, though, notes often look a lot like SAFEs because they commonly include a valuation cap and/or discount in addition to [interest](https://startuplawyer.com/startup-law-glossary/interest), a maturity date, and conversion in a “[qualified financing](https://startuplawyer.com/startup-law-glossary/qualified-financing)” above a dollar threshold. If the qualified financing doesn’t happen by maturity, you’re negotiating from a weaker position than you were on the day you took the money. ### Interest: usually not the economic driver, but it adds up Founders often fixate on whether the interest rate is 4% or 8%. Most of the time, the valuation cap and discount matter more, and the interest is secondary. But it becomes material if you’re extending notes repeatedly or you’re close to maturity, because accrued interest increases the conversion amount and can change pro rata math in the next round. ### Maturity: the negotiation you don’t want to have Theory: maturity is just a date and everyone extends. Reality: maturity is when a reasonable investor asks, “Why hasn’t the priced round happened?” and starts pricing in risk. In a good scenario, you extend maturity for more time. In a bad scenario, investors ask for better economics, extra rights, or immediate conversion into a shadow preferred round. From the investor’s perspective, maturity is downside protection and a forcing function. They’re optimizing for not being stuck indefinitely in a non-equity instrument with no liquidity path. If you’re doing a note, try to avoid a maturity date that’s shorter than your realistic fundraising and product timeline, and be careful with a qualified financing threshold that’s higher than what you could plausibly close in a tough market. If you are using a convertible note and need help reviewing, structuring, or negotiating one, you can also read more about my work on the [Convertible Note Lawyer](https://startuplawyer.com/convertible-note-lawyer) page. ## Accelerators and seed funding: don’t ignore the “small print” [Accelerators](https://startuplawyer.com/startup-law-glossary/accelerator) can be a great seed funding catalyst because they bundle a small check with a distribution channel: intros, a demo day, and credibility. But because the check is “small,” founders sometimes stop reading when they see the headline. Don’t. The program terms can include equity, a SAFE, or other rights that show up later when you’re trying to run a clean priced round. ### Common accelerator asks: MFN, pro rata, and “major investor” treatment The recurring pattern is “just give us MFN” or “just give us pro rata,” framed as standard. Sometimes it is standard. But it can also create a pre-allocation problem in your next round, especially if several early investors all have pro rata rights and the Series A lead wants to control allocation. If you have leverage, limit these rights to the next round only and make sure they don’t automatically expand into full investors’ rights agreements later. ## “Light preferred” seed rounds: when a priced round is worth it A light preferred seed round is just a priced equity round with fewer sharp edges than a full Series A. You sell preferred stock at a negotiated valuation, and you adopt a set of preferred rights and governance terms that will look familiar to [venture capital investors](https://startuplawyer.com/startup-law-glossary/venture-capitalist-vc). ### The seed terms that matter (and why they show up) Liquidation preference determines who gets paid first in an [exit](https://startuplawyer.com/startup-law-glossary/exit-event). In most founder-friendly seed rounds, you’re pushing for 1x non-participating, because it protects investor downside without double-dipping on upside. Protective provisions are investor veto rights over major actions. The negotiation is usually about scope, not whether they exist. Option pool sizing is where “valuation” quietly moves. If the investor requires a larger unallocated option pool to be created pre-money, you take that dilution immediately. Board composition and observer rights shape [control](https://startuplawyer.com/startup-law-glossary/control). Pro rata rights can be reasonable for a lead who is truly committing, but they can also crowd out new money if you hand them out too broadly. ## Seed funding red flags and what to do instead Most seed terms are not “good” or “bad” in the abstract. The red flags are the ones that (1) create hidden dilution, (2) hand out long-term rights with no lead investor, or (3) add leverage against you without buying you real time or certainty. A red flag is not automatically a deal-breaker, but it can become a real headwind if you accumulate several of them early, because later investors often ask you to unwind or harmonize the mess. ### Red flags in a SAFE round - **Different caps for different investors, with no “round close” plan:** you can accidentally sell far more of the company than you intended. *Fix:* set one cap/discount for the round, pick a target amount, and treat any change as a new close with a clean cutoff date. - **MFN that applies to side-letter rights (not just economics):** a single later side letter can retroactively upgrade everyone. *Fix:* narrow MFN to cap/discount terms only, or define exactly which rights are covered. - **Pro rata granted to lots of small checks:** it can crowd out your next lead and create allocation fights. *Fix:* reserve pro rata for major investors and limit it to the next equity financing. - **“We’ll clean it up later” paperwork:** missing approvals and scattered PDFs become expensive diligence work. *Fix:* run a simple closing checklist and keep one tracked schedule of SAFEs and side letters. ### Red flags in a convertible note round - **Short maturity relative to your runway and fundraising reality:** it can turn into investor leverage right when you have the fewest options. *Fix:* align maturity with a realistic timeline, and be explicit about extension mechanics up front. - **Qualified financing threshold that’s higher than what you can plausibly close:** you can end up with “stuck” debt that doesn’t convert. *Fix:* set a threshold that matches the kind of round you can actually lead at your stage. - **Multiple note forms with inconsistent definitions:** conversion becomes spreadsheet archaeology and invites disputes. *Fix:* standardize one form and one definitions section across investors. - **Hidden economics (cap/discount) plus extra rights:** if you’re giving both debt leverage and heavy side-letter rights, you’re paying twice. *Fix:* pick one “hard thing” per instrument: either the maturity clock, or the extra rights, and keep the rest plain. ### Red flags in accelerators and light preferred rounds - **Accelerator rights that pre-allocate your next round:** broad pro rata for small checks or MFN that upgrades rights, not just price. *Fix:* treat accelerator side letters like real financing terms and keep them “next round only.” - **Light preferred round with a big pre-money option pool requirement:** your effective valuation drops even if the headline valuation looks great. *Fix:* model the option pool impact alongside valuation and negotiate the pool size like it’s economics (because it is). - **Protective provisions that feel like Series A control at seed:** founders can end up with unexpected vetoes on day-to-day actions. *Fix:* narrow the veto list to true major actions and keep operational decisions with the board/common where market allows. ### If you see 2+ of these at once at your seed funding round When two or more red flags show up in the same seed round, the right move is usually not “negotiate harder” in the abstract. It’s to simplify the deal structure, standardize the paper, and reset expectations before you accumulate rights that a future lead investor will want to unwind. - Pick a single instrument and one set of economics for the rest of the round, and set a clear close date. - Standardize side letters (or stop issuing them) and create one tracked schedule of who has which rights. - If you already have multiple instruments outstanding, consider whether a priced seed round is the clean reset that saves time later. ## Cap table hygiene: how seed documents become a diligence problem By the time you’re raising a priced round, investors are not just underwriting your business. They’re underwriting whether your prior seed funding paperwork can survive diligence. The failure mode is rarely the SAFE itself. It’s the pile of inconsistent side letters, untracked MFN promises, and missing approvals that turns a clean cap table into a cleanup project. ### Stacking SAFEs (especially at different caps): what goes wrong Post-money SAFEs make each investor’s percentage easier to calculate, but that transparency cuts both ways. If you sell 8% on one cap and then sell another 8% on a different cap, nobody else is getting diluted. You are. So a “rolling” SAFE round can quietly become an outcome where founders absorb essentially all dilution from later SAFE checks. The fix is mostly process: pick one set of SAFE economics, set a target amount, and treat anything outside that box as a decision, not an accident. If you need to change price, consider doing it with a clear “round close” and a new round, or consider whether a priced seed round is the cleaner reset once you have enough investor interest. ### Side letters: the administrative nightmare and how to keep them bounded I keep seeing the same pattern: founders keep the SAFE form standard, then hand out side letters like party favors. That’s backwards. Side letters are often where the real long-term rights live, especially pro rata and MFN, so you should standardize them and track them like you would any other cap table item. Founder-friendly bounding moves: limit pro rata to the next equity financing, reserve it for “major investors,” and use one standard form of side letter rather than bespoke edits. Also, be explicit whether MFN covers only economics (cap/discount) or also side-letter rights. If you’re not explicit, you’re inviting a future disagreement about what “more favorable” means. ## Seed funding edge cases: down rounds, small exits, and “we never raised again” ### Small acquisition before a priced round A surprising number of companies sell before a Series A. In that scenario, your SAFEs may have a payout mechanic that is not simply “everyone gets their money back.” Read the liquidity event language so you understand whether investors get a cash-out amount, a conversion amount, or a choice, and where they sit in the payout stack. ### Down round or flat round If your next priced round is at or below the cap, the cap may not drive the economics at all, and the discount can become the meaningful lever. This is also where founders sometimes discover that “post-money ownership sold” estimates were just that: estimates, because the priced round’s price, option pool changes, and the SAFE’s exact conversion language interact in ways that are easy to misread. ### If you never raise a priced round If there’s no equity financing, a SAFE can sit outstanding for a long time, and a note can mature and force a negotiation. Either way, the instrument becomes part of your company’s long-term capital structure, not a temporary bridge. That’s why you should optimize for documents you can live with, not just documents you can close quickly. ## Seed funding closing checklist Even when the paper is “simple,” you still need real corporate approvals and a clean closing set. The goal is not paperwork for its own sake. The goal is that, at the next round, you can hand over a neat folder and not spend two weeks recreating history from email threads. ### SAFE round checklist - One standard SAFE form per investor, with the same economic terms unless you are deliberately running two separate “closes.” - Board approval (and stockholder approval if your charter, investor rights, or prior financing documents require it). - A tracked side-letter policy and one standard side letter template (if you are offering pro rata, MFN, or information rights). - A cap table that reflects every SAFE, including date, amount, cap/discount, and any side-letter rights. - A closing email and final PDFs saved in one place, so diligence is copy/paste later. ### Convertible note round checklist - One note form per investor plus any related purchase agreement, with consistent definitions (especially “qualified financing”). - Clarity on maturity: what happens at maturity, who can extend, and whether an extension changes economics. - Clarity on economics: cap and/or discount, and whether interest converts as well as principal. - Clarity on edge cases: what happens in an acquisition before conversion, and whether repayment is ever realistic. - A cap table schedule tracking principal, interest, and any amendments, so the conversion math is not a spreadsheet archeology project. ## People confuse these seed funding matters… *SAFE vs KISS:* A KISS ([Keep It Simple Security](https://startuplawyer.com/startup-law-glossary/kiss)) is another early-stage instrument with similar goals, but it often includes different control and conversion features depending on the template. *Valuation cap vs valuation:* The cap is a conversion-price mechanism, not a statement of what your company is “worth” today. It can feel like a valuation because it shows up in the math, but it only applies if your next round prices above it. *Seed funding vs Series Seed:* “Seed funding” is a stage label. “Series Seed” usually refers to a priced preferred round using seed-style documents and a preferred stock designation. ## A founder’s seed funding negotiation playbook ### 1) Set the “round box” before you negotiate individual checks Before you take the first $25k check, decide what the round is: target amount, instrument (post-money SAFE or note), cap and/or discount, and whether you will offer MFN or pro rata. Otherwise, you’ll negotiate the “round” one investor at a time, which is like trying to build a cap table by group chat. It technically works, but you won’t like the screenshot later. ### 2) Model dilution using the terms you’re actually signing Model at least three scenarios: (a) Series A at or below the cap, (b) Series A well above the cap, and (c) a smaller-than-hoped seed preferred round that converts everything. Include the option pool increase that a lead may ask for, because that dilution often lands on you, not on the new money. If you don’t have a model, you’re negotiating blind, even if you’re great at storytelling. ### 3) Negotiate the leverage points, not the cosmetic ones - SAFE: confirm it’s post-money, then negotiate cap/discount, and keep MFN and side-letter rights narrow. - Note: negotiate maturity, qualified financing threshold, and what happens at maturity before you argue about interest. - Any instrument: decide who gets pro rata and whether it’s limited to the next round. - Light preferred: watch the option pool and protective provisions as closely as valuation. ## The practical takeaway on seed funding If you remember one thing: in seed funding, the instrument doesn’t just price money. It prices future optionality. Pick the structure that keeps your next round leadable, then be disciplined about keeping terms consistent across investors. ### What you should do this week - If you’re about to start a SAFE round: pick the post-money form, set a cap/discount policy, and write down a one-page side-letter policy (what you will and won’t give). - If you already have multiple SAFEs outstanding: model conversion and dilution before you negotiate the next one, and consider whether a seed preferred round would simplify the cap table. - If you’re considering a note: sanity-check maturity against your runway and be explicit about extension mechanics. - If a lead is pushing for a priced round: focus your energy on option pool, liquidation preference, and protective provisions, not just headline valuation. ## Seed Funding FAQs ### Should I raise on a SAFE or a convertible note? If you’re choosing between them for seed funding, a post-money SAFE is usually the starting point because it closes fast and avoids maturity pressure while keeping dilution more predictable. Move to a convertible note when the investor needs a maturity date (or you’re doing a true bridge where the clock is part of the deal), and you’re comfortable with the leverage that creates if the next financing takes longer than planned. ### What is a valuation cap in a SAFE? A valuation cap sets the maximum valuation used to calculate the SAFE’s conversion price, which usually means the investor gets more shares if your next priced round is above the price cap. If your next round prices below the price cap, the price cap often doesn’t drive the math, and the SAFE converts based on the round’s actual price (or discount, if applicable). ### What is a post-money SAFE and why does it matter? A [post-money](https://startuplawyer.com/startup-law-glossary/post-money-valuation) SAFE measures the SAFE investor’s ownership after the SAFE money is included, which makes dilution more predictable at signing. It matters because post-money SAFEs reduce “stacking surprises,” where additional SAFEs change earlier investors’ and founders’ expected ownership percentages. ### What are standard SAFE terms investors ask for? Most investors focus on valuation cap and/or discount, and some ask for MFN protection. Separately, many meaningful “asks” show up in side letters, like pro rata rights or information rights, so you should negotiate those with the same seriousness as the headline economics. ### What’s the biggest founder mistake in seed funding SAFEs? Stacking multiple SAFEs with caps without modeling combined dilution is the most common, expensive mistake. The fix is simple: treat all SAFEs as one round, keep terms consistent, and update your cap table model before you sign the next one. ### What happens if a SAFE never converts? If there’s never a priced equity financing, the SAFE can remain outstanding until another trigger happens, like a liquidity event or dissolution, depending on the form. That’s why you should understand the acquisition payout mechanics, not just the priced-round conversion. ### When should I do a priced seed round instead of SAFEs or notes? A priced seed round can be worth it when you have a lead who wants to set terms, you want to clean up a messy stack of SAFEs/notes, or you need the signaling of “real” preferred stock for the next financing. You’ll spend more on docs and negotiate more terms, but you often buy clarity and avoid cap table drag later. ### Do SAFEs give investors control rights? Usually not. A standard SAFE is primarily economic and does not, by itself, grant voting rights, board seats, or protective provisions. But control rights can sneak in through side letters (information rights, observers) or arrive later automatically when the SAFE converts into preferred stock in a priced round. ### Should I give pro rata rights in a SAFE side letter? It can be reasonable for a true lead or a large check, because it rewards conviction and helps the investor justify doing diligence early. If you give it, keep it limited to the next equity financing and reserve it for major investors, or you risk crowding out new money in your next round. ### What is a “qualified financing” in a convertible note? It’s the defined priced round that triggers automatic conversion, usually a preferred stock financing above a minimum dollar amount. The threshold matters because it determines whether a smaller round converts the note automatically or leaves you stuck with debt that can mature. ### Can I mix SAFEs and convertible notes in the same seed funding round? You can, but it’s usually a self-inflicted complexity tax. Mixing instruments makes it harder to explain your cap table, and MFN clauses can create unexpected “cross-pollination” of terms. If you need two instruments, do it deliberately and track exactly who has what rights. ### Are accelerator terms “standard,” or can I negotiate them? Many accelerators do have standard forms, and you should expect less flexibility than a one-off angel SAFE. That said, “standard” doesn’t mean “uniform,” because programs vary on whether the investment is equity or a post-money SAFE, and whether there’s an attached pro rata side letter. If you’re comparing programs, ask for the actual documents early so you’re not learning the real tradeoffs the day before you accept. ### What should I watch for in accelerator side letters? The biggest issues are usually pro rata rights, MFN clauses, and information rights, because those terms can pre-allocate your next round or create admin burdens. If you agree to pro rata, try to keep it limited to the next equity financing and use a standard calculation formula rather than a hard ownership target. Also, be clear whether MFN covers only economics (cap/discount) or also side-letter rights. ### Do accelerator deals make a Series A harder? They can help if the accelerator improves your fundraising surface area: intros, credibility, and a tighter narrative. They can hurt if the deal adds special rights that your Series A lead now has to diligence, harmonize, or buy out. The practical rule is that you want one clean instrument and, if there are side letters, one standardized set of side-letter rights you can explain in a sentence. ### What is a “light preferred” seed round? It’s a priced seed round where investors buy preferred stock now, but the documents and negotiations are typically slimmer than a full NVCA-style Series A package. You’re paying more legal and negotiation cost up front in exchange for clarity on valuation, a cleaned-up cap table, and defined governance terms. Many founders use “Series Seed” style documents as the lightweight template for this. ### In a priced seed round, what terms matter more than valuation? Option pool size and whether it’s created pre-money can move your effective valuation more than the headline number. Liquidation preference structure and protective provisions shape your downside and control in real exits and real board moments, not just in spreadsheets. So if you’re spending negotiation time, spend it there first. ### When is a priced seed round better than a post-money SAFE? A priced seed round is often better when you have a real lead, you’re raising enough money that “defer the hard terms” stops being worth it, or you need to clean up stacked SAFEs/notes before a larger financing. It can also be the right move when you want a functioning governance setup now, rather than waiting for a Series A to define it. If you’re raising smaller checks and speed is the priority, a post-money SAFE can still be the cleanest default. ## Related Topics If you are working through seed financing structure, dilution, investor rights, or the path from SAFEs and notes to a priced round, these guides are a helpful next place to go. - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) ## Questions About Seed Funding, SAFEs, or Convertible Notes? If you would like to talk through a seed round, SAFE, convertible note, or priced-seed financing issue, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are actively raising a seed round and deciding between SAFEs, notes, or a priced seed financing, you can also learn more about my work on the [Seed Funding Lawyer](https://startuplawyer.com/seed-funding-lawyer) page. If you are using a SAFE, my [SAFE Lawyer](https://startuplawyer.com/safe-lawyer) page may be a helpful next step. If you are using a convertible note, you can also read more about my work on the [Convertible Note Lawyer](https://startuplawyer.com/convertible-note-lawyer) page. If you need broader support with financing strategy, cap table issues, or the overall fundraising process, you can also read more about my work as a [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer). And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) **Published:** May 2, 2026 **Author:** Ryan Roberts **Content:** - [What this venture capital term sheet guide covers](#aioseo-what-this-venture-capital-term-sheet-guide-covers-3) - [What a venture capital term sheet is](#aioseo-what-a-venture-capital-term-sheet-is-6) - [Sample venture capital term sheet](#aioseo-sample-venture-capital-term-sheet-12) - [How to read a venture capital term sheet fast](#aioseo-how-to-read-a-venture-capital-term-sheet-fast-16) - [Venture capital term sheet economics: what changes your payout](#aioseo-venture-capital-term-sheet-economics-what-changes-your-payout-26) - [Venture capital term sheet control terms: who can say “no”](#aioseo-venture-capital-term-sheet-control-terms-who-can-say-no-45) - [Venture capital term sheet process terms: no-shop, fees, and the closing timeline](#aioseo-venture-capital-term-sheet-process-terms-no-shop-fees-and-the-closing-timeline-79) - [What to negotiate in a venture capital term sheet](#aioseo-what-to-negotiate-in-a-venture-capital-term-sheet-117) - [What people confuse with or in a venture capital term sheet](#aioseo-people-confuse-with-or-in-a-venture-capital-term-sheet-131) - [Venture capital term sheet red flags from the founder perspective](#aioseo-venture-capital-term-sheet-red-flags-from-the-founder-perspective-137) - [The venture capital term sheet practical takeaway](#aioseo-the-venture-capital-term-sheet-practical-takeaway-145) - [Venture Capital Term Sheet FAQs](#aioseo-venture-capital-term-sheet-faqs-153) - [Related Topics](#aioseo-related-topics-193) - [Questions About a Venture Capital Term Sheet or Priced Round?](#aioseo-questions-about-a-venture-capital-term-sheet-or-priced-round-202) If you are a founder with a *[venture capital term sheet](https://startuplawyer.com/startup-law-glossary/term-sheet)* in your inbox, you’re not “almost closed.” You’re at the moment where a few pages of business terms quietly lock in years of economics and control for your startup. A VC term sheet is a short summary of the key terms of a proposed [preferred stock](https://startuplawyer.com/startup-law-glossary/preferred-stock) financing and it becomes the roadmap for the definitive documents, often based on [NVCA](https://nvca.org/model-legal-documents/)-style forms. I’m assuming you’re a founder or CEO of a Delaware C-Corp in a priced round (often Series A, sometimes Series Seed), and you’re negotiating with an institutional lead. Even that isn’t your exact fact pattern, this article will still be useful. Here’s a useful decision rule: if a term affects (1) who gets paid first at exit or (2) who can block major company actions, treat it as “real,” even if the term sheet says it’s non-binding. ## What this venture capital term sheet guide covers This is a founder-focused, investor-aware walkthrough of the core terms you’ll see in a venture capital term sheet, what’s usually standard, and where negotiation actually changes outcomes. It’s written to help you respond to a term sheet quickly without missing the landmines. It does not try to replace your counsel, model your exact cap table, or predict “market” for your specific company. If you’re negotiating a down round, multiple liquidation preference stack, venture debt, or a structured secondary, you’ll want a more tailored analysis. If you are preparing for a priced round and need broader support with financing strategy, cap table issues, or the overall fundraising process, you can also read more about my work as a [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer). ## What a venture capital term sheet is A venture capital term sheet is a short, mostly non-binding letter that summarizes the key economics and control terms for an equity financing. In most institutional priced rounds, the term sheet maps to the definitive documents (charter, stock purchase agreement, investor rights, voting agreement, and ROFR/co-sale), often built from [NVCA model legal documents](https://startuplawyer.com/startup-law-glossary/nvca-docs). Most of the “business deal” terms are labeled non-binding, but you should assume the parties will treat them as the baseline during drafting. Also, certain provisions are commonly written to be binding, especially confidentiality and exclusivity/[no-shop](https://startuplawyer.com/startup-law-glossary/no-shop-clause). ### The theory vs. reality of “non-binding” In theory, you can sign and still walk away. In reality, once you sign a venture capital term sheet, everyone starts spending money and time as if the deal is “the deal,” and big term changes late can kill trust or reset the process. Also, be careful with anything labeled “binding,” and be clear about what gets superseded later. Delaware case law can, in some circumstances, treat term sheet provisions as surviving unless the definitive documents clearly replace them. ## Sample venture capital term sheet **How to use this:** Skim the sample venture capital term sheet table, then scroll back to it as you read the economics, control, and process sections below so you can match each concept to the clause. The table below is an example of how common venture capital term sheet terms are often presented in a priced venture capital preferred stock round. It’s for education only and should not be treated as legal advice or “market” for your deal. **Term****Sample language****Founder notes (what to watch)****ECONOMICS**Type of securitySeries \[A\] Preferred StockMake sure the term sheet matches a priced preferred round (not a SAFE/note) and that the “as converted” mechanics are clear.Amount raised$\[X\] total investment (Lead: $\[Y\])If there are multiple closings, confirm who controls terms and how allocations work.Pre-money valuation$\[Pre\] on a fully diluted basis (including the option pool)“Fully diluted” definitions drive dilution. Confirm whether the increased option pool is included pre-money.Post-money valuation$\[Pre + New money\] (for reference)Helpful for sanity-checking ownership math and for comparing offers.Price per share$\[PPS\] per share (based on $\[Pre\] / \[FD shares\])Ask for the implied cap table showing exactly how PPS is calculated.Option poolIncrease option pool to \[X\]% of fully diluted cap *prior to closing*This is often a major hidden economic term. Tie size to a 12–18 month hiring plan if possible.Liquidation preference\[1x\] non-participating; preference equals original purchase price, plus declared but unpaid dividends (if any)Model “good but not huge” exits. If participation appears, ask about caps and conversion thresholds.DividendsNon-cumulative dividends at \[X\]% when, as, and if declared by the Board; payable on an as-converted basisWatch for *cumulative* dividends that accrue whether or not declared and effectively increase the preference stack.Anti-dilutionBroad-based weighted average anti-dilution; standard exceptions (options, strategic issuances, etc.)Confirm it’s weighted average (not full ratchet) and review the exception list carefully.Pro rata rightsMajor investors have the right to purchase their pro rata share in future financings (subject to customary limits)Consider limiting pro rata to “Major Investors” above a meaningful threshold so rights don’t proliferate across dozens of small holders.**CONTROL**Board composition\[3\]-person Board: \[1\] common, \[1\] preferred, \[1\] independent mutually agreedAvoid predictable deadlocks. Be specific about how/when the independent is selected.Protective provisionsApproval of \[majority\] of Series \[A\] required for: new senior stock, debt > $\[X\], sale of company, charter amendments adverse to preferred, etc.The veto list is normal; overbreadth is the risk. Push operational items out or add thresholds.Drag-alongSale approved by Board + \[preferred %\] + \[common %\] requires all holders to support the transaction (customary protections)Confirm the approval thresholds and that minority holders get customary notice and consideration protections.Information rightsDelivery of annual budgets, quarterly financials, and other customary reporting to major investorsKeep reporting realistic. Ensure confidentiality obligations and competitive safeguards are addressed.**PROCESS**Exclusivity / no-shopCompany agrees not to solicit or negotiate alternative financings for \[30–60\] daysThis is a leverage shift. Limit duration, define what inbound interest you can respond to, and clarify when it ends.ConfidentialityTerm sheet and negotiations are confidential (subject to customary exceptions)Ensure you can share with existing investors and advisors, as needed.Drafting responsibilityCompany counsel drafts the first set of definitive documents; investor counsel reviews and negotiatesCompany counsel typically coordinates and drafts (or manages drafting of) the first set of documents. In practice, either side may draft depending on the round and the lead. Confirm who is “driving” the docs and timeline, and aim for a tight issue list so the first draft doesn’t sprawl.Expenses / investor counsel reimbursementCompany reimburses investor counsel legal fees and expenses up to $\[Cap\], payable *only at closing* (no reimbursement if the deal does not close)Fee caps are common; sometimes investor counsel fees aren’t reimbursed. Negotiate a clear cap, confirm it covers only “reasonable” fees, and avoid language that requires payment even if the financing dies.Conditions to closingSatisfactory diligence; execution of definitive docs; board and stockholder approvals; creation of option plan; etc.Ask what “satisfactory diligence” means in practice and what issues are already known.ExpirationThis term sheet expires at \[5pm PT\] on \[Date\] unless extended in writingUse the deadline to keep momentum, but don’t let an artificial clock force acceptance of bad structure.## How to read a venture capital term sheet fast When you’re triaging a term sheet, I’d bucket terms into (1) economics, (2) control, and (3) process. Start with the clauses that change your exit math, then the clauses that give someone a veto, then the clauses that control the timeline. ### A 10-minute checklist before you react to the headline valuation - Confirm the security: [Series A Preferred](https://startuplawyer.com/startup-law-glossary/series-a-preferred-stock), [Series Seed](https://startuplawyer.com/startup-law-glossary/series-seed-financing), or something bespoke. - Build the “[fully diluted](https://startuplawyer.com/startup-law-glossary/fully-diluted-basis)” cap table including the [option pool](https://startuplawyer.com/startup-law-glossary/option-pool). - Read [liquidation preference](https://startuplawyer.com/startup-law-glossary/liquidation-preference) and [participation](https://startuplawyer.com/startup-law-glossary/participating-preferred-stock) like a payout waterfall. - Scan [anti-dilution](https://startuplawyer.com/startup-law-glossary/anti-dilution) and [pay-to-play](https://startuplawyer.com/startup-law-glossary/pay-to-play) for “down round” risk. - Check [board composition](https://startuplawyer.com/startup-law-glossary/board-of-directors) and [protective provisions](https://startuplawyer.com/startup-law-glossary/protective-provisions) for veto points. - Find [no-shop](https://startuplawyer.com/startup-law-glossary/no-shop-clause) and expiration so you know your clock. ## Venture capital term sheet economics: what changes your payout ### Valuation is visible. Option pool mechanics are expensive. The headline pre-money valuation tells you the price. It doesn’t tell you the dilution. That dilution comes from the fully diluted capitalization the investor assumes, including the size and timing of the option pool. If the term sheet requires a “refreshed” option pool pre-money, you’re trading ownership for hiring flexibility, and the cost usually comes out of common holders first. ### Pre-money vs. post-money valuation (and why founders get tripped up) [Pre-money valuation](https://startuplawyer.com/startup-law-glossary/pre-money-valuation) is the value of the company *before* the new investment goes in. [Post-money valuation](https://startuplawyer.com/startup-law-glossary/post-money-valuation) is the value *after* the investment. The basic relationship is: **Post-money = Pre-money + New money**. Where founders get burned is that your *dilution* depends on the price per share and the “fully diluted” share count the investor uses, often including the existing option plan and any increase required by the term sheet. In other words, you can agree on a pre-money number and still end up selling more of the company than you think if the fully diluted capitalization is defined broadly. ### Option pool increase: the quiet economics term If the term sheet says the company will “increase the option pool to X% on a pre-money basis,” that usually means the pool gets topped up *before* the investor buys shares, so the dilution lands [primarily on founders and other common holders](https://startuplawyer.com/startup-law-glossary/option-pool-overhang). If the pool is increased post-money, the dilution is shared across everyone (including the new investors) based on the post-closing ownership. A practical founder move is to ask: “What specific hires does this pool support over the next 12–18 months, and what’s already granted?” Then propose a pool sized to that plan (or a smaller pre-money pool plus a board-approved increase later). This is one of the cleanest ways to improve your economics without arguing about headline valuation. ### Liquidation preference: downside protection and sometimes upside capture Liquidation preference is the term that decides who gets paid first in a sale or liquidation of the company. The most common structure is “1x,” meaning investors get their money back first (or they can convert to common and take their pro rata share, whichever is better). [Participating preferred](https://startuplawyer.com/startup-law-glossary/participating-preferred-stock) (sometimes called “double dip”) typically means the investor gets their 1x preference off the top *and then* also shares in remaining proceeds with common, which can materially reduce founder payouts in mid-range exits. For example, on a $2M sale where the investor put in $1M for 25%: with 1x non-participating they may take $1M; with 1x participating they may take $1M plus 25% of what’s left. ### Dividends: usually “boring,” but read the fine print Dividends in venture financings are often more about *preventing* cash from being paid to common without also paying preferred, not about investors expecting yearly payouts. The NVCA-style approach commonly ties preferred dividends to dividends paid on common (paid “on an as-converted basis”). Cumulative dividends are the version to watch: they can accrue each year whether or not the company declares dividends, and then get paid later (sometimes at exit), effectively increasing what preferred is owed before common sees proceeds. They’re not always a deal-killer, but they can quietly increase the preference stack in a long time-to-exit scenario. ### Anti-dilution: protection in a down round Anti-dilution provisions adjust the preferred stock’s conversion price if you later issue shares at a lower price (a “[down round](https://startuplawyer.com/startup-law-glossary/down-round)”). The practical effect is that earlier preferred investors receive more shares upon conversion, shifting dilution onto common and other holders. Broad-based weighted average anti-dilution is a common middle ground: the adjustment depends on both the price drop *and* how many new shares are sold (bigger down rounds cause bigger adjustments). Full ratchet is harsher because it effectively resets conversion as if the prior round happened at the new low price, regardless of the size of the down round. If you only model one thing, model an exit where the outcome is “good but not huge” (because that’s where preferences, participation, and dividends can dominate). Then move to the control terms, because even a great economic deal can feel terrible if governance slows the company down. ## Venture capital term sheet control terms: who can say “no” ### Board composition: avoid governance deadlocks [Board composition is where “control” becomes real](https://startuplawyer.com/board-of-directors/board-composition-sticky-control-shifts). A classic early structure is 3 seats: one common (you), one preferred (the lead), and one independent. That can work well, but only if the independent is truly independent and you have a workable process to pick them. In practice, I keep seeing founders accept “two founders, two investors, pick the independent later” and then get stuck in a slow-motion tie. If you’re choosing between a slightly higher valuation and a board structure that lets you make decisions quickly, the board structure often pays you back more than the valuation headline. ### Founder vesting (reverse vesting) and acceleration In a priced VC round, you may see founders asked to “(re)vest” some or all of their common stock under a vesting schedule. This is often structured as *r[everse vesting](https://startuplawyer.com/startup-law-glossary/reverse-vesting)*: you already own the shares, but the company has a repurchase right if you leave before vesting. Why it shows up: investors want to know the founding team will be around to build what they just funded. What’s negotiable is usually the scope (all shares vs a portion), any “credit” for time already served, the length of the schedule, and what counts as a good leaver/bad leaver concept in the definitive documents. Also watch [accelerated vesting](https://startuplawyer.com/startup-law-glossary/accelerated-vesting) on a sale of the company. “Single-trigger” acceleration (vests on a sale) is rarer in institutional rounds; “double-trigger” (sale plus termination without cause / good reason) is more common. The goal is to avoid a situation where the company sells and founders are pushed out with a large portion of their equity still unvested. ### Protective provisions: the veto list that shapes your flexibility [Protective provisions](https://startuplawyer.com/startup-law-glossary/protective-provisions) (also called “veto rights”) require a class vote of preferred stockholders before you take certain actions. Think of them as speed bumps on major decisions, not day-to-day operations. - Issuing new stock or a new series of preferred - Changing the charter in ways that harm the preferred class - Taking on debt over a threshold - Selling the company or substantially all assets - Paying dividends or repurchasing stock From the investor side, these rights are mostly about preventing “value leakage” and making sure you can’t unilaterally change the deal they just priced. The tradeoff is real: you’re trading speed and autonomy for investor comfort and, often, a willingness to lead the round. ### Drag-along rights: how exits get approved (and who can force the vote) [Drag-along rights](https://startuplawyer.com/startup-law-glossary/drag-along-rights) are meant to prevent a small group of stockholders from blocking a company sale that has been properly approved. In plain English, if the required approvals are met, stockholders agree to vote for the deal and sign the sale documents. The founder-sensitive parts are (1) *who* can approve a sale that triggers drag-along (board + preferred + common, or something else) and (2) what protections minority holders get (same deal economics, reasonable escrow exposure, no unexpected personal liability). A drag-along can help you get to an exit; liquidation preference determines what you actually take home. - Avoid “preferred-only” drag-along; aim for approvals that include both preferred and common (and board approval). - Confirm everyone gets the same form of consideration per share class and customary notice of the transaction. - Limit small-holder obligations: escrow caps, several (not joint) liability, and no non-compete/IP “surprises” imposed on minority holders. ### Information rights and pro rata: the “stay close” package [Pro rata rights](https://startuplawyer.com/startup-law-glossary/pro-rata) give investors the ability to maintain their ownership in future financings. Founders sometimes treat this as optional “nice to have” language, but in many institutional rounds it’s part of the core bargain: early risk gets you the right to keep backing the company if it works. If your cap table is getting crowded, you can sometimes negotiate pro rata to apply only to “major investors” or above a dollar threshold. The key is to avoid giving 30 small investors paperwork rights that slow down every future round. ### “Major Investor” thresholds: a small definition with big consequences A lot of “rights” in venture documents (information rights, pro rata rights, sometimes certain consent rights) are limited to a defined set of holders, often called “[Major Investors](https://startuplawyer.com/startup-law-glossary/major-investor).” That definition is usually based on either (1) a minimum dollar amount invested or (2) a minimum percentage ownership. Why founders should care: if the threshold is too low, you can end up with dozens of people entitled to reports, notices, and pro rata paperwork. A common founder-friendly approach is to set a meaningful threshold and/or let the company update the Major Investor list as holdings change, so rights don’t “spray” across an increasingly crowded cap table. ### ROFR/co-sale and founder secondary sales: what changes after VC money Most institutional rounds include a [Right of First Refusal](https://startuplawyer.com/startup-law-glossary/right-of-first-refusal) (ROFR) and co-sale (sometimes called “[tag-along](https://startuplawyer.com/startup-law-glossary/tag-along-rights)”) framework in the definitive documents. In plain English: if a founder wants to sell shares, the company and/or certain investors typically get the first chance to buy them, and other investors may have the right to participate alongside the sale. If you’re hoping for founder liquidity (a secondary sale) as part of the round, assume it’s a negotiated term. Many term sheets either prohibit founder secondary entirely at that stage or allow only a small, structured amount, because investors want your incentives tied to building value, not “taking chips off the table” too early. Practical points to watch: who holds the ROFR (company, major investors, or both), how long they have to decide, whether there’s a minimum transfer size (to avoid constant admin), and how expenses are handled. Even if secondary isn’t on the table now, getting clean transfer mechanics makes future liquidity discussions easier. ## Venture capital term sheet process terms: no-shop, fees, and the closing timeline The clauses that feel “administrative” often have the sharpest teeth because they control your leverage. Exclusivity/no-shop typically prevents you from actively soliciting or negotiating alternative deals for a set period, while confidentiality limits what you can share. If you have a term sheet in hand, this is often the best moment to get a quick legal review, because once you sign a no-shop, you’ve traded away time and leverage. A short review can also help you send a clean issue list back to the lead instead of negotiating by email thread. ### No-shop/exclusivity: what it really restricts A no-shop clause is less about “being polite” and more about leverage: once you agree, you’re giving the lead investor time to diligence and paper the deal while limiting your ability to create a real alternative. Most no-shops restrict you from actively soliciting competing offers and, in many cases, from negotiating or encouraging alternative financings. The gray area is usually “passive” inbound interest, what happens if another investor reaches out, or you were already mid-conversation. - Keep the term short (often measured in weeks, not months), and tie extensions to real drafting/diligence progress. - Define what you can do with inbound interest (e.g., you can listen; you can’t negotiate) and what you must disclose (if anything). - Limit who is bound (company and founders) and avoid pulling in every employee/advisor unnecessarily. - Make sure the no-shop terminates automatically if the investor stops moving the deal forward. If you want outside help anywhere, start here: review the no-shop language *before* you sign, because fixing it later is much harder. If you are negotiating a priced round and want help reviewing or responding to the term sheet itself, you can also learn more about my work on the [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page. ### Confidentiality: what you can share and with whom Confidentiality provisions usually exist to prevent term sheet “shopping” and to keep sensitive diligence materials from spreading. They should still let you share the term sheet and diligence materials with your lawyers, accountants, and key advisors who are under their own duty of confidentiality. If you need to brief existing major investors or board members, the confidentiality clause should accommodate that too. If it doesn’t, fix it early—because you don’t want to be forced to choose between compliance and informed governance. ### Fees and investor counsel reimbursement: caps, timing, and fairness In many VC rounds, the company reimburses the lead investor for a portion of their legal fees at closing. That’s not automatically “unfair”, it’s often the price of getting a lead to run point, but it should be bounded and predictable. Sometimes you can push back on this, but it can be difficult to get. The problems happen when fee reimbursement is uncapped, payable even if the deal dies, or written so broadly that it covers unrelated work. If you’re trying to keep your round clean and your burn under control, this is a clause worth tightening. - Include a clear cap (and confirm whether it includes taxes and expenses). - Make reimbursement payable *only at closing*, and not if the financing doesn’t close. - Limit it to “reasonable” fees for the financing (not side projects or portfolio work). - If there are multiple investors, clarify whether reimbursement is only for lead counsel (not everyone’s counsel). A focused term sheet review can also catch fee language that should be capped or conditioned on closing, before it becomes an avoidable cost. ### Who drafts the definitive documents after the venture capital term sheet is signed In many venture financings, company counsel coordinates the closing and drafts (or manages drafting of) the first pass of the definitive documents, with investor counsel marking them up. In others, especially when a lead investor has a strong preference, investor counsel may draft first. Either can work…the key is clarity. Before you sign exclusivity, ask who is driving the paper and what the expected drafting schedule is. The fastest deals usually have a short term sheet issue list, a clean diligence folder, and one person empowered to make decisions…so each new doc draft doesn’t reopen settled business points. ### The closing timeline: a practical week-by-week map 1. **Week 0 (term sheet):** agree the business deal, decide what’s binding, and set a realistic no-shop period. 2. **Week 1 (diligence):** investor diligence (corporate docs, IP, financials, key contracts) and cleanup of obvious gaps. 3. **Weeks 2–3 (drafting):** first drafts of charter and deal docs, issue-spotting, and negotiation of open points. 4. **Weeks 3–4 (approvals + closing):** board approval, stockholder consents, signatures, funds flow, and filing the amended charter. This varies by deal, and the map above is just a baseline. Closings slow down when corporate housekeeping is messy (missing signed founder docs, unclear cap table), IP isn’t buttoned up (no assignment agreements), key customer contracts raise issues, or drafting balloons into renegotiating business points. If you want speed, prep diligence early and keep open issues to a short, prioritized list. ### How long does it take to negotiate a term sheet and close? Even when a term sheet moves quickly, closing a priced round usually takes longer because you still have diligence, drafting, and approvals. The week-by-week map above is a practical baseline, your deal can be faster or slower depending on complexity, responsiveness, and whether new issues pop up. ### Can you change a term sheet after signing? Sometimes. If diligence surfaces a real issue, a major term was misunderstood, or the round structure changes, parties may adjust terms. But if you try to renegotiate core economics or control without a clear trigger, expect the investor to treat it as reopening the deal, and plan for time cost and relationship cost. ## What to negotiate in a venture capital term sheet What to negotiate in a term sheet depends less on “is it negotiable” and more on your leverage and the investor’s priorities. If you have competing interest or real momentum, you can often trade across terms: you give a little on price, they give you cleaner governance, or vice versa. If you have one offer and a short runway, you should focus on the few terms that can permanently distort incentives or exit outcomes. ### The 80/20 negotiation list - Liquidation preference and participation (model a few exit values). - Option pool size and whether it’s pre-money or post-money. - Board composition and how the independent gets chosen. - Protective provisions scope and thresholds. - Anti-dilution and any pay-to-play mechanics. - No-shop length, who it binds, and what “passive” inbound interest means. Founders commonly over-optimize valuation and under-optimize “clean structure.” A slightly lower valuation with a clean 1x non-participating preference, a sane board, and a reasonable veto list can be a better outcome than a flashy valuation paired with terms that drag on every major decision. ### How much can you negotiate in a venture capital term sheet? How much can you negotiate in a term sheet? Usually more than you think on structure, and less than you think on “market” terms when you have weak leverage. Early rounds with strong demand can be quite founder-friendly. Later rounds, or rounds done under time pressure, often shift leverage toward investors, and the term sheet reflects that. A useful framing is: “I’m not trying to win every point. I’m trying to keep the exit math and governance clean so the next round is easier.” That tells a serious investor you’re optimizing for long-term fundability, not ego. ## What people confuse with or in a venture capital term sheet - A [SAFE](https://startuplawyer.com/startup-law-glossary/safe) or convertible note: those are typically pre-priced instruments that convert later; a venture capital term sheet usually covers a priced preferred stock round. - A cap table “ownership percentage”: your percentage is not your payout. Preferences and participation change what your equity is worth in dollars at exit. - A commitment to fund: most term sheets say they’re not a commitment to invest until definitive documents are signed and conditions are met. - “Standard terms”: standard for one stage, sector, or year may be aggressive in another. The question is whether the term fits your leverage and your future financing path. ## Venture capital term sheet red flags from the founder perspective - Participating preferred with no cap, especially stacked on prior preferences - Full ratchet anti-dilution outside true rescue financing - A board structure that creates a predictable deadlock or investor control (especially early in the startup’s lifespan) - Overbroad protective provisions that creep into operational decisions - A long no-shop with vague “no conversations” language and no clear end conditions A “red flag” doesn’t mean the investor is bad or the term sheet is not executable. It means the term meaningfully shifts outcomes, so you should model it, ask why it’s there, and decide what you’re trading to accept it. ## The venture capital term sheet practical takeaway **If you remember one thing:** the venture capital term sheet is where your economics and governance get set. Don’t let the valuation headline distract you from the terms that determine payout and decision-making later. ### What you should do this week - **If you have one offer**: ask counsel to model liquidation preference, option pool dilution, and board control before you agree to no-shop. - **If you have multiple interested investors**: run a short, disciplined process so the lead can’t use timeline pressure to win concessions late. - **If you’re raising under time pressure**: pick the one or two terms you can’t live with (often participation, harsh anti-dilution, or a deadlocking board) and spend your negotiation budget there. - **In all cases**: reply to the term sheet with a clean issue list. Don’t renegotiate in a 30-email thread. ## Venture Capital Term Sheet FAQs ### What is a venture capital term sheet? A venture capital term sheet is a short document that summarizes the key economics (price, dilution, preferences) and control terms (board, veto rights) of a proposed preferred stock financing. It’s usually not the final contract, but it sets the baseline for the definitive documents. ### Is a VC term sheet legally binding? Most business terms in a VC term sheet are labeled non-binding. However, certain provisions are often binding (commonly confidentiality and no-shop/exclusivity), and the non-binding terms usually become the starting point for the final legal documents, so treat them as consequential. ### What parts of a venture capital term sheet are typically binding? Typically binding sections include confidentiality, no-shop/exclusivity, governing law, and sometimes cost/expense or access-to-information language. Always confirm which sections are expressly binding and how long they last. ### What should founders negotiate first in a venture capital term sheet? Start with terms that change payout and control: liquidation preference/participation, option pool size and timing, board composition, protective provisions, and no-shop length. If you only have negotiation leverage for a few points, spend it there rather than on cosmetic language. ### What is liquidation preference, and why does it matter? Liquidation preference sets who gets paid first in an exit (and how much) before common stockholders share in proceeds. It matters most in low-to-mid exits, and it can matter a lot more than valuation if your outcome isn’t a massive win. ### What is participating preferred? Participating preferred generally means preferred holders get their liquidation preference first, and then also share in the remaining proceeds with common as if they had converted. Because it can reduce common’s share in many “good but not huge” exits, founders often try to avoid it or negotiate a cap. ### What is anti-dilution protection? Anti-dilution provisions protect investors if a later financing is priced below the current round by adjusting the conversion price of preferred stock. Broad-based weighted average is generally more founder-friendly than full ratchet, which can be significantly more punitive. ### What is the option pool “shuffle” in a VC term sheet? The “option pool shuffle” is founder slang for requiring the company to increase its equity incentive pool before the financing (pre-money), which effectively shifts more dilution onto existing stockholders. The right pool size should be driven by a hiring plan, not a default percentage. ### What are protective provisions? Protective provisions are investor veto rights that require preferred approval for certain major actions (like issuing new preferred stock, taking on significant debt, or selling the company). They’re normal in VC rounds, but the scope and thresholds can dramatically affect how fast you can run the business. ### What are drag-along rights? Drag-along rights require stockholders to support and sign onto a sale of the company once it has been approved by the required groups (often the board plus specified percentages of preferred and common). They’re designed to prevent holdouts, but founders should pay close attention to the approval thresholds and the limits on minority holders’ post-closing obligations (escrow, reps, and liability). ### What are pro rata rights? Pro rata rights give an investor the ability to buy enough shares in future rounds to maintain their percentage ownership. This can be important to investors, and it can affect how much allocation is left for new investors in later rounds. ### What is a “Major Investor” threshold, and why does it matter? “Major Investor” is usually a defined term in the investor rights agreement that limits certain rights (like information rights and pro rata) to holders above a minimum investment or ownership threshold. If the threshold is too low, you can end up administering these rights for dozens of small holders, which adds friction to future financings, so the definition is worth getting right. ### What is a no-shop clause, and should I agree to it? A no-shop (exclusivity) clause limits your ability to solicit or negotiate alternative deals for a period of time while the investor drafts and diligences the financing. It’s common, but founders should pay attention to length, scope (who it binds), what inbound interest you can respond to, and what ends the restriction. ### Do I need a lawyer to review a venture capital term sheet? If you’re raising a priced VC round, a lawyer review is strongly recommended because small wording differences can translate into major economic or control shifts in the definitive documents. At minimum, you want someone who can model exit outcomes and spot governance deadlocks before you sign. If you wait to engage a lawyer after your term sheet is signed, your lawyer will have less power to negotiate on your startup’s behalf. ### What is founder reverse vesting (and why does it show up in a venture capital term sheet)? Reverse vesting is when you already own founder shares, but the company has the right to repurchase unvested shares if you leave before a vesting schedule is completed. Investors often ask for it to keep incentives aligned after a priced round. What’s negotiable is usually the portion subject to vesting, credit for time already served, and whether there’s double-trigger acceleration on a sale. ### What should I send my lawyer for a review of a venture capital term sheet? Send the clean term sheet PDF (and any edits you’ve already discussed), your current cap table, and a note on any “must-have” outcomes (for example: board control, option pool size, or avoiding participating preferred). If there are multiple offers, include the competing term sheets so your counsel can help you compare tradeoffs efficiently. ### How fast can a VC term sheet review be turned around? Timing depends on complexity (stacked preferences, unusual anti-dilution, side letters, multiple investors) and how quickly you can share your cap table and context. If a no-shop is on the table, treat review as time-sensitive, ideally you want feedback before you sign and agree to exclusivity, not after. ### What does a VC term sheet review typically include? Typically, a term sheet review flags high-impact economics and control terms, explains what’s standard vs aggressive for your situation, and gives you an issue list (and suggested fallback positions) to take back to the lead investor. It usually does not replace full deal counsel on the definitive documents, think of it as getting the roadmap right before drafting begins. ### What legal documents come after the venture capital term sheet? In a typical priced round, you’ll move from the term sheet to definitive documents such as an amended charter (amended and restated certificate of incorporation), stock purchase agreement, investor rights agreement, voting agreement, and a right of first refusal/co-sale agreement. The term sheet is the blueprint; these are the contracts that actually govern the deal. ## Related Topics If you are working through a priced round, investor rights, or financing process issues, these guides are a helpful next place to go. - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) ## Questions About a Venture Capital Term Sheet or Priced Round? If you would like to talk through a venture capital term sheet, preferred stock financing, or priced-round process issue, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are negotiating the term sheet itself, you can also learn more about my work on the [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page. If you need broader support with financing strategy, cap table issues, or the overall fundraising process, you can also read more about my work as a [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer). And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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[How to use this startup hiring guide](#aioseo-how-to-use-this-startup-hiring-guide-1) - [Startup hiring: employee vs contractor and why it matters](#aioseo-startup-hiring-employee-vs-contractor-and-why-it-matters-4) - [What documents do you need for startup hiring?](#aioseo-what-documents-do-you-need-for-startup-hiring-17) - [Offer letters, employment agreements, and at-will employment](#aioseo-offer-letters-employment-agreements-and-at-will-employment-34) - [PIIA and CIIAA: IP, confidentiality, and invention assignment](#aioseo-piia-and-ciiaa-ip-confidentiality-and-invention-assignment-40) - [Startup hiring and equity: option grants, ISOs vs NSOs](#aioseo-startup-hiring-and-equity-option-grants-isos-vs-nsos-46) - [Advisors and fractional talent: keep it simple, keep it documented](#aioseo-advisors-and-fractional-talent-keep-it-simple-keep-it-documented-66) - [People confuse this in the startup hiring context](#aioseo-people-confuse-this-in-the-startup-hiring-context-69) - [Restrictive covenants: noncompetes, nonsolicitation, and trade secrets](#aioseo-restrictive-covenants-noncompetes-nonsolicitation-and-trade-secrets-75) - [Termination and severance: the startup hiring plan for the bad day](#aioseo-termination-and-severance-the-startup-hiring-plan-for-the-bad-day-120) - [Startup hiring paperwork: the compliance checklist you can’t skip](#aioseo-startup-hiring-paperwork-the-compliance-checklist-you-cant-skip-124) - [The practical takeaway on startup hiring](#aioseo-the-practical-takeaway-on-startup-hiring-144) - [What you should do this week: 3 common scenarios](#aioseo-what-you-should-do-this-week-3-common-scenarios-146) - [Startup Hiring FAQ](#aioseo-startup-hiring-faq-152) - [Related Topics](#aioseo-related-topics-174) - [Questions About Startup Hiring, Equity, or Team Paperwork?](#aioseo-questions-about-startup-hiring-equity-or-team-paperwork-183) ## 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](https://startuplawyer.com/startup-law-glossary/c-corporation), venture-style expectations), this is the 80/20 startup hiring legal playbook. The goal is not to turn you into HR. The goal is to help you make decisions that hold up when you’re moving fast and someone smart (a candidate, a [VC](https://startuplawyer.com/startup-law-glossary/venture-capitalist-vc), or an acquirer) asks, “show me the paperwork.” Start here if you’re deciding between an employee and a [contractor](https://startuplawyer.com/startup-law-glossary/independent-contractor), you’re trying to figure out what documents you actually need, or you’re about to promise equity in an offer. Jump to the section you need, then come back and run the checklist before the person starts work. Your startup hiring program will benefit. ## Startup hiring: employee vs contractor and why it matters “Contractor vs employee” is not a vibes-based choice. It’s a legal classification question with tax, wage-and-hour, and benefits consequences, and different agencies look at it through different lenses. For startup hiring, a useful decision rule is: if you’re controlling *how* the person works day-to-day and the role is part of your core business, you’re usually in employee territory. Why does this show up in [venture capital financings](https://startuplawyer.com/startup-law-glossary/venture-capital-financing) and [exit events](https://startuplawyer.com/startup-law-glossary/exit-event)? Because misclassification can create unpaid payroll taxes, overtime exposure, and messy IP ownership. In practice, “we’ll use contractors for now” can quietly become a long-term, manager-led role, until diligence forces you to unwind it fast. ### A practical classification heuristic for startups - **Control:** Do you set hours, tools, priorities, and methods, or are you buying an output? - **Integration:** Is this person doing core product work that looks like what your employees do? - **Duration:** Is it a defined project with a clear “done,” or an open-ended role? - **Exclusivity and economic dependence:** Are they working mainly for you? - **Reality over labels:** Calling someone a “consultant” won’t help if you manage them like an employee. ### When should a startup use a contractor instead of an employee? You typically use a contractor when you need specialized help for a defined scope and you’re comfortable giving the person autonomy over how they deliver it. Classic examples are a brand project, a security review, a short-term migration, or fractional finance work. You’re trading day-to-day control for speed and flexibility. From the contractor’s perspective, they’re optimizing for clean scope, clean payment terms, and avoiding being pulled into endless “just one more thing” requests. So the best contractor relationships read like procurement: deliverables, acceptance, rates, and a clear IP and confidentiality package. ## What documents do you need for startup hiring? If you’ve decided whether someone is an employee or contractor, the next step is papering the relationship so expectations, IP ownership, and (if applicable) equity are clear. If you’re asking “what documents do you need to hire your first startup employees?”, the short answer is: you need an offer letter plus a small set of companion documents that cover IP, confidentiality, and (if you’re offering equity) the equity plan mechanics. For contractors, you swap the offer letter for a consulting agreement, but the IP and confidentiality requirements usually get stricter, not looser. ### The standard startup hiring document stack: employee - **Offer letter** (usually at-will) that states title, comp, start date, and key conditions. - **Confidentiality and inventions assignment** agreement, often called a [CIIAA](https://startuplawyer.com/startup-law-glossary/inventions-assignment) (or PIIAA). - **Equity paperwork**: a reference in the offer letter that any equity is “subject to board approval” plus the actual grant documents later (see equity section). - **Policy acknowledgements**: basic security and acceptable use are common early. More formal people policies (code of conduct, anti-discrimination/harassment, reporting, investigations) are often added later; sometimes as “to be implemented” covenants after a Seed or Series A round. Adopting them earlier can be a great signal if you’re prepared to follow them consistently. - **Onboarding compliance forms**: I-9, W-4, and state forms (covered below). One caution: once you publish policies, treat them like commitments. If a handbook or policy says you will investigate complaints, apply progressive discipline, or follow a specific process, then you should actually do that (or update the policy), because written policies can become evidence of the terms and expectations of the employment relationship. ### The standard startup hiring document stack: contractor or consultant - **Consulting agreement** with scope, deliverables, rate, and invoice/payment timing. - **IP assignment and confidentiality** clauses that clearly assign work product to the company and include a present assignment of inventions where appropriate. - **Status language** clarifying independent contractor status (no benefits, taxes handled by contractor), while remembering the real-world relationship still controls classification. - **Security and data handling terms** if they will touch production data or customer info. ## Offer letters, employment agreements, and at-will employment Most startup hiring uses an offer letter, not a heavy “employment agreement,” for the same reason most startups don’t start with a 60-page customer MSA: it creates negotiation surface area you don’t need. In most U.S. states, employment is presumed to be [at-will](https://startuplawyer.com/startup-law-glossary/at-will-employee), meaning either side can end the relationship at any time, with or without cause, subject to limits like anti-discrimination laws. ### Do I need an employment agreement or just an offer letter? For most early hires, you usually want a clean offer letter plus a standalone PIIA/CIIAA, and you reserve a negotiated employment agreement for executives where severance, change-of-control terms, or restrictive covenants are material. The boundary condition is leverage: if the person won’t join without a negotiated termination package, you’re in employment-agreement territory. A practical drafting point: be careful about accidental “promises” in offer letters, especially guaranteed bonuses, fixed employment terms, or vague language that sounds like job security. Those often become exhibit A in a dispute later, even if everyone meant well at the time. If you are actively negotiating offer letters, consulting agreements, restrictive covenants, or other hiring-related agreements, you can also learn more about my work on the [Startup Contracts Lawyer](https://startuplawyer.com/startup-contracts-lawyer) page. ## PIIA and CIIAA: IP, confidentiality, and invention assignment A PIIA, sometimes called a CIIAA, is a Proprietary (or Confidential) Information and Inventions Assignment agreement. After classification, this is usually the single most important signature for startups because it’s what turns “we paid for the work” into “we own the work.” It does two jobs: it requires confidentiality around company information and it assigns to the company the inventions and work product created in the course of the person’s services. So, what is a PIIA and do employees need to sign it? If you want clean IP ownership for investors and acquirers, you generally want every employee and contractor who touches product, code, designs, or customer data to sign one (or equivalent IP and confidentiality terms) before they start. Contractors are where founders often get surprised, because default IP rules can be less favorable if you don’t paper the relationship correctly. ### What gets negotiated in practice and what matters in startup hiring Most pushback isn’t about the company owning what it pays for. It’s about boundaries: side projects, prior inventions, and whether the agreement accidentally sweeps in everything the person has ever done on nights and weekends. A market approach is to include a “prior inventions” schedule and a clear carveout for pre-existing work that is not using company resources and not related to the company’s business. In diligence, the question is boring and brutal: do you have signed invention assignments for everyone who contributed? If the answer is “mostly,” you’re about to spend money chasing signatures when you’d rather be negotiating valuation. ## Startup hiring and equity: option grants, ISOs vs NSOs Once the paperwork and IP are clean, equity is the next place startups can accidentally create liability. An [option grant](https://startuplawyer.com/startup-law-glossary/stock-options) is not just a number you email someone. It’s typically granted under an [equity incentive plan](https://startuplawyer.com/startup-law-glossary/stock-plan) and needs board approval and the right supporting documents. ### What documents do I need to grant stock options? - **Equity incentive plan** adopted by the board and approved by stockholders (typical for option plans). - **Board approval** for the specific grant (written consent or minutes) approving recipient, share count, vesting, and strike price. - **Grant document**: an option grant notice and an option agreement, under the plan. - **409A valuation** to support fair market value (FMV) for the [strike price](https://startuplawyer.com/startup-law-glossary/strike-price). - **Cap table update** so your records match what you promised. - **Securities law hygiene**: as you scale, you’ll care about [Rule 701](https://www.sec.gov/resources-small-businesses/exempt-offerings/employee-benefit-plans-rule-701-0) and disclosures, especially before a financing. ### ISO vs NSO: what is the difference? ISOs (incentive stock options) are a tax-favored flavor of option available only to employees, while NSOs (nonqualified stock options) can be granted to employees, contractors, and advisors. At a high level, NSOs typically create ordinary income at exercise on the “spread,” while ISOs can avoid regular income tax at exercise but may trigger alternative minimum tax (AMT) and require holding periods to get favorable treatment on sale. Two practical ISO constraints matter in startup hiring. First, ISOs require a compliant plan and other statutory requirements like a 10-year maximum term. Second, there’s a $100,000 per-year limit based on the grant-date FMV of shares first becoming exercisable in a calendar year. Anything over that limit gets treated as a nonstatutory option (functionally, an NSO) for the excess. ### 409A valuations: the unglamorous thing that protects your option program A [409A valuation](https://startuplawyer.com/startup-law-glossary/409a-report) is an independent appraisal of the fair market value of a private company’s common stock, and it’s commonly used to set the minimum strike price for stock options. If you grant options below FMV, you can create tax problems for the recipient and diligence headaches for the company. In practice, you typically refresh a 409A at least annually and after material events that can affect value, like a financing. The founder mistake I see is over-optimizing on strike price optics instead of process. A clean process usually beats a “low” strike price when you’re in a deal room. ### How to talk about equity in an offer letter without creating a mess with your startup hiring program Offer letters can mention the intended equity award, but keep it high-integrity: specify the form (options vs restricted stock), the size (usually number of shares or an anticipated range), and the [vesting schedule](https://startuplawyer.com/startup-law-glossary/vesting-schedule) as a description. Then be explicit that the grant is subject to board approval and the terms of the equity plan and grant documents. As you translate equity into an actual grant, most U.S. startups use a fairly standard vesting schedule for employee options: four years of vesting with a one-year cliff, then monthly (or sometimes quarterly) vesting for the remaining three years. Variations exist. Executives may negotiate different terms, and advisors often have shorter schedules. If you’re trying to keep offers comparable and your cap table predictable, starting with the standard schedule is usually the cleanest default. ## Advisors and fractional talent: keep it simple, keep it documented Advisors can be real leverage in startup hiring, but only if expectations are concrete. An advisor relationship is usually a consulting relationship with a narrower scope and lighter time commitment, documented in an [advisor agreement](https://startuplawyer.com/board-of-directors/advisor-agreement) that covers confidentiality, IP (if any), and compensation. Equity for advisors is typically an option grant, and because advisors are not employees, it’s usually an NSO, not an ISO. If you want an advisor to help with intros or strategy, a short vesting schedule with monthly vesting after a short cliff can align incentives without creating the “forever advisor” problem. ## People confuse this in the startup hiring context - **Offer letter vs employment agreement:** an offer letter usually confirms basic terms in an at-will framework; an employment agreement is a negotiated contract that often includes severance, detailed termination terms, and restrictive covenants. - **PIIA/CIIAA vs NDA:** an NDA is often just confidentiality. A PIIA/CIIAA usually includes both confidentiality and invention assignment, which is why it matters more for product work. - **Stock options vs restricted stock:** options are a right to buy later at a strike price; restricted stock is actual stock now, usually subject to vesting and often paired with an [83(b) election](https://startuplawyer.com/startup-law-glossary/83b-election). - **ISO vs NSO:** ISO is an employee-only category with statutory constraints; NSO is more flexible but typically creates ordinary income at exercise. ## Restrictive covenants: noncompetes, nonsolicitation, and trade secrets Restrictive covenants are the terms that limit what someone can do during and after work, like [noncompetes](https://startuplawyer.com/startup-law-glossary/non-compete) and [nonsolicitation](https://startuplawyer.com/startup-law-glossary/non-solicitation) clauses. The reality check is that enforceability varies a lot by state, and some states significantly restrict or even prohibit certain post-employment restrictions. Treat this as a location-by-location question, not a one-size-fits-all template in your startup hiring program. ### What counts as a restrictive covenant - **Noncompete:** limits where someone can work after they leave. - **Customer nonsolicitation:** limits recruiting or servicing your customers after departure. - **Employee nonsolicitation / no-raiding:** limits poaching your employees. - **No-hire / no-poach (company-to-company):** limits hiring between two businesses (often scrutinized and context-specific). - **Confidentiality:** limits use and disclosure of confidential information. - **Invention assignment:** assigns work product and inventions to the company (often housed in your PIIA/CIIAA). ### Noncompetes: when they’re used and what makes them enforceable Noncompetes are the most aggressive tool in the restrictive-covenant toolkit, which is why they’re also the most regulated. Some states ban or heavily restrict them; other states enforce them with guardrails (for example, limiting them to certain roles or requiring advance notice). Because the rules change by state, treat “should we use a noncompete?” as a question you answer per work location and seniority, not as a default clause in every template. Where noncompetes are allowed, enforceability often turns on whether the restriction is reasonable and tied to a legitimate business interest, like protecting trade secrets or customer goodwill. A practical set of drafting principles that tends to travel well across states: - **Narrow the scope:** target direct competitors or specific business lines the person actually touched. - **Keep duration modest:** shorter is usually easier to defend than “one year everywhere,” and the right duration depends on the role and the information at risk. - **Be careful with geography:** remote work makes geography messy, so many agreements focus more on competitor scope than miles. - **Make the timing clean:** some states require advance notice before the start date; don’t spring it after the candidate has resigned from their prior job. - **Make sure you gave consideration:** in some states, continued employment is not enough for a new noncompete midstream, so use a real benefit (e.g., promotion, bonus, or severance). - **Have a fallback:** if a noncompete is risky, rely on confidentiality, invention assignment, and narrower nonsolicitation obligations. ### Nonsolicitation and no-poach: the safer middle ground Nonsolicitation covenants are often more defensible than noncompetes because they protect a specific relationship rather than blocking someone from working. Two common versions are (1) customer nonsolicitation and (2) employee nonsolicitation. Both still vary by state, and overly broad versions can be treated like de facto noncompetes, so narrow drafting matters. - **Customer nonsolicitation:** most defensible when it focuses on customers the person actually worked with or learned about through the job, for a reasonable period. - **Employee nonsolicitation:** often framed as “no raiding” the team; be careful with breadth and who counts as “employee.” - **Company-to-company no-poach / no-hire:** agreements between businesses not to hire each other’s people can draw antitrust scrutiny depending on context, so don’t add these casually to vendor or partner contracts. ### Confidential information vs trade secrets “[Confidential information](https://startuplawyer.com/startup-law-glossary/confidential-information)” is usually a contract category: you define it in an agreement and require the person to protect it. “[Trade secrets](https://startuplawyer.com/startup-law-glossary/trade-secret)” are a legal category: information can qualify as a trade secret when it derives independent economic value from not being generally known and you take reasonable measures to keep it secret. That “reasonable measures” piece is why your actual security practices matter, not just your paper. Also, there’s a federal trade secret statute (the [Defend Trade Secrets Act](https://www.congress.gov/bill/114th-congress/senate-bill/1890)) that allows an owner to bring a civil action in federal court when a trade secret is misappropriated and related to a product or service used in (or intended for use in) interstate or foreign commerce. ### Practical trade secret protection steps for startups - **Decide what your secrets actually are:** for many startups it’s source code, product roadmaps, pricing, customer lists, and security architecture. - **Use need-to-know access controls:** least privilege for repos, cloud consoles, and customer data; remove admin-by-default. - **Centralize credentials:** use a password manager and MFA; don’t keep shared credentials in Slack or personal notes. - **Label and handle sensitive docs:** simple labels like “Confidential” and rules for where sensitive docs can live (e.g., company drive, not personal Dropbox). - **Offboarding is part of protection:** disable access quickly, recover devices, rotate shared secrets, and remind departing employees of confidentiality obligations. - **Vendor and contractor hygiene:** don’t share sensitive information without a signed agreement, and limit what each vendor can access. - **Train lightly but consistently:** a 10-minute onboarding talk on data handling and security often beats a policy nobody reads. ### A quick note on confidentiality and non-disparagement clauses Be cautious with overly broad confidentiality or non-disparagement language, especially in separation and severance documents. Depending on the workforce and context, labor law considerations can limit clauses that broadly prevent employees from discussing workplace conditions. This is a fast-moving area, so treat severance templates as something you periodically review, not a “set it and forget it” form. ### What actually protects you when noncompetes are weak If you’re in a state where noncompetes are disfavored or void, your protection usually comes from a layered approach: strong confidentiality and invention assignment terms, real trade secret practices (access controls and clean offboarding), and, where permitted, narrowly tailored nonsolicitation provisions. Overreaching restrictions can backfire by becoming unenforceable or triggering statutory remedies in some states. ## Termination and severance: the startup hiring plan for the bad day Even in at-will employment, terminations create risk because they happen under time pressure. Severance is less about generosity and more about buying certainty: you pay money in exchange for a release of claims and clean separation terms. In most early-stage startup hiring programs, rank-and-file employees do not have contractual severance. Severance shows up for executives, or when you’re asking someone to take risk or relocate, or when you’re trying to defuse a dispute. Investors and acquirers will also ask if anyone has change-of-control severance or acceleration rights, because that can become a real cost in an acquisition. ## Startup hiring paperwork: the compliance checklist you can’t skip After documents are signed and the role is set up, onboarding compliance is what keeps you out of avoidable trouble later. Startup hiring paperwork is not glamorous, but it’s the stuff regulators and diligence teams can verify instantly. If you’re building a repeatable hiring process, treat this like production infrastructure: it’s boring until it isn’t. If your company needs broader ongoing support with hiring process, people policies, onboarding, equity administration, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### Startup employee onboarding checklist **Timing****Task****Example**Before day 1Signed offer letter (confirm at-will language where applicable) and signed PIIA/CIIAASend a single PDF packet via e-sign that includes the offer letter plus inventions/confidentiality as separate signature blocksBefore day 1Collect personal info needed for payroll setup and set up in your payroll providerLegal name, home address, SSN/ITIN as applicable, and bank details for direct deposit in Gusto/Rippling/ADPBefore day 1Prepare a role-based access planCreate an email account, add the hire to a password manager vault, enable SSO/MFA, and pre-approve only needed systems (e.g., GitHub repo access but not production admin on day 1)Before day 1If you discussed equity, confirm the company can actually grant it and calendar approvalsConfirm an adopted option plan and a current 409A, then calendar “board consent for option grant” for the next board meeting (or written consent)Before day 1Send any required pre-start disclosures and confirm work location for tax registrationProvide required state/local notices if hiring in a new state and confirm the employee’s primary work location (which can change registrations, notices, and payroll settings)Day 1Complete Form I-9 Section 1 and start the verification process for Section 2Collect a U.S. passport or a List B plus List C combination and schedule verification (including remote verification if using an authorized method/provider)Day 1Have the employee complete Form W-4 and any applicable state withholding formsState withholding forms vary (for example, some states have their own equivalents to a state W-4)Day 1Confirm confidentiality and security expectationsNo customer data on personal devices; don’t paste source code into public AI tools; report incidents to \[security @ company dot com\]Day 1Provide a short written role charterOne-page doc with manager, first-week deliverables, decision-maker for priorities, and what success looks like by day 30First weekFinish Form I-9 Section 2 within the required deadline and store it correctlyKeep I-9s in a separate folder (not the general personnel file) with restricted accessFirst weekComplete state new-hire reporting and confirm workers’ comp coverage and required noticesAdd the employee to your workers’ comp policy and confirm required workplace notices for the work location (physical or electronic posting where allowed)First weekConfirm access is correct and document where credentials liveRemove any temporary admin permissions and ensure shared credentials are stored only in the password manager, not in SlackFirst weekIf granting options, run the grant workflowDraft board consent, issue a grant notice/option agreement, update the cap table, and send a short explainer of vesting and exercise basicsFirst monthDocument expectations and feedback cadenceA 30/60/90 plan plus a weekly 1:1 agenda template and a lightweight performance notes docFirst monthDecide whether you’re ready to publish additional people policies, and if you publish them, follow themIf you publish an anti-harassment complaint process, identify who receives reports and how investigations are documentedFirst monthRun an IP and open-source hygiene check for engineering hiresConfirm repos are under company control, confirm open-source licenses for key dependencies, and ensure the hire isn’t importing prior employer code### Common startup hiring onboarding pitfalls - **Work starts before paperwork is signed:** the PIIA/CIIAA (and sometimes even the offer letter) gets “handled later,” which is exactly how IP gaps happen. - **Equity is promised but not grantable on time:** no adopted plan, no current-enough 409A, or no board process, so the “we’ll grant it soon” drifts for months. - **Overbroad access on day one:** new hires get admin access “temporarily,” and it never gets removed. - **Policies published but not followed:** a code of conduct or complaint process exists on paper, but the company doesn’t follow it consistently, creating avoidable risk. - **I-9 and tax forms get mixed into general files:** I-9s should be stored separately with limited access, and payroll forms should be organized for auditability. - **Remote-work location surprises:** a hire works from a state you didn’t plan for, triggering registrations, notices, and payroll changes. - **Contractor habits inside employee onboarding:** treating someone like an employee while paying as a contractor (or vice versa) increases misclassification risk. ### Form I-9: verify work authorization on a real deadline For U.S. employees, you must complete Form I-9. The employee completes Section 1 no later than the first day of work for pay, and you complete Section 2 within 3 business days of the first day of work for pay (earlier if the job lasts less than 3 days). ### Form W-4, payroll setup, and state new-hire reporting You generally want a signed Form W-4 on file so you can withhold federal income tax correctly. Separately, states require new-hire reporting, often within 20 days, to support child support enforcement and fraud prevention (deadlines vary by state). ### E-Verify: when it’s optional and when it isn’t E-Verify is generally voluntary at the federal level unless you’re a federal contractor with the relevant contract clause, but state law can also require it depending on where you have employees. If you think you might take government money later, check this early so it doesn’t surprise your onboarding flow. ## The practical takeaway on startup hiring If you remember one thing about startup hiring, it’s this: **clean hiring paperwork is deal insurance**. Classify the person correctly, get the IP assignment signed before work starts, and don’t promise equity you can’t grant the right way. That combination prevents most “surprise legal work” later. ## What you should do this week: 3 common scenarios - **If you’re about to hire your first employee:** finalize an offer letter, confirm at-will language, and collect a signed PIIA/CIIAA before day one. - **If you’re about to use a contractor for core product work:** tighten the consulting agreement scope and make sure the IP assignment language is strong enough that a buyer will accept it. - **If you’re about to promise equity:** confirm you have an equity plan, a current-enough 409A, and a board approval process so the grant can happen fast after the start date. - **If you’re hiring across states:** assume the rules can change by location, especially for restrictive covenants, final pay timing, required notices, and onboarding forms, so sanity-check your templates for the employee’s work state before you send them. ## Startup Hiring FAQ ### What documents do you need to hire your first startup employees? Think of it as two buckets: (1) the relationship documents (offer letter + PIIA/CIIAA, and any policy/security acknowledgements you actually plan to follow), and (2) the compliance documents (I-9, W-4, and any state onboarding items). If you’re offering equity, treat it as a separate workflow that happens after start and requires plan + board approval. ### ISO vs NSO what is the difference? Use the “eligibility” shortcut: employees can potentially receive ISOs; contractors and advisors cannot (they get NSOs). Then remember the tax-and-admin shortcut: NSOs are simpler and more flexible, while ISOs come with statutory requirements and limits that can turn part of a grant into NSOs anyway. ### Contractor vs employee how do you classify? Ask three questions: Who controls the day-to-day work? Is the role ongoing and core to the business? Is the person economically dependent on you (time, exclusivity)? If those answers point toward “managed like a team member,” default to employee and paper it that way. ### What is a PIIA and do employees need to sign it? A PIIA/CIIAA is your IP-and-confidentiality backbone: it’s what helps ensure the company owns what gets built. The practical rule is “sign it before access and work begin,” and include a clear prior-inventions schedule so you’re not accidentally claiming unrelated side projects, especially for engineers and contractors. ### When should a startup use a contractor instead of an employee? Choose a contractor when you can define deliverables and accept that you’re buying an outcome, not managing a role. If you need weekly priorities, ongoing accountability, and full integration into the team, it’s usually time to hire an employee (or use a staffing model) instead. ### Are noncompetes enforceable for startup employees? It depends on the employee’s work state and the specific drafting. Some states broadly restrict noncompetes, others allow them with conditions. A safer default posture is a layered approach: confidentiality plus invention assignment plus real trade secret practices, and, where permitted, a narrowly scoped nonsolicitation clause that doesn’t function like a noncompete. ### What documents do I need to grant stock options? Minimum viable grant packet: an adopted plan, a board approval for the specific grant, and a signed grant notice/option agreement. Operationally, you also want a supportable strike price (often via 409A) and a cap table that matches what was approved. ### Do I need an employment agreement or just an offer letter? Default to an offer letter for most hires, and escalate to a negotiated employment agreement when termination economics or post-termination restrictions are part of the deal (common for executives). If you find yourself negotiating severance, change-of-control terms, or bespoke restrictions, you’re past “offer letter only.” ### When should a founder or early hire file an 83(b) election? If you receive restricted stock (or you early-exercise options into restricted stock), an 83(b) election lets you recognize income at grant instead of as shares vest. The deadline is tight: it generally must be filed within 30 days of the stock transfer, so you need to decide quickly and coordinate with your tax advisor. ### When do I need to complete an I-9 for a new employee? Treat I-9 timing as a calendar item in your onboarding workflow: the employee completes Section 1 by day one, and you complete Section 2 within three business days (sooner for very short employment). Store I-9s separately with limited access so you can produce them quickly if audited. ## Related Topics If you are thinking through startup hiring, equity grants, IP ownership, or how people-process issues affect diligence and growth, these guides are a helpful next place to go. - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) ## Questions About Startup Hiring, Equity, or Team Paperwork? If you would like to talk through hiring, onboarding, equity grants, contractor classification, or other first-team legal issues, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If your company needs broader ongoing support with hiring process, people policies, onboarding, equity administration, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. If you are actively negotiating offer letters, consulting agreements, restrictive covenants, or other hiring-related agreements, you can also learn more about my work on the [Startup Contracts Lawyer](https://startuplawyer.com/startup-contracts-lawyer) page. And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Start There Before Patents, Trademarks, or Anything Else](#aioseo-who-owns-the-ip-start-there-before-patents-trademarks-or-anything-else-16) - [Startup Trademarks: When to File and Why Founders Wait Too Long](#aioseo-startup-trademarks-when-to-file-and-why-founders-wait-too-long-36) - [Patents for Startups: When They Matter and When They Do Not](#aioseo-patents-for-startups-when-they-matter-and-when-they-do-not-46) - [Startup Copyright: What It Protects and What It Does Not](#aioseo-startup-copyright-what-it-protects-and-what-it-does-not-59) - [Trade Secrets for Startups: The Most Underrated IP Protection](#aioseo-trade-secrets-for-startups-the-most-underrated-ip-protection-70) - [Common Startup IP Mistakes and Misunderstandings](#aioseo-common-startup-ip-mistakes-and-misunderstandings-86) - [Startup IP Due Diligence: What Investors and Acquirers Actually Care About](#aioseo-startup-ip-due-diligence-what-investors-and-acquirers-actually-care-about-91) - [The Best Startup IP Strategy Is Usually the Least Glamorous](#aioseo-the-best-startup-ip-strategy-is-usually-the-least-glamorous-110) - [Intellectual Property for Startups FAQ](#aioseo-intellectual-property-for-startups-faq-114) - [Related Topics](#aioseo-related-topics-150) - [Questions About Startup IP, Ownership, or Diligence?](#aioseo-questions-about-your-situation-152) ## What Intellectual Property for Startups Means [Intellectual property](https://startuplawyer.com/startup-law-glossary/intellectual-property) for startups is not just a filing exercise. It is the practical work of identifying what creates value in the company, making sure the company actually owns it, and choosing the right protection for each asset. For most startups, that means getting the ownership chain clean, protecting the brand early, using confidentiality like it matters, and only then deciding whether patents deserve real budget. My rule is simple. If an IP asset is core to the product, the brand, or leverage in a financing or exit, lock it down now. If it is expensive to protect and does not change investor, customer, or acquirer behavior, do not over-lawyer it. Founders routinely spend time worrying about [patents](https://startuplawyer.com/startup-law-glossary/patent) they may never enforce while ignoring assignment issues that can slow a round next month. That is because startup teams usually experience IP in the wrong order. The flashy question is whether the company should patent something. The real questions are usually much less glamorous: who wrote the code, who designed the logo, what the contractor agreement actually says, what open source software is in the stack, what confidential information leaves the company, and whether the product name can survive real-world clearance. Those are the issues that affect financings, partnerships, and exits. ## Startup IP Strategy: What This Guide Covers This guide covers the four core buckets of startup IP: trademarks, patents, copyrights, and trade secrets. It also covers the issue that usually matters first in the real world, which is whether the company owns the code, content, inventions, data rights, and brand assets it thinks it owns. That is what investors and acquirers test early because it goes to title, not just housekeeping. This is not a guide for turning founders into trademark examiners or patent prosecutors. It is a practical framework for deciding what matters now, what can wait, and what creates avoidable risk. For most startups, the best IP strategy is not the most complicated one. It is the one that fits the stage, budget, industry, and actual source of leverage in the business. If you want the shortest possible framework, use this table. It gives founders a fast way to understand what each type of IP protects, how you get it, and where startups usually get the analysis wrong. **Trademark****Patent****Copyright****Trade secret****What it protects**Brand names, logos, slogans, and other source-identifying brand assetsQualifying inventions, processes, machines, compositions, or certain technical methodsOriginal works fixed in a tangible medium, including code, copy, design assets, videos, and documentationValuable confidential information that is not generally known**How you get protection**Rights can arise from use, but federal registration usually gives much stronger practical protectionFile an application and go through examination; cost and timing are usually significantProtection generally exists on creation, with registration often helping enforcementUse reasonable secrecy measures such as confidentiality terms, access controls, and disciplined internal handling**Best fit for startups**Company name, product name, or brand assets that will be public and expensive to change laterBiotech, medtech, hardware, deep tech, or products where technical exclusivity drives valueSoftware, website content, design systems, marketing assets, and other creative or product-adjacent materialsInternal know-how, models, processes, customer intelligence, and information that loses value if publicly disclosed**Cost / speed / difficulty**Usually moderate cost, relatively manageable timing, and often worth doing early if the brand mattersUsually the most expensive, slowest, and most complex optionUsually the cheapest and fastest to obtain, though registration can add cost and processUsually cheap to start but operationally demanding because protection depends on consistent internal discipline**What investors care about most**Whether the brand is actually clear, important to the business, and protected before it becomes expensive to rebrandWhether the patents are owned by the company, strategically relevant, and strong enough to matter in the marketWhether the company clearly owns the code, content, and creative assets that matter to the product and brandWhether the supposed secret sauce is actually being treated as confidential through real policies, access controls, and discipline**Common founder mistake**Assuming a domain name or entity filing means the brand is protectedFiling because it sounds impressive rather than because it creates real leverageThinking copyright protects the idea or functionality rather than the specific expressionCalling something a trade secret without actually treating it like one## Who Owns the IP? Start There Before Patents, Trademarks, or Anything Else The first question in startup IP diligence is usually not whether you have a patent. It is whether the company actually owns the product. That means founder assignment agreements, employee confidentiality and inventions agreements, contractor IP assignment language, and a clean story for anything built before incorporation. Ownership is the floor under every other IP conversation. If the company does not own the asset, the filing strategy is mostly theater. How do founders assign IP to a startup? Usually through a written assignment that transfers pre-incorporation and ongoing inventions, code, and other work product to the company. If the prototype existed before the company did, the paper needs to reach backward and capture that earlier work. I see too many startups with clean cap tables and messy IP chains. That is a terrible trade. This comes up in diligence because ownership defects can be existential in a way a late trademark filing usually is not. If a former co-founder, contractor, or prior employer has a plausible claim to core technology, investors may force cleanup before closing and acquirers may reduce price, widen indemnities, or walk. In startup financings, clean title to the product matters far more than legal window dressing. If you are still getting the company set up or cleaning up early ownership and assignment issues, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. ### Pre-incorporation work is where a lot of hidden intellectual property for startups risk lives Many startups begin before the company exists. A founder experiments on nights and weekends, builds a prototype with a friend, hires a freelance engineer for a few sprints, or tests branding with an outside designer. By the time the entity is formed, everyone mentally treats those early efforts as company property. Legally, though, that assumption may be wrong unless the relevant rights were assigned in writing. The earlier the work was done and the more informal the relationship, the more carefully you should review the paper trail. The practical cleanup usually is not complicated, but it does require discipline. Identify everyone who contributed to core product, brand, or content assets. Confirm what they created, when they created it, and under what agreement. Then make sure the company has written assignments broad enough to capture that work. Founders often delay this because they assume everyone is friendly. The problem is not always bad intent. Sometimes a missing signature becomes an issue simply because someone moves, disappears, gets upset, or cannot be found when a financing is live. ### Founder, employee, and contractor mistakes that cause trouble Founder work is the obvious issue, but contractors are the repeat offender. A startup pays someone to build part of the product, assumes payment equals ownership, and learns later that it does not. For copyrightable work like software code, work-for-hire language alone is often not enough as a practical drafting matter. You want an express assignment backup. That concern shows up again and again in recent diligence checklists, which treat contractor-created IP as a routine risk area rather than an edge case. Prior employer contamination is the quieter problem. If you built the first version of the product while employed elsewhere, or on systems tied to that job, expect diligence questions. The investor or acquirer is optimizing for certainty. They are not trying to be difficult. They are trying to avoid buying a lawsuit wrapped in a pitch deck. If a founder previously worked in the same technical area, diligence will often include a close read of prior employment agreements and a timeline review of when the startup technology was actually developed. The right founder mindset here is simple: if there is any factual wrinkle, document it early. Preserve a clear timeline, identify what was created before and after incorporation, and understand what prior agreements may say. You do not need to panic every time a founder had a previous job. But you do need a coherent answer if someone asks whether the former employer could claim rights in the startup’s core technology. In venture and M&A settings, uncertainty itself can be a problem even when the underlying legal claim is weak. ## Startup Trademarks: When to File and Why Founders Wait Too Long A trademark protects the brand that tells customers where goods or services come from, not the product idea itself. In the United States, rights can arise from use, but federal registration through the USPTO gives much stronger nationwide benefits and procedural advantages. That matters because founders constantly assume that buying a domain or forming an entity means the brand is protected. It does not. When should a startup file a trademark? Usually once it has picked a name it is serious about using and done enough clearance work to believe the mark is available. If the brand will be public, customer-facing, and expensive to change later, filing early is often worth it. The hard part is not the filing form. The hard part is choosing a name that is actually protectable and unlikely to trigger confusion problems later. This is where founders make two opposite mistakes. Some file too late, after they have already invested in product design, domain purchases, social handles, sales collateral, and customer awareness around a fragile name. Others file too early on a weak, descriptive, or still-changing brand that may never survive product-market fit. The goal is not to race to the filing portal just to feel productive. The goal is to protect the brand you are actually going to build around. ### How to Choose and Protect a Startup Brand Good startup trademark strategy is boring in the best way. Pick a distinctive name, run clearance before launch, file in the classes that match your real goods or services, and make sure the marketing team is not inventing side brands without legal review. A rebrand at pre-seed is annoying. A rebrand after press, customers, and investor references is expensive and distracting. ### Trademark Clearance for Startups: More Than a Database Search Founders often think trademark clearance means typing the proposed name into a database and seeing whether the exact words appear. In reality, the analysis is broader. Similar sound, look, meaning, or commercial impression can create problems, especially when the goods or services are related. That is why the [USPTO](https://www.uspto.gov/) centers the likelihood-of-confusion framework in its search materials. A startup does not need to become obsessive about every remote possibility, but it should treat naming as a legal and business decision, not just a branding exercise. ## Patents for Startups: When They Matter and When They Do Not A patent can protect an invention for a limited period if you meet the legal standards and go through the filing process. But patents are not a universal startup tax. You are spending money and disclosing information now in exchange for a potentially enforceable right later. That is worth it when the invention is core, competitors can reverse-engineer it, and the business can justify the cost. It is much less compelling when the real moat lives elsewhere. The [USPTO startup and IP toolkits](https://www.uspto.gov/learning-and-resources/startup-resources) frame patents as one of several possible tools, not the answer to every IP question. That is the right mindset for founders. In software especially, some teams chase patents because it feels sophisticated, when the better answer may be speed, trade secret controls, and a stronger commercial moat. USPTO startup-focused educational materials similarly tie patents, trademarks, copyrights, and trade secrets to business goals and timing rather than treating them as isolated legal silos. ### Do Startups Need Patents? It Depends on the Business If you are in biotech, medical devices, hardware, deep tech, or another field where technical exclusivity drives enterprise value, patents may matter a lot. The same can be true if investors in your category expect a filing strategy before or around a priced round. By contrast, if your product changes every quarter and the real moat is execution, distribution, or data, patenting every idea may be money set on fire in a very professional-looking way. The point is not that patents are overrated. The point is that they are highly industry-dependent, and smart founders treat them as part of a broader company strategy rather than as a generic startup milestone. Founders also need realistic expectations about what a patent filing does and does not accomplish. Filing something is not the same as having a meaningful issued patent, and a weak application is not a magic shield in diligence. Investors who care about patents usually care about quality, ownership, scope, timing, and whether the claims line up with the actual product. Recent diligence checklists keep focusing on chain of title, filing status, application quality, and freedom-to-operate questions for exactly that reason. If you are preparing for a priced round and investor diligence is starting to focus on ownership, filings, and IP risk, you can also learn more about my work on the [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page. ### What patents do not solve for a startup A patent does not fix a weak business, bad distribution, poor product execution, or a company that cannot afford to enforce its rights. It also does not substitute for clear ownership documents. Some founders treat patents like a proxy for defensibility because the concept is easy for outsiders to understand. Sometimes that is true. Other times the better question is whether the patent portfolio actually creates leverage with competitors, investors, acquirers, or customers. If the answer is no, your legal budget may have better uses. ## Startup Copyright: What It Protects and What It Does Not Copyright protects original works of authorship fixed in a tangible medium, which can include software code, website copy, design assets, videos, documentation, and marketing content. It does not protect ideas, systems, or methods of operation. So if your pitch is that copyright protects your product concept, that is usually the wrong frame. The [U.S. Copyright Office](https://www.copyright.gov/) and USPTO materials both emphasize this division among copyrights, patents, trademarks, and trade secrets because businesses regularly confuse what each tool is actually designed to do. For many works, copyright exists automatically when the work is created, but registration can still matter for enforcement and leverage. From a startup perspective, the bigger issue is often ownership rather than existence. If outside designers, developers, or agencies created core assets, you want contracts that make the company the clear owner from the start. This is especially important when copyrightable assets are customer-facing or commercially central, such as software code, design systems, documentation, and brand content that others may copy or reuse. Startup teams tend to underappreciate how much value sits in copyrightable material. Product copy, help center articles, landing pages, demo videos, training materials, onboarding flows, sales collateral, and investor visuals can all matter commercially. In some businesses, those assets are secondary. In others, they are part of the product experience and brand differentiation. If a creative agency or contractor produced them, you want the company’s rights to be explicit, not inferred. ### Software copyright is not the same as software exclusivity For software startups, copyright is real but often misunderstood. It can protect the code as written, as well as other original expressive elements. It does not automatically stop a competitor from building similar functionality through different code or architecture. That is why software defensibility discussions often involve a mix of copyright, trade secrets, contracts, product speed, data advantages, and sometimes patents. Founders should resist the urge to collapse all of that complexity into one sentence like “our software is copyrighted,” because that usually tells investors or acquirers very little about the actual moat. ## Trade Secrets for Startups: The Most Underrated IP Protection A [trade secret](https://startuplawyer.com/startup-law-glossary/trade-secret) is information that derives value from not being generally known and is protected by reasonable secrecy measures. That last part is where the theory-versus-reality problem shows up. Founders say something is a trade secret, but then store it in shared folders with broad access, discuss it casually with vendors, and skip basic confidentiality discipline. Courts care about the controls, not the label. The USPTO includes trade secrets in its basic startup IP materials for a reason: for many companies, especially software and process-heavy businesses, trade secret discipline is a core part of practical IP protection. Trade secrets can be the better answer when the know-how is hard to reverse-engineer and would lose value if publicly disclosed in a patent filing. Think internal models, processes, customer intelligence, manufacturing know-how, or certain product decisions. But you only get the benefit if you behave like the information matters: NDAs where appropriate, access controls, clean onboarding and offboarding, and internal documentation that marks the information as confidential. Investors reviewing AI or data-heavy startups increasingly look at these governance practices because they want to know whether the supposed secret sauce is actually being treated as secret. ### Do startups need NDAs? Yes, but founders tend to misunderstand where [NDAs](https://startuplawyer.com/startup-law-glossary/nda) actually matter. NDAs are useful with employees, contractors, consultants, vendors, and certain business partners because they help create the confidentiality framework that supports trade secret protection. They are part of the evidence that the company treated important information like it was actually confidential, rather than just calling everything “proprietary” after the fact. What NDAs do not do is substitute for judgment or operational discipline. Many sophisticated investors will not sign a broad NDA for an initial pitch, and founders should not treat that as shocking or disqualifying. The better approach is to be thoughtful about what you disclose, use NDAs where they actually fit the relationship, and back them up with access controls, clear ownership documents, and sensible internal handling of sensitive information. ### Reasonable secrecy measures are where strategy becomes evidence Trade secret protection sounds abstract until you translate it into company operations. Who has access to the repository? Who can export sensitive customer or model data? Are contractors bound by confidentiality terms? Are departing employees reminded of ongoing obligations? Are sensitive folders restricted on a need-to-know basis? These are not merely administrative details. They are the facts that help determine whether the company can later argue that the information was genuinely protected as confidential business information. There is also a startup-specific balancing act here. You want enough openness for fast collaboration, but not so much openness that every important process becomes effectively public inside and outside the company. Startups often overcorrect in one direction or the other. They either lock everything down so tightly that work slows, or they treat everything casually and later claim it was all secret. The better answer is targeted protection around the information that would actually matter if a competitor got it tomorrow. ## Common Startup IP Mistakes and Misunderstandings **Entity name vs. trademark.** Forming a company or registering a DBA does not mean you have trademark rights broad enough to stop others. **Patent vs. trade secret.** A patent requires disclosure in exchange for exclusivity. A trade secret requires secrecy and reasonable protection measures, but gives you no rights against independent invention. **Copyright vs. patent.** Copyright can protect code as expression, but it does not give you a monopoly on the functional idea behind the software. **Owning a domain vs. owning a brand.** A domain registration is helpful, but it is not the same as owning trademark rights. The USPTO expressly distinguishes domain names, business names, and trademarks because founders routinely blur them together. ## Startup IP Due Diligence: What Investors and Acquirers Actually Care About When investors or acquirers run IP diligence, they are usually looking for a predictable set of issues: missing assignments, unclear inventorship, open source problems, weak trademark clearance, prior employer claims, unrecorded licenses, and a mismatch between the company’s pitch and what is actually protected. Those themes show up repeatedly in current startup-focused diligence guidance, which puts ownership chain, contractor documents, open source use, patent status, and trademark readiness near the center of review. Diligence also gets stricter as the stakes rise. At the earliest stages, investors may focus mainly on whether the company appears to own its product and whether any obvious risks are lurking in the background. As rounds get larger or an acquisition becomes real, the review becomes more granular. The practical effect is that a problem you could have fixed quietly six months earlier may become a negotiated issue once lawyers, counterparties, and deadlines are involved. If IP issues are surfacing in a live sale process or acquisition diligence, you can also learn more about my work on the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page. Here is the reality check. Investors do not need your IP to be perfect at pre-seed. They do need the risks to be understandable and fixable. By Series A or an acquisition process, tolerance drops. A missing contractor assignment that felt like a clerical issue twelve months earlier can become a closing condition when everyone is tired and the legal bill is already offensive. The startup that handles IP best is usually not the startup with the fanciest portfolio. It is the one that can answer diligence questions clearly, produce the right documents quickly, and show that legal protection actually maps to the business model. If your company needs broader ongoing support with IP process, contractor and employee paper, confidentiality discipline, diligence readiness, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### What actually gets reviewed Expect requests for founder and contractor agreements, employee invention assignment agreements, schedules of patents and applications, trademark filings, material inbound and outbound licenses, open source policies, and any disputes or threatened claims. If your business depends on proprietary data or AI workflows, expect questions about provenance, permissions, and what part of the stack is actually proprietary versus rented infrastructure. In other words, diligence is not only about counting assets. It is about testing whether your legal rights support the company story you are telling the market. ### A practical startup IP checklist before fundraising Before you open a data room, make sure you can answer a short list of questions without improvising. - Who contributed to the product, and are all assignments signed? - Was any core technology created before incorporation or during prior employment? - What open source components are in the product, and do you understand the license implications? - Have you chosen a brand that has been properly vetted? - What patents or applications exist, who owns them, and do they cover what matters? - What confidential information are you treating as a trade secret, and what controls back that up? If you can answer those questions cleanly, your IP posture is usually in much better shape than most early-stage companies. ## The Best Startup IP Strategy Is Usually the Least Glamorous If you remember one thing, make it this: the most important startup IP work is usually not glamorous. Clean ownership, sensible confidentiality, and early brand discipline usually matter more than a stack of filings that do not map to the business. Protect what creates leverage, document what the company owns, and do not wait until diligence to discover the paper trail has holes. The best startup IP strategy is the one that makes the company more investable, more defensible, and easier to understand. ## Intellectual Property for Startups FAQ ### How do founders assign IP to a startup? They do it through a written assignment agreement that transfers relevant inventions, code, content, and related rights to the company. If important work was created before incorporation, the agreement should cover that earlier work too, or the company may have a gap right where investors look first. ### When should a startup file a trademark? A startup should usually file once it has chosen a brand it plans to use publicly and has done enough clearance to believe the mark is available. If the name will sit on your website, fundraising materials, product, and customer contracts, early filing is often cheaper than a late rebrand. ### Do startups need patents? Not every startup does. Patents tend to matter more where technical exclusivity drives value, such as biotech, hardware, or certain deep tech businesses. In fast-moving software businesses, trade secrets, speed, data advantages, and strong contracts may matter more than patent count. ### What IP mistakes do investors care about most? The biggest ones are usually ownership gaps, contractor issues, prior employer claims, open source problems, and weak trademark clearance. Investors can live with some incompleteness at an early stage, but they do not like uncertainty about whether the company owns its core assets. ### Is software protected by copyright, patent, or trade secret? Potentially all three, but for different things. Copyright can protect the code as expression, patents may protect qualifying inventions, and trade secrets can protect confidential know-how that is not publicly disclosed. The right answer depends on what part of the software creates the value and how exposed it is. ### Does registering a company name or domain give startup trademark rights? No, not by itself. Business name registrations and domain names are different from trademark rights, and the USPTO explicitly treats them as different concepts. You need actual trademark use and, in many cases, federal registration is what gives you the strongest practical protection. ### Should investors sign an NDA before a startup pitch? Usually not at the initial pitch stage. Many sophisticated investors will not sign broad NDAs before hearing a startup pitch, and founders should not treat that as unusual. The better approach is to be thoughtful about what you disclose early, avoid sharing unnecessarily sensitive technical detail before there is real engagement, and use NDAs where they actually fit the relationship, such as with contractors, vendors, consultants, or deeper diligence conversations. ### Can open source software create IP problems for startups? Yes. Open source software can be extremely useful, but startups need to understand the licenses attached to what they use. The real issue is usually not that open source is bad. It is that founders sometimes do not know what is in the codebase, what obligations apply, or whether customer promises and investor expectations match the actual software stack. ### Does a startup own code or design work created by a contractor? Not automatically. Paying a contractor does not by itself mean the company owns the work product. If a contractor created code, design assets, content, or other important materials, the startup should have a written agreement with clear IP assignment language so ownership is not left to assumption. ### How do startups protect trade secrets in practice? They protect trade secrets by pairing legal documents with operational controls. That usually means confidentiality terms, selective use of NDAs, access restrictions, careful onboarding and offboarding, and internal processes that limit who can see sensitive information. If the company does not treat the information like it is secret, it becomes much harder to claim trade secret protection later. ### What IP should a startup protect first? Usually ownership and brand come first. A startup should make sure the company actually owns the product, code, and core creative assets, then protect the brand if it is going public under a name it expects to keep. After that, the right next step depends on the business. Some companies need a patent strategy early, while others get more value from contracts, trade secret controls, and execution speed. ## Related Topics If you are thinking through IP ownership, hiring and contractor issues, diligence readiness, or how startup legal process affects IP risk, these guides are a helpful next place to go. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Questions About Startup IP, Ownership, or Diligence? If you would like to talk through IP ownership, assignment, confidentiality, diligence, or other startup IP issues, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are still getting the company set up or cleaning up early ownership and assignment issues, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. If you are preparing for a priced round and investor diligence is starting to focus on ownership, filings, and IP risk, my [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page may also be a helpful next step. If your company needs broader ongoing support with IP process, contractor and employee paper, confidentiality discipline, diligence readiness, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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[What this startup commercial contracts guide covers and what it does not](#aioseo-what-this-startup-commercial-contracts-guide-covers-and-what-it-does-not-1) - [Why startup commercial contracts matter](#aioseo-why-startup-commercial-contracts-matter-7) - [Startup commercial contracts with customers](#aioseo-startup-commercial-contracts-with-customers-12) - [Liability caps and SLAs in startup commercial contracts](#aioseo-liability-caps-and-slas-in-startup-commercial-contracts-21) - [What founders over-negotiate and under-negotiate in startup commercial contracts](#aioseo-what-founders-over-negotiate-and-under-negotiate-in-startup-commercial-contracts-39) - [Self-serve vs enterprise startup customer contracts](#aioseo-self-serve-vs-enterprise-startup-customer-contracts-46) - [What changes when a startup starts selling to enterprises](#aioseo-what-changes-when-a-startup-starts-selling-to-enterprises-54) - [Using a customer’s standard form or your own contract](#aioseo-using-a-customers-standard-form-or-your-own-contract-64) - [Pilot and proof-of-concept startup agreements](#aioseo-pilot-and-proof-of-concept-startup-agreements-81) - [Startup vendor contracts and procurement risk](#aioseo-startup-vendor-contracts-and-procurement-risk-87) - [Channel, reseller, and partnership agreements for startups](#aioseo-channel-reseller-and-partnership-agreements-for-startups-94) - [Marketplace, platform, and API agreements for startups](#aioseo-marketplace-platform-and-api-agreements-for-startups-100) - [Privacy and data terms in startup commercial contracts](#aioseo-privacy-and-data-terms-in-startup-commercial-contracts-106) - [IP ownership in startup commercial contracts](#aioseo-ip-ownership-in-startup-commercial-contracts-114) - [Startup commercial contracts in due diligence](#aioseo-startup-commercial-contracts-in-due-diligence-121) - [Assignment and change of control in startup commercial contracts](#aioseo-assignment-and-change-of-control-in-startup-commercial-contracts-127) - [People confuse startup commercial contracts with](#aioseo-people-confuse-startup-commercial-contracts-with-142) - [The practical takeaway on startup commercial contracts](#aioseo-the-practical-takeaway-on-startup-commercial-contracts-146) - [Startup Commercial Contracts FAQ](#aioseo-startup-commercial-contracts-faq-149) - [Related Topics](#aioseo-related-topics-174) - [Questions About Startup Contracts or Commercial Terms?](#aioseo-questions-about-startup-contracts-or-commercial-terms-183) ## What this startup commercial contracts guide covers and what it does not Startup commercial contracts are the agreements that govern how you sell, buy, share data, and work with commercial partners. In practice, startup commercial contracts include startup customer contracts, startup vendor contracts, SaaS agreements, statements of work, data processing terms, reseller agreements, and other commercial contracts that affect revenue, delivery, and risk. If you are wondering what contracts do startups need with customers, or what contracts matter most in due diligence, this guide covers the parts of the contract stack that usually matter first. This is not a guide to incorporation documents or a venture capital financing document guide. It is a founder-focused guide to startup commercial contracts that shape customer revenue, vendor dependency, enterprise procurement, and commercial diligence. If you are pre-seed through Series A and selling software, services, or a tech-enabled product, these are usually the contracts that create the most leverage and the most avoidable mistakes. ## Why startup commercial contracts matter If you are selling anything, your commercial contracts are not side paperwork. They are the operating system for revenue. They decide what you are promising, when you get paid, how implementation works, who owns deliverables, and how much risk stays with you if something goes wrong. Here is the simplest decision rule: if a relationship affects revenue, customer data, product obligations, recurring spend, or distribution rights, you need written commercial terms. [Founders](https://startuplawyer.com/startup-law-glossary/founder) often over-optimize headline pricing and under-optimize liability, support scope, and renewal mechanics. That is backwards, because bad commercial paper can quietly wipe out the economics of what looks like a great deal. The theory is that contracts prevent disputes. The reality is more practical. Good startup contracts speed sales, reduce procurement churn, protect margins, and keep a future investor or buyer from discovering that your biggest customer is effectively controlling your roadmap. ## Startup commercial contracts with customers Start with customer paper because startup commercial contracts with customers usually drive the largest mix of revenue, risk, and negotiation time. Once this structure is right, the rest of your startup commercial contracts stack gets easier to manage. ### What contracts do startups need with customers If you sell software or services, your customer paper usually includes an MSA, an SOW, order forms, SaaS subscription terms, service level commitments, and sometimes implementation or professional services exhibits. What contracts do startups need with customers? Enough paper to define what the customer is buying, what you are obligated to deliver, which promises are limited, and how the parties handle failure, change requests, and data use. The high-value move is separating stable legal terms from changing commercial terms. Put recurring legal rules in the MSA and keep pricing, product package, renewal details, and project-specific scope in order forms or statements of work. That structure speeds future deals because you are not renegotiating the whole relationship every time the customer buys more. ### Theory versus reality in startup commercial contracts with customers The theory is that a startup customer contract reflects a balanced business deal. The reality is that customer paper often gets stitched together from an MSA, an order form, a DPA, a security exhibit, and procurement redlines from three different teams. If you are not careful about precedence and internal consistency, the customer can end up with obligations you never meant to accept. Once you move from basic contract structure into real negotiation, startup commercial contracts usually turn on two issues: how much liability you are carrying and what service promises you are actually making. ## Liability caps and SLAs in startup commercial contracts ### What liability caps are really doing A limitation of liability clause does not make risk disappear. It prices risk and decides how much of it your company is keeping. In most startup customer contracts, the real negotiation is not whether there will be a cap. It is how high the cap is, which claims are carved out, and whether the cap applies once or separately to different buckets of exposure. The market norm is usually some multiple of fees paid or payable over a defined period, often 12 months. But the important question is what sits outside the cap. If data breaches, confidentiality claims, IP indemnity, or gross negligence are fully uncapped, the headline cap may not protect you nearly as much as it seems. ### How startups should think about SLA commitments An SLA is not just a customer comfort document. It is an operational promise with legal consequences. If you commit to aggressive uptime, response times, service credits, or termination rights, you are converting your engineering and support realities into contract terms. In practice, I keep seeing founders negotiate SLAs as if they are sales collateral. Then the legal team discovers the service credits stack, chronic outages trigger termination rights, or support promises were drafted for an enterprise support team the company does not yet have. A weaker but realistic SLA is often better than a strong one you cannot consistently meet. ### The tradeoff customers are pushing for From the customer side, this push is understandable. If they are buying a critical workflow tool, they want enough recourse to matter when the product fails. You are trading deal velocity and logo value for economic exposure and operational rigidity. That trade can be worth it for a strategically important customer, but only if you price it consciously and make sure your vendor stack, support model, and insurance posture can absorb it. After you price risk and service levels, the next question is how the deal is organized on paper. That is where the MSA, SOW, and order-form structure starts to matter. ### MSA vs SOW in startup customer contracts What is the difference between an MSA and an SOW? The MSA sets the legal framework for the relationship, including payment mechanics, liability caps, confidentiality, warranties, indemnities, and termination rights. The SOW sets the specific project, services, timeline, deliverables, and acceptance mechanics. If you expect repeat work, you usually want the heavy legal negotiation in the MSA and the changing work terms in the SOW. In practice, I keep seeing startups negotiate an SOW like it is harmless operational detail. Then the SOW quietly adds custom support obligations, product commitments, acceptance tests, or ownership language that overrides the core paper. If you do implementation work, this is one of the fastest ways to turn a good customer into a low-margin customer. ### The clauses founders commonly over-optimize You will usually spend less money giving a modest pricing concession than carrying uncapped liability, broad indemnity exposure, or a custom roadmap obligation. Founders often fixate on list price because it is visible. But the clauses that reshape the business are usually limitation of liability, warranty scope, service levels, termination rights, acceptance, and customer-specific security promises. The customer perspective is not irrational. A procurement team is trying to reduce operational and legal risk while getting confidence that your startup can perform like a mature vendor. You are trading a faster signature or bigger logo for heavier obligations. That trade can be worth it, but only if your team can actually support what the contract says. ## What founders over-negotiate and under-negotiate in startup commercial contracts If you are moving quickly, you need a triage mindset for startup commercial contracts. Some clauses feel important because they are visible or easy to argue about. Others quietly reshape the economics of the deal and deserve much more attention. ### What founders over-negotiate I keep seeing founders over-negotiate list price, mutual wording symmetry, and small wording changes that do not move real risk. Those issues can matter, but they usually matter less than they feel like they do in the moment. A small discount often costs less than one badly drafted carveout or one vague implementation promise. ### What founders under-negotiate The clauses founders under-negotiate are the ones that become expensive later: liability carveouts, SLA remedies, acceptance mechanics, security commitments, termination rights, data-use restrictions, and ownership of custom work. If you are going to spend negotiation energy anywhere, spend it where the contract can force your team to do more work, carry more risk, or give up leverage after signature. The theory is that hard negotiations happen around dramatic legal issues. The reality is that margin often leaks out through quieter clauses that look operational. That is why the best commercial negotiators are usually not the ones arguing every point. They are the ones spotting the few provisions that actually change the business. If you are actively negotiating customer, vendor, or other revenue-related agreements, you can also learn more about my work on the [Startup Contracts Lawyer](https://startuplawyer.com/startup-contracts-lawyer) page. ## Self-serve vs enterprise startup customer contracts That customer structure also changes depending on how you sell. A self-serve motion can rely more heavily on standard terms, while enterprise sales usually require negotiated paper and a longer list of operational promises. ### Terms of service versus negotiated customer paper What is the difference between terms of service and a customer contract? Terms of service are usually standard-form rules presented through a sign-up flow or clickwrap process. A negotiated customer contract is tailored paper for a specific account, often with custom pricing, security language, service levels, and procurement-driven redlines. If your sales motion includes both self-serve users and larger accounts, you usually need both systems working together. ### When enterprise paper starts to look different The moment you sell into mid-market or enterprise customers, startup customer contracts often become layered. You may have a negotiated order form, an MSA, a DPA, a security exhibit, and an SLA. What looks like one sale is really a stack of commitments. So the goal is not just to get signature. It is to make sure your legal paper, product limits, and support reality still line up. A common mistake is assuming website terms are enough until a large prospect appears. They usually are not. If the customer is asking for uptime commitments, onboarding services, data security promises, or custom use rights, you are already in negotiated-paper territory whether you planned for it or not. ## What changes when a startup starts selling to enterprises Selling to enterprises changes more than deal size. It changes who controls the process, how long startup commercial contracts take, and which promises become non-negotiable. Once procurement, security, legal, and business stakeholders all enter the room, startup customer contracts stop being just sales documents and start becoming operational commitments across your whole company. That shift matters because enterprise customers often price risk differently than startups do. You may still think you are selling software. They may think they are onboarding a critical vendor. Those are not the same mental models, and a lot of painful redlines come from that mismatch. If your company needs broader ongoing support with contract process, customer paper, vendor issues, approvals, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### Red flags in enterprise customer contracts The red flags are usually not subtle. Watch for uncapped or lightly capped liability, broad security warranties, open-ended audit rights, vague service commitments, customer ownership of broadly defined deliverables, aggressive breach notice timing, and termination rights that let the customer walk away while keeping your team tied to transition work. A large customer’s standard form can also hide favored clauses in exhibits and order forms, so do not assume the main agreement tells the whole story. In practice, I keep seeing founders focus on the indemnity headline while missing the quieter operational landmines. A contract can look manageable and still become painful if it commits you to support levels, implementation effort, or security processes your team does not actually have. ## Using a customer’s standard form or your own contract Once you are dealing with a larger customer, one practical question shows up fast: do you push your paper, or do you agree to start from theirs? There is no universal right answer. The better answer usually depends on your leverage, the speed of the deal, how enterprise-ready your form is, and whether the customer’s standard paper is merely customer-favorable or genuinely unworkable. ### Pros of using your own startup contract form If you start with your own MSA or SaaS agreement, you control the baseline. That usually means cleaner positions on liability, IP ownership, service commitments, data use, and renewal mechanics. It also gives your team a repeatable playbook, which matters because commercial contracts get expensive when every deal becomes a bespoke drafting exercise. The downside is leverage. A large customer may simply refuse to engage seriously with startup paper, especially if procurement is set up to run on its own template. Even when they do accept your form as the draft, they may redline it back into something that functionally looks like their paper anyway. ### Pros of using the customer’s standard form Using the customer’s form can reduce friction at the front end because you are working inside their internal process rather than fighting it. If the deal is important and you know the customer will never sign your paper cleanly, starting from their form can sometimes be the fastest route to signature. But the risks are obvious. Their standard form was designed to protect them, not you. So you often inherit aggressive positions on indemnity, security commitments, audit rights, warranty scope, limitation of liability, and termination. In practice, I keep seeing founders underestimate how much hidden work sits in a large customer’s “standard” paper. Standard for them often means highly optimized against vendors. ### When to use your contract form and when to use theirs If your form is reasonably mature and the customer is not massively strategic, start with your paper. If the customer is large, process-heavy, and unlikely to move, it can make sense to start with their form and negotiate hard on the clauses that actually change the economics and operational burden. You are not trying to win every drafting point. You are trying to avoid signing obligations your product, support team, and vendor stack cannot actually support. The theory is that your form saves time because it reflects your preferred positions. The reality is that paper only saves time if the other side is willing to use it. Sometimes the best move is to send your form first to anchor the negotiation, then switch to the customer’s paper once you know which issues matter and which ones are just noise. ## Pilot and proof-of-concept startup agreements Pilot, trial, and proof-of-concept deals look temporary, but they can create production-like obligations surprisingly fast. If the contract is vague on success criteria, support scope, data use, security commitments, or rollout assumptions, a short test can turn into a long argument about what the customer thought it was buying. If you are using a pilot to win a larger account, be clear about what the pilot is and is not. Define the term, the scope, the evaluation criteria, the support model, who owns any deliverables, and what happens at the end. Otherwise, you are effectively subsidizing custom implementation work under the label of “testing.” One pattern I keep seeing is that founders accept enterprise-style obligations in pilot paper because the customer promises future expansion. Sometimes that happens. Often it does not. You are trading present effort and risk for possible future revenue, so the pilot needs boundaries or it stops being a pilot in any meaningful sense. ## Startup vendor contracts and procurement risk Your outbound startup commercial contracts are only part of the story. If you depend on vendors to deliver uptime, security, support, or implementation, your inbound paper matters just as much. Vendor contracts deserve more attention than they usually get, because your own customer promises may depend on what your vendors can actually deliver. A bad cloud, data, software, outsourced support, or implementation agreement can trap you in recurring spend, weak service commitments, or data-handling terms that conflict with what you promised your customers. For vendor paper, focus first on scope, fees, renewal mechanics, suspension rights, termination, and ownership of outputs. Then look at the hidden commercial issues: can the vendor change pricing mid-term, subcontract freely, restrict your migration rights, or disclaim responsibility for core dependencies? Those are the clauses that create operational pain later. One real-world pattern I keep seeing is startups signing vendor paper as if it were commodity procurement, then discovering that the vendor’s limits make the startup’s customer promises impossible to honor. If your customer SLA is tighter than your upstream vendor commitment, you are effectively self-insuring the gap. ## Channel, reseller, and partnership agreements for startups The next layer of risk in startup commercial contracts shows up when you stop selling only through your own team. Once another company sits between you and the end customer, control over pricing, branding, support, and the customer relationship starts to shift. Once you move beyond direct sales, startup contracts often include referral agreements, reseller deals, channel partnerships, white-label arrangements, and marketplace terms. These can accelerate distribution, but they also create indirect revenue risk because another company may be controlling the customer relationship, pricing presentation, or support expectations. The clauses to watch are exclusivity, territory, pricing control, branding rights, lead ownership, payment timing, audit rights, and who is responsible when the end customer complains. A reseller contract that sounds like a growth shortcut can quietly lock you into channel conflict, margin compression, or support obligations you did not price correctly. Big logo syndrome shows up here too. A strategic partner with a recognizable name can make the deal feel more valuable than it is. But if the paper gives them favored economics, broad license rights, or soft exclusivity, the contract may end up constraining future sales more than it expands them. ## Marketplace, platform, and API agreements for startups If your growth depends on a marketplace listing, a platform relationship, or [API](https://aws.amazon.com/what-is/api/) access, those agreements deserve more attention than founders usually give them. They can affect distribution, pricing freedom, customer ownership, technical use rights, and even whether your product can keep working the way you expect. The legal issue is not just access. It is dependency. A platform can change use restrictions, rate limits, review standards, revenue share, branding rules, or termination rights in ways that hit both product and revenue. If a meaningful part of your motion depends on one ecosystem, that contract is not background paper. It is part of your go-to-market strategy. API agreements can also create hidden downstream problems. If your customer contract promises functionality that depends on third-party APIs, but your upstream platform terms restrict caching, sublicensing, training use, or service levels, you may be promising more than your stack legally supports. That is a business model problem disguised as a contract issue. ## Privacy and data terms in startup commercial contracts As soon as customer data enters the picture, startup commercial contracts get more complicated. Price and scope may get the deal moving, but privacy and security terms often decide whether the deal actually closes. If your product touches personal data, privacy and security terms become part of your commercial paper, not a separate compliance side quest. Depending on the deal, you may need a privacy policy, a DPA, a security exhibit, incident response language, and data-use restrictions. In customer negotiations, those documents often matter as much as the commercial terms because they decide whether the buyer can actually onboard you. This is where many startups get pulled into enterprise procurement faster than expected. A customer may agree on price and then send a privacy rider that asks for audit rights, retention commitments, aggressive breach notice windows, or restrictions on subprocessors. The practical question is not whether the language sounds reasonable. It is whether your operations, vendor stack, and security team can live with it. Do startups need [NDAs](https://startuplawyer.com/startup-law-glossary/nda)? Sometimes, yes, especially when you are exchanging technical, pricing, or customer information with vendors and partners. But in commercial deals, the heavier lift is usually the ongoing confidentiality and data-handling language inside the main agreement, not the standalone NDA at the front of the conversation. ## IP ownership in startup commercial contracts Data terms are only part of the risk allocation. The next issue is ownership: what the customer gets, what you keep, and what rights survive once the project or subscription is over. Some of the most expensive fights in startup contracts are really fights about IP ownership dressed up as commercial negotiation. If you are providing software, implementation services, integrations, models, content, or custom work, the agreement should say what the customer owns, what you retain, and what rights each side gets to use underlying tools, feedback, and improvements. Founders often hear “the customer owns deliverables” and assume that only applies to the final work product. In practice, vague ownership language can bleed into templates, connectors, training materials, product features, or background technology you need for other customers. If you do services or customization, this is one of the sharpest drafting lines in the whole contract. People confuse ownership with access all the time. A license lets the customer use the product. Ownership transfers the asset. Confidentiality limits disclosure. Those are different levers, and if the contract blurs them, the commercial relationship gets harder to scale. ## Startup commercial contracts in due diligence All of this eventually shows up in diligence. If you are building for growth, fundraising, or a future sale, your startup commercial contracts are part of the product whether you think of them that way or not. What contracts matter most in due diligence? If the focus is commercial, buyers and investors usually care most about your largest customer agreements, non-standard enterprise redlines, channel and reseller deals, key vendor contracts, data processing terms, and any agreement that creates exclusivity, favored pricing, unusual service levels, or change-of-control friction. The reason is simple. Those contracts reveal whether your revenue is durable and whether your obligations are scalable. A startup can look strong on bookings and weak on contract quality if too much revenue depends on one-off concessions, bespoke security promises, or implementation obligations that only work because the founders are personally patching the gaps. In an acquisition process, the question is not whether you have contracts. It is whether your paper supports the story your metrics are telling. If your top deals contain unusual liability exposure, consent rights, or roadmap commitments, that mismatch is where value leaks out. One issue tends to matter even more once a sale becomes real: whether your key contracts move with the company cleanly. ## Assignment and change of control in startup commercial contracts If you ever want to sell the company, [assignment](https://startuplawyer.com/startup-law-glossary/assignment) language matters more than most founders realize. A commercial contract may look valuable in diligence, but if it cannot be assigned in a merger, stock sale, or asset sale without customer consent, that contract can become a friction point in the deal. Sometimes it is just an extra signature. Sometimes it gives the counterparty leverage at exactly the worst moment. The basic issue is anti-assignment language. Some contracts prohibit assignment outright without consent. Others allow assignment but treat a change of control as an indirect assignment. Still others permit assignment in connection with a merger, acquisition, or sale of substantially all assets. Those are very different outcomes, and buyers will care about the difference because they do not want key revenue contracts held hostage by consent risk. ### Why startup commercial contracts matter in a sale process In practice, I keep seeing founders focus on pricing, liability, and service commitments while underestimating assignment clauses. Then an acquisition process starts, and suddenly the question is whether your top customer, vendor, or platform contracts survive the transaction cleanly. If too many of them require consent, the buyer may discount value, ask you to fix the issue before closing, or treat the contracts as less durable than your revenue numbers suggest. The counterparty perspective is understandable here. A customer may not want to wake up one day and discover that its vendor is now owned by a competitor, private equity sponsor, or larger strategic buyer it did not choose. But from your side, a rigid anti-assignment clause can turn ordinary M&A mechanics into a renegotiation event. ### What to watch for in startup commercial contracts Watch for clauses that prohibit assignment by operation of law, treat a change of control as an assignment, or require prior written consent for any merger, recapitalization, or sale of equity. Also look for termination rights tied to change of control, because those can be just as disruptive as a pure anti-assignment restriction. The theory is that assignability is a back-end [M&A](https://startuplawyer.com/startup-law-glossary/mergers-and-acquisitions) issue. The reality is that it should be negotiated when the contract is signed, because your leverage is usually much worse once a sale is on the table. If you need a practical rule, use this one: for important customer, vendor, channel, and platform agreements, try to preserve assignment in connection with a merger, acquisition, or sale of substantially all assets, ideally without needing consent as long as the assignee can perform the contract. You are trading a little counterparty comfort for much cleaner exit optionality later. That trade is often worth pushing for in contracts you may need a buyer to rely on. ## People confuse startup commercial contracts with A startup contract is not the same thing as a template. A template is just a starting point. The contract is the signed document plus the schedules, order forms, riders, and overrides that define the real deal. It is also not the same thing as a policy. A privacy policy tells users how you say you handle data. A DPA or customer agreement allocates legal responsibility between companies. And it is not the same thing as diligence hygiene. Organizing signed PDFs, board approvals, and cap table records does not fix a bad contract. It just makes the bad contract easier for the other side to find. ## The practical takeaway on startup commercial contracts If you remember one thing, make it this: your commercial contracts are where the business model becomes legally real. They define what you owe, what you can charge for, what risks you are carrying, and whether growth will scale cleanly. The best time to fix weak customer or vendor paper is before a big customer, procurement team, or acquirer uses it as leverage. ## Startup Commercial Contracts FAQ ### What contracts do startups need with customers? If you sell software or services, you usually need a customer contract stack that includes an MSA, order form, SOW, terms of service, and sometimes an SLA or DPA. The exact mix depends on whether you sell self-serve, do implementation work, handle personal data, or negotiate enterprise deals. ### What is the difference between an MSA and an SOW? An MSA sets the standing legal rules for the relationship, such as payment terms, liability caps, confidentiality, and termination rights. An SOW covers the specific work, timeline, deliverables, and acceptance terms for a project or implementation. If you expect repeat work, separating those documents usually makes future deals cleaner. ### What is the difference between terms of service and a customer contract? Terms of service are standard terms used at scale, usually through a website or product flow. A customer contract is negotiated paper for a specific account. Once the buyer wants custom pricing, security commitments, implementation services, or procurement terms, you are usually outside pure terms-of-service territory. ### When should a startup use the customer’s standard form instead of its own? If your form is mature and the customer is not unusually strategic, start with your paper because it gives you a cleaner baseline. If the customer is large, procurement-heavy, and unlikely to move, starting with their form can be faster, but only if you negotiate the clauses that change economics and operational burden. The real question is not whose template wins. It is whether the final paper matches what your team can actually support. ### What changes once a startup starts selling to enterprises? Enterprise sales usually bring longer procurement cycles, more stakeholders, and a larger stack of contract documents. What looks like one deal can become an order form, MSA, DPA, SLA, security exhibit, and implementation paper. That matters because your legal obligations start reaching across product, support, security, and finance at the same time. ### What red flags matter most in enterprise customer contracts? The biggest red flags are usually uncapped liability, broad security warranties, open-ended audit rights, vague service commitments, aggressive breach notice timelines, and customer ownership of broadly defined deliverables. A contract can also look fine at the headline level while hiding the real pain in exhibits, order forms, or security riders. ### What should be in a pilot or proof-of-concept agreement? A pilot agreement should define the term, scope, evaluation criteria, support level, data rules, and what happens when the pilot ends. If the pilot includes custom work, the agreement should also address ownership, rollout expectations, and whether a paid production deal is automatic or still subject to a separate contract. Without those boundaries, a pilot can turn into subsidized implementation work. ### What vendor contracts matter most for startups? The vendor contracts that matter most are the ones tied to core infrastructure, customer data, outsourced delivery, recurring spend, or service dependencies behind your own customer promises. If a vendor affects uptime, security, implementation, or gross margin, that contract deserves real attention because your downstream obligations may depend on it. ### Do startups need NDAs? Sometimes, especially with vendors, partners, and diligence counterparties. But in commercial relationships, the heavier lift is usually inside the confidentiality, data use, and security language in the main agreement. A standalone NDA helps at the beginning, but it does not replace the real contract. ### Should startup commercial contracts be assignable in an acquisition? Usually, yes, at least for your important customer, vendor, channel, and platform agreements. If a contract blocks assignment or treats a change of control as a breach without consent, it can create avoidable deal friction and give the counterparty leverage during an acquisition. The key issue is whether mergers, stock sales, and asset sales are covered clearly enough to avoid a fight later. ### What contracts matter most in due diligence? On the commercial side, buyers and investors care most about your largest customer agreements, non-standard redlines, key vendor contracts, channel and reseller deals, platform dependencies, data-related commitments, and assignment restrictions. They are looking for concentration risk, unusual liability, hidden service burdens, exclusivity, and change-of-control problems. ## Related Topics If you are thinking through contract process, customer paper, vendor risk, or how commercial terms affect growth and diligence, these guides are a helpful next place to go. - [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) - [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) ## Questions About Startup Contracts or Commercial Terms? If you would like to talk through customer contracts, vendor agreements, procurement terms, or other commercial-contract issues, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are actively negotiating customer, vendor, or other revenue-related agreements, you can also learn more about my work on the [Startup Contracts Lawyer](https://startuplawyer.com/startup-contracts-lawyer) page. If your company needs broader ongoing support with contract process, customer paper, vendor issues, approvals, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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[Startup board of directors guide overview](#aioseo-startup-board-of-directors-guide-overview-1) - [What does a startup board of directors do](#aioseo-what-does-a-startup-board-of-directors-do-6) - [When should a startup have a board of directors](#aioseo-when-should-a-startup-have-a-board-of-directors-21) - [Startup board of directors meetings and who runs them](#aioseo-startup-board-of-directors-meetings-and-who-runs-them-32) - [Startup board seats and board composition](#aioseo-startup-board-seats-and-board-composition-41) - [Startup board governance beyond board seats](#aioseo-startup-board-governance-beyond-board-seats-57) - [Delaware board meetings vs written consent](#aioseo-delaware-board-meetings-vs-written-consent-73) - [Startup board minutes and why they matter](#aioseo-startup-board-minutes-and-why-they-matter-92) - [Startup board fiduciary duties](#aioseo-startup-board-fiduciary-duties-103) - [Interested director transactions in a startup](#aioseo-interested-director-transactions-in-a-startup-115) - [Startup board observer rights and why they matter](#aioseo-startup-board-observer-rights-and-why-they-matter-126) - [Startup board terms people confuse](#aioseo-startup-board-terms-people-confuse-138) - [Startup board governance mistakes founders make](#aioseo-startup-board-governance-mistakes-founders-make-143) - [Startup board of directors practical takeaway](#aioseo-startup-board-of-directors-practical-takeaway-147) - [Startup board of directors FAQs](#aioseo-startup-board-of-directors-faqs-150) - [Related Topics](#aioseo-related-topics-168) - [Questions About Startup Board Control or Governance?](#aioseo-questions-about-startup-board-control-or-governance-177) ## Startup board of directors guide overview A startup [board of directors](https://startuplawyer.com/startup-law-glossary/board-of-directors) is the group that legally approves major company actions and oversees management, while the CEO runs the business day to day. If you are a founder or CEO of a Delaware [C-Corp](https://startuplawyer.com/startup-law-glossary/c-corporation), that answer starts to matter as soon as outside investors ask for board seats, board observer rights, or approval rights over major decisions. If you are raising a priced round or negotiating governance terms, this is usually the moment to stop treating the board like formation paperwork and start treating it like a real control issue. This guide answers the questions founders usually ask first: What does a startup board of directors do, when should a startup have a board of directors, how many board seats should a startup have, and what is a board observer in practice? I cover startup board governance, fiduciary duties, board meetings versus written consent in Delaware, board minutes, CEO versus board authority, and interested director transactions. Put more bluntly, this is about who has power, how that power gets used, and where you can lose leverage without realizing it until later. ## What does a startup board of directors do A startup board of directors is the body that manages, or directs the management of, the corporation’s business and affairs under Delaware law. In plain English, it sits at the top of the legal authority chart. It approves major corporate actions, appoints officers, oversees risk, and decides whether management can take the kinds of steps that change ownership, control, or direction. A board of directors means the formal governing body of the corporation. A [corporate officer](https://startuplawyer.com/startup-law-glossary/officer) means a person, such as the CEO or CFO, who has delegated authority to run part of the business. In real company life, the board usually approves financings, stock issuances, equity plans, top-officer appointments, major budgets, acquisitions, a sale of the company, and other actions that are too important to leave to informal founder judgment. It is also where conflicts stop being background noise and become a real process issue. If one investor is leading a bridge round, if management is getting retention packages in a sale process, or if the company is choosing between two bad options, this is where it gets handled or mishandled. ### Startup board powers vs CEO powers If you are the [CEO](https://startuplawyer.com/startup-law-glossary/chief-executive-officer-ceo), it probably feels like you run the company because, on most days, you do. But a startup board of directors is not management, and board power is not CEO power. The board decides whether the company can take certain major actions at all. You usually carry those decisions out under delegated authority. That difference can sound technical right up until a deal is about to close and someone realizes the company never got the required board approval. For example, you can usually hire employees, direct sales strategy, negotiate ordinary-course contracts, and push the operating plan forward unless the bylaws, board resolutions, or internal approval rules say otherwise. By contrast, issuing stock, approving a financing, expanding an equity plan, appointing senior officers, entering a merger agreement, or authorizing a sale usually sits with the board. I keep seeing founders confuse signature authority with approval authority. Those are not the same thing, and the distinction tends to show up in diligence, which is rarely when you want surprises. ### How startup board control works in practice The clean theory is that a startup board of directors supervises management through thoughtful meetings, decent materials, and informed votes. The messier reality is that early-stage boards spend a lot of time on runway, financing pressure, hiring judgment, and whether the CEO still has the board’s trust. So the next question is usually not academic. It is when this starts to matter in a real company with real outside money and real approval dynamics. ## When should a startup have a board of directors If you formed a corporation, you already have a board, even if it is just you. The better question is when your startup board of directors stops being a founder-only formality and starts becoming a real governance body with outside voices and real control consequences. That usually happens at the first institutional priced round, although some [seed stage](https://startuplawyer.com/startup-law-glossary/seed-stage) deals start the shift earlier through information rights, protective provisions, or an observer right that functions like a soft-launch board seat. ### How startup board of directors structure changes by stage At pre-seed, the startup board of directors is often one founder or two co-founders. That is usually fine. Speed matters more than ceremony, and there may not be much to govern yet besides equity issuances, option grants, and basic officer appointments. At seed, the governance picture often starts changing before the board formally changes. Investors may ask for more reporting, a board observer, or consent rights over a small set of major actions. That can matter a lot even if they do not yet hold a voting seat. At [Series A](https://startuplawyer.com/startup-law-glossary/series-a-round), a common startup board of directors structure is two common seats, two preferred seats, and one independent. That is where control starts to feel different even if you still own a lot of common stock. Once the board becomes coalition-based instead of founder-led, the real question is not just whether you still have a seat. It is who can align with whom when the company misses plan, needs a bridge, or gets a low but credible acquisition offer. I keep seeing founders negotiate valuation very hard and governance surprisingly softly, then realize later that board composition changed more than they thought. Once that shift happens, you usually feel it first in the meeting itself, because that is where board authority stops being abstract. If you are raising a priced round or negotiating investor governance terms, you can also learn more about my work on the [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page. ## Startup board of directors meetings and who runs them In most startup board meetings, you and your team run the flow in practical terms even though the board is the legal decision-maker. You usually set the agenda, prepare the deck, frame the issues, and present the proposed path. In a young company, that means the meeting often feels like a management presentation with a governance overlay, which is fine because nobody needs fake formality. But you do not own the board process just because you built the deck. Directors can ask for more information, change the discussion order, defer action, reject management’s recommendation, and meet without management in executive session. Once outside investors join, the meeting usually shifts from “here is what we are doing” to “here is what we recommend and why.” That sounds like a small language change. It is not. ### What executive session means in startup board of directors meetings An executive session is the part of the meeting where directors meet without management or without certain attendees present. In startup board meetings, that usually comes up when the board wants to talk more candidly about CEO performance, compensation, a financing dynamic, litigation, or a conflict issue. If you are the CEO, do not treat every executive session like a coup attempt. But if they start getting longer, more frequent, or harder to read, pay attention. That is often where board mood shows up before anyone says it out loud. ## Startup board seats and board composition How many board seats should a startup have? Early on, fewer is usually better. A three-person startup board of directors is often cleaner than a five-person board because it keeps things fast, lowers the politics, and makes accountability clearer. Five seats can make sense once you have multiple major investor constituencies or you really need an independent voice to break likely deadlocks, but a bigger board is not automatically more mature. Sometimes it is just slower and harder to manage. Most startup board seats fall into three buckets: founder or management seats, investor seats, and independent seats. Founder seats carry operating context. Investor seats carry capital, monitoring, and influence. Independent seats are supposed to bring judgment and neutrality, although in real life the independence question often turns on who selected the person, who trusts them, and whether they are walking into the room as an actual swing vote or as someone’s polite proxy. ### When to add an independent director to a startup board of directors A startup should usually add an [independent director](https://startuplawyer.com/startup-law-glossary/independent-director) when the board is no longer just a founder working session and starts becoming a real approval body with competing interests. T hat often happens at Series A, sometimes earlier, and occasionally later if the cap table stays simple. The point is not to look grown-up. The point is to improve trust, process, and decision quality when the board is likely to split on hard issues. If you are negotiating the independent seat, the real issue is selection mechanics. “Mutually agreed” sounds balanced, but what matters is who can block whom, how long the seat can sit vacant, and whether one side can weaponize delay. You are trading certainty for neutrality. Sometimes that is worth it. Sometimes it leaves the most important seat on the board floating in limbo right when you need a real adult in the room. ## Startup board governance beyond board seats Startup board governance is the system that decides who gets information, who gets a vote, who can block action, and how a corporate decision becomes valid company action. If you only look at the cap table, you miss most of the governance picture. Governance sits across the charter, bylaws, voting agreement, investor rights agreement, approval thresholds, committee structure, and the actual behavior inside the boardroom. The [certificate of incorporation](https://startuplawyer.com/startup-law-glossary/certificate-of-incorporation) is the charter document that sets core share rights and governance basics. The [bylaws](https://startuplawyer.com/startup-law-glossary/bylaws) are an internal governance rulebook covering mechanics like meetings and officer authority. For example, you can keep a lot of common equity and still lose practical control if two investor-appointed directors plus one independent can outvote you on executive leadership, financing strategy, or sale timing. On the other hand, an investor can have a board seat and still not control much if founder seats are aligned and the independent is genuinely independent. So if you are trying to understand startup board governance, read it as a package. Seats matter. Consent rights matter. Observer rights matter. Process matters too, and process is where a lot of the real power hides. If your company needs broader ongoing support with governance, board process, approvals, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### Startup board governance documents that matter The certificate of incorporation sets class and series rights. The bylaws handle meeting mechanics, quorum, and officer authority. The [voting agreement](https://startuplawyer.com/startup-law-glossary/voting-agreement) often locks in who gets to designate directors. The [investor rights agreement](https://startuplawyer.com/startup-law-glossary/investor-rights-agreement) usually handles information rights and can include board observer rights or inspection rights. In venture financings, the [NVCA model legal documents](https://startuplawyer.com/startup-law-glossary/nvca-docs) are the standard starting point for these arrangements, which is one reason board terms feel familiar from deal to deal even when the leverage differs. Once those documents are in place, the next question is how the board actually takes action under Delaware law. ## Delaware board meetings vs written consent In a Delaware corporation, the board usually acts in one of two ways: at a board meeting or by unanimous written consent. The legal rule is simple enough. The practical difference is what matters. At a meeting, a [quorum](https://startuplawyer.com/startup-law-glossary/quorum) and the required (often a majority) vote can be enough. By written consent, unanimity is usually the rule. If you are moving fast, that difference can be the line between a clean approval and an avoidable mess. ### When a Delaware startup board of directors meeting is better than written consent A board meeting is usually better when the issue is complex, disputed, or likely to matter later in diligence or litigation. Meetings let management present context, let directors ask questions in real time, and create a cleaner record that the startup board of directors actually deliberated. If you are approving a down round, a conflicted financing, executive compensation, a recapitalization, or a sale process, a real meeting is usually the safer path because the process itself may get examined later. Written consent is usually better when the action is routine, urgent, and not meaningfully disputed. Approving banking resolutions, clean-up equity issuances, officer appointments, or standard option grants often fits that category. You are trading deliberation for speed. That trade can be worth it. It is a bad trade when the board needs real discussion, conflict management, or a record that shows actual care. ### Delaware board approval rules founders miss At a meeting, you need to satisfy the notice rules in the bylaws, hit quorum, and get the required vote. Delaware’s default rule is that a majority of the total number of directors constitutes a quorum, unless the charter or bylaws validly require a different number within the statutory limits, and the act of a majority of directors present at a meeting with quorum is usually enough unless the governing documents require more. By contrast, action by written consent under [DGCL](https://startuplawyer.com/startup-law-glossary/delaware-general-corporation-law) Section 141(f) requires all directors to sign or otherwise validly consent. One missing signature can break the approval chain. This is one reason founder-only boards use consents far more comfortably than venture-backed boards with outside directors. If the board is just you and a co-founder, unanimous written consent is easy. Once you have investor directors, an independent, and maybe a board observer in the mix, the meeting stops being just a voting device and starts being the place where oversight actually happens. That is usually when a startup board of directors begins to feel real. And once the board starts acting more formally, the written record starts mattering more too. ## Startup board minutes and why they matter Board minutes are the formal written record of what happened at a board meeting. If the board acts by written consent, that executed consent should live with the company’s board records too. Minutes matter because they are evidence of process, not because lawyers like paperwork. They show who attended, whether quorum existed, what materials the board reviewed, whether anyone recused, and what resolutions were approved. If you ever sell the company, raise another round, face a dispute, or answer a diligence request, those details stop feeling clerical very quickly. ### What good startup board of directors minutes should include Good startup board minutes usually identify the date, attendees, quorum, major topics discussed, any observer exclusions, any director recusals, and the resolutions approved. They should show real process without becoming a transcript. That balance matters. If the minutes capture every loose comment, you create noise and sometimes litigation problems. If they say almost nothing, they do not do the one job you actually need them to do, which is prove that the board acted like a board. In many startups, outside counsel, company counsel, or the corporate secretary drafts the minutes, usually with management input and the draft resolutions nearby. The common mistake is letting them drift and then backfilling the record months later because a financing, audit, or M&A process forced the issue. That is governance debt. It tends to come due at exactly the moment you have the least patience for it. ## Startup board fiduciary duties What fiduciary duties do startup directors owe? In a Delaware corporation, directors generally owe duties of care and loyalty to the corporation and its stockholders. That means they are supposed to get informed, act in good faith, manage conflicts, and exercise judgment for the company rather than for their personal constituency. Delaware’s board framework under [DGCL Section 141](https://delcode.delaware.gov/title8/c001/sc04/) and the conflict rules in [DGCL Section 144](https://delcode.delaware.gov/title8/c001/sc04/#144) are part of the legal backdrop for how those duties get tested in practice. This matters most when incentives split. You may care about dilution, mission, and staying in the role. An investor-director may care more about downside protection, timing, and portfolio economics. Nobody gets to treat a board seat like a delegate badge for their own camp. Once someone is acting as a director, the legal job is to use judgment for the company. That does not make everyone neutral. It does mean the process has to deal with conflicts honestly instead of pretending they are not there. ### When startup board fiduciary duties matter most The flashpoints are familiar: insider-led financings, down rounds, repricings, acqui-hires, sale processes where management gets retention packages, related-party contracts, and decisions about whether to keep funding a struggling company. In those moments, outcome matters, but process matters almost as much. If the startup board of directors did not get enough information, failed to surface conflicts, used a thin written consent when a real meeting was needed, or papered the minutes later, the argument often becomes about whether the board acted responsibly at all. That is the bridge to interested director transactions, where conflict management stops being a general principle and becomes a very specific process problem. ## Interested director transactions in a startup An interested director transaction is a deal where a director or officer has a personal financial interest, a conflicting relationship, or some other stake that can affect impartial judgment. Think founder loans, insider bridge notes, a lease with an affiliate, unusual compensation arrangements, or a financing where one director’s fund is leading the round. Under Delaware law, these deals are not automatically invalid just because of the conflict. But they do require real disclosure and real process. Wishful thinking is not a substitute. ### How Delaware Section 144 applies to startup conflicts Section 144 is Delaware’s conflict-management framework. The current version provides procedural safe harbors for interested director and officer transactions if the material facts are disclosed or known and the transaction is approved by disinterested directors or disinterested stockholders under the statute’s conditions, or otherwise qualifies under the fairness path. The 2025 amendments were meant to add more clarity and certainty, not to bless sloppy insider deals. If the company wants the benefit of those safe harbors, disclosure, disinterested review, and a defensible record still matter a lot. Take a simple startup example. The company is running low on cash, one existing investor director offers to lead a bridge financing, and the alternatives are bad or nonexistent. That deal may still be the right answer. But if the interested director drives the process, dominates the information flow, and the startup board of directors never creates a real record of alternatives, recusal handling, and why the terms were the best realistically available, the later problem will not just be price. It will be process. That same logic carries over to board observers, because access to the room can shape the process even without a formal vote. ## Startup board observer rights and why they matter A [board observer](https://startuplawyer.com/startup-law-glossary/board-observer) is a person who has contractual rights to attend board meetings and receive board materials, but does not hold a director seat. Do board observers have voting rights? No, not as directors. Their leverage usually comes from access, presence, and influence rather than formal voting power. In venture deals, observer rights often show up through the investor rights agreement and related side arrangements, which is why they can matter more than they look at first glance. This is the part people underweight. A board observer may not have a vote, but the observer can shape agenda flow, ask sharp questions, influence the independent, and relay everything back to the investor who negotiated the right. Non-voting does not mean harmless. In some rooms, it means influence with less accountability, which is not always the bargain you thought you were making. ### How to limit startup board observer rights If you grant board observer rights, build in clear exclusion rights for privilege, conflicts, compensation, litigation, financing strategy involving that investor, and other topics where the observer’s presence creates a real process problem. You also want confidentiality obligations that are real, not decorative. The investor’s ask is understandable because they want visibility and influence. The company’s answer should be that visibility is fine, but not at the expense of privilege, conflict management, or basic governance hygiene. At that point, it also helps to separate observers from the other roles founders tend to lump together. ## Startup board terms people confuse **Advisors.** An advisor helps informally and usually has no governance authority. A board observer is tied to negotiated company rights and sits much closer to the formal decision process. **Officers.** Officers run the company day to day under delegated authority. Directors oversee officers and approve major actions. You can be both a founder-officer and a director, but the roles are still different and the law treats them differently. **Protective provisions.** These are investor or preferred-stock consent rights over specific corporate actions. They are not the same thing as a board seat, but together with board seats they can materially shift control. **Stockholder voting.** Some actions need stockholder approval in addition to board approval. So if you are asking who approves major decisions in a startup, the answer is often the board first and then the stockholders or a protected investor class if the law or the deal documents require it. ## Startup board governance mistakes founders make The first mistake is treating startup board governance like a math problem and stopping at seat count. But minutes, information flow, conflict handling, observer access, written-consent discipline, and independent-seat mechanics often matter just as much as raw composition. The second mistake is confusing operational control with governance control. You may still be the CEO, still own the most common stock, and still be the person everyone inside the company follows. But if the board can replace officers, block a financing path, insist on a sale process, or refuse the deal you want, your practical authority is narrower than it feels on a random Tuesday afternoon. The third mistake is over-optimizing for symbolic wins. I keep seeing founders fight hard over whether an investor gets an observer seat, then approve meaningful actions through a thin written consent when a real board meeting would have created a much better record. Others focus on whether the board has three seats or five and barely engage on who controls the independent seat selection. From the investor side, the push for meetings, materials, and governance rights is often about monitoring risk, not grabbing control for sport. That is usually a fair instinct. The question is whether the package still fits the company you are actually running. ## Startup board of directors practical takeaway If you remember one thing, remember this: a startup board of directors is not background compliance. It is where legal authority, investor leverage, founder judgment, and conflict management all meet. So if you are raising money, do not ask only what economics you are giving up. Ask who can approve, who can delay, who can block, who sees the materials, who controls the meeting, and what the record will look like later when someone finally cares about the process. ## Startup board of directors FAQs ### What does a startup board of directors do? A startup board of directors approves major corporate actions and oversees management at the highest level. It does not run the business day to day. Instead, it decides whether the company can do things like issue stock, approve a financing, appoint or remove top officers, or pursue a sale. ### When should a startup have a board of directors? You already have a board if you formed a corporation, even if it is just one founder. In practice, the board becomes operationally important once you raise outside money, grant governance rights, or move into a priced round where investor oversight becomes real. ### How many board seats should a startup have? Early on, three seats is often the cleanest board structure. It keeps decisions fast and politics lower. Five seats can make sense later if you have multiple investor constituencies or need a real independent director. ### What is the difference between a board meeting and a written consent in Delaware? At a board meeting, directors discuss the issue, satisfy quorum, and vote. By written consent, the board usually acts only if all directors sign or otherwise validly consent. In Delaware startups, meetings are usually better for complex or conflict-heavy decisions, while written consents are better for routine or urgent actions. ### Who usually runs startup board meetings? Usually the CEO and management run the meeting flow by setting the agenda, presenting the deck, and teeing up decisions. But the board, not management, is the formal decision-maker. Directors can ask for more information, change the process, or meet without management when needed. ### Do board observers have voting rights? No. Board observers do not vote as directors. Their influence comes from access to board materials, attendance at meetings, and the ability to shape discussion before a vote happens. ### How do the board’s powers differ from the CEO’s powers? The board approves major corporate actions and appoints officers. The CEO runs day-to-day operations under delegated authority. So the CEO may negotiate and sign ordinary-course matters, but board approval is often needed for financings, stock issuances, equity plan changes, top-officer appointments, or a sale. ### What is an interested director transaction? An interested director transaction is a deal where a director or officer has a personal stake that could affect impartial judgment. In a Delaware startup, the usual fix is disclosure, disinterested approval where possible, and a clear record showing why the deal was fair or the best realistic option. ## Related Topics If you are thinking through board control, governance rights, or how investor terms affect decision-making, these guides are a helpful next place to go. - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) ## Questions About Startup Board Control or Governance? If you would like to talk through board control, governance, approval rights, or board process issues, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If your company needs broader ongoing support with governance, approvals, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. If you are negotiating a priced round or investor governance terms, my [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page may be a helpful next step. And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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[Startup Acquisition Process Overview](#aioseo-startup-acquisition-process-overview-1) - [How the Startup Acquisition Process Begins](#aioseo-how-the-startup-acquisition-process-begins-10) - [Startup Acquisition Deal Structure](#aioseo-startup-acquisition-deal-structure-20) - [How to Prepare for the Startup Acquisition Process Before the LOI](#aioseo-how-to-prepare-for-the-startup-acquisition-process-before-the-loi-37) - [Startup Acquisition Process: The LOI](#aioseo-startup-acquisition-process-the-loi-54) - [Startup Acquisition Process: Due Diligence](#aioseo-startup-acquisition-due-diligence-process-87) - [Startup Acquisition Process: The Documents](#aioseo-startup-acquisition-process-the-documents-110) - [Startup Acquisition Process: Payout and Proceeds](#aioseo-startup-acquisition-process-payout-and-proceeds-129) - [Startup Acquisition Process: Signing and Closing](#aioseo-startup-acquisition-process-signing-and-closing-143) - [Startup Acquisition Process: Post-Closing Issues](#aioseo-startup-acquisition-process-post-closing-issues-166) - [What Kills a Startup Acquisition Process](#aioseo-what-kills-a-startup-acquisition-process-175) - [Startup Acquisition Terms People Confuse](#aioseo-startup-acquisition-terms-people-confuse-194) - [Startup Acquisition Takeaways for Founders](#aioseo-startup-acquisition-takeaways-for-founders-199) - [Startup Acquisition Process FAQ](#aioseo-startup-acquisition-process-faq-211) - [Related Topics](#aioseo-related-topics-233) - [Questions About a Startup Acquisition or Exit?](#aioseo-questions-about-your-situation-238) ## Startup Acquisition Process Overview This guide is for you if you are a founder or CEO of a U.S. startup and you want to understand the startup acquisition process before you are stuck inside it. If you are asking how does a [startup acquisition](https://startuplawyer.com/startup-law-glossary/acquisition) work, what is an LOI in a startup acquisition, what happens during acquisition due diligence, and what happens after closing an acquisition, this is the version that matters in an actual deal. A startup acquisition means a transaction in which a buyer acquires your company or its assets through an asset sale, stock sale, or merger. If you get serious inbound interest, your decision rule should be simple: stop treating legal and process work like cleanup and start treating them like economics. That sounds a little harsh. It is also true. In real startup M&A, deals usually do not die because somebody found a fascinating doctrinal issue. They die because the [cap table](https://startuplawyer.com/startup-law-glossary/capitalization-table) is messy, consents were ignored, IP ownership is incomplete, or the seller side never got aligned on what it would actually take to sell. That said, most serious startup acquisition processes do get to the finish line. The point of understanding the process is not to assume the deal will fall apart. It is to help you get the deal done on better terms and with fewer bad surprises. This is a cornerstone guide, so I am not trying to bury you in edge cases. I am focusing on the parts of the startup acquisition process that actually move outcomes for you: structure, leverage, diligence, documents, approvals, payout mechanics, and post-closing risk. ## How the Startup Acquisition Process Begins Most startup acquisitions begin one of two ways. A buyer approaches you because they have been tracking your product, talent, market position, or customer base. Or you run a more deliberate process with counsel, bankers, or both. The first path feels flattering. The second path feels organized. Neither one excuses you from process discipline. In the early stage, the buyer often wants just enough information to decide whether to spend real time. So you usually see an NDA, a few management conversations, a request for basic metrics, and then a move toward a letter of intent if interest becomes serious. At that point, the startup acquisition process stops being abstract. From there, it becomes a managed transfer of information and [leverage](https://startuplawyer.com/startup-law-glossary/leverage-ability). ### When a Buyer Starts Taking the Startup Acquisition Process Seriously You will probably ask how long a startup acquisition takes. A normal answer after a signed [LOI](https://startuplawyer.com/startup-law-glossary/letter-of-intent) is 60 to 120 days, although messy deals take longer and unusually clean ones can move faster. But the calendar is not the real story. The real story is leverage, and yours is usually strongest before exclusivity, before the buyer has spent weeks learning where your soft spots are. ## Startup Acquisition Deal Structure ### Asset Sale vs Stock Sale vs Merger in a Startup Acquisition An [asset sale](https://startuplawyer.com/startup-law-glossary/asset-acquisition) lets the buyer purchase selected assets and selected liabilities. That sounds clean, and from the buyer side it often is. They can try to leave behind parts of the company they do not want, including certain liabilities, awkward contracts, or old operating baggage. But for you as the seller, especially if you are a [Delaware](https://corp.delaware.gov/) C-Corp, that cleanliness can come with tax friction, more transfer work, and more room for value to leak. A stock sale transfers the equity of the company itself, so the legal entity continues to own its contracts, assets, and liabilities. A [merger](https://startuplawyer.com/startup-law-glossary/merger) achieves a similar practical result through statutory mechanics, and in venture-backed deals a merger is often the cleanest way to move the whole equity stack in one transaction. Buyers do not choose structure because one label sounds nicer. They choose structure because it changes taxes, consents, risk allocation, and how hard the [integration](https://startuplawyer.com/startup-law-glossary/integration) will be on day one. If you remember one early rule, make it this: structure often matters as much as price. Sometimes more. That is why deal structure belongs early in the startup acquisition process, not buried later in the documents. You are not just negotiating what the buyer will pay. You are negotiating what gets bought, who keeps legacy risk, how much cash actually shows up at closing, and what part of the deal is still contingent, deferred, or trapped. So if you obsess over headline value and shrug at structure, you are usually negotiating the wrong number. ### What Founders Over-Optimize in a Startup Acquisition You will be tempted to over-optimize for headline price because it is clean, simple, and emotionally satisfying. That instinct is understandable and often expensive. In a real startup acquisition process, you are usually trading a bigger top-line number for some combination of more [escrow](https://startuplawyer.com/startup-law-glossary/escrow), more [earnout](https://startuplawyer.com/startup-law-glossary/earnout), worse tax treatment, tougher employment conditions, or lower certainty of closing. That trade can be worth it. It is not smart just because the bigger number looks better in your head. For example, a lower all-cash offer with limited post-closing exposure may be better than a higher offer that depends on two years of employment and a vague earnout formula. You are trading theoretical value for actual value. Founders sometimes need to hear that plainly because no one wins a trophy for maximizing consideration that never materializes. ## How to Prepare for the Startup Acquisition Process Before the LOI ### Clean Up Cap Table, Corporate Records, and IP Before a Startup Acquisition Before the LOI, the highest-value work is boring. Clean up your cap table, confirm board and stockholder approvals for major actions, make sure every founder, employee, and contractor signed invention assignment documents, and organize a real data room. That is not glamorous founder work, but it is the kind of work that keeps buyers from discovering expensive surprises during M&A [due diligence](https://startuplawyer.com/startup-law-glossary/due-diligence). If your company needs broader ongoing legal support getting its legal house in order before a transaction, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. What does this mean in practice? It means checking that option grants were actually approved, that [SAFEs](https://startuplawyer.com/startup-law-glossary/safe) and notes are reflected correctly, that old advisors did not receive phantom promises by email, and that your core product was not built on code you do not clearly own. Buyers regularly find missing signatures, stale approval records, and contractor IP problems. Those are classic value reducers because they are easy to spot and hard to love. ### Get Board and Investor Alignment Before the Startup Acquisition Process You also want alignment on the seller side before the buyer senses momentum. Talk to your board, understand investor expectations, identify any veto rights or [drag-along rights](https://startuplawyer.com/startup-law-glossary/drag-along-rights), and decide who will run point with legal, finance, and the buyer. This matters because a startup acquisition process is not just one negotiation between you and the acquirer. It is also an internal negotiation among founders, investors, employees, and sometimes debt holders, all of whom may care about different outcomes. In practice, I keep seeing founders walk into acquisition talks as if the only real negotiation is with the buyer. It is not. A lot of deal stress comes from seller-side misalignment that should have been surfaced before the LOI, not while everyone is pretending the wire is basically done. ### Build a Startup Acquisition Data Room Before Diligence Starts If you wait until diligence starts to build your [data room](https://startuplawyer.com/startup-law-glossary/data-room), you are already giving away leverage. A good room lets you produce corporate documents, key contracts, financial statements, tax records, equity records, IP assignments, privacy materials, and employment documents quickly and coherently. Buyers read speed as confidence. They read chaos as risk, even when the underlying problem is fixable. And once you have done that prep, you are in a much better position to handle the LOI and what comes after it. ## Startup Acquisition Process: The LOI ### What Is an LOI in a Startup Acquisition A letter of intent, or LOI, sets the commercial frame for the deal before the parties spend serious money and time on full diligence and definitive documents. Most LOIs are largely non-binding on the core economics, but exclusivity, confidentiality, expense allocation, and similar process terms may be binding. So the right mental model is not “soft document.” It is “control document” for the next phase of the startup acquisition process. If you have raised venture capital before, one useful comparison is this: an acquisition LOI often feels less specific than a venture capital term sheet. A [VC term sheet](https://startuplawyer.com/startup-law-glossary/term-sheet) usually locks in more of the economic architecture early, even though the long-form documents still matter. By contrast, a startup acquisition LOI often leaves more of the real pain for later. Indemnity scope. Schedule burden. Working capital logic if relevant. Employment-linked economics. Post-closing risk. So if the LOI feels a little underwritten compared with a financing term sheet, that is usually because it is. ### Startup Acquisition LOI Terms That Change Founder Outcomes The terms to negotiate hard at the LOI stage are purchase price, structure, form of consideration, escrow or holdback, earnout, exclusivity length, expected employment or retention conditions, and rollover equity. If the buyer expects you or your team to stay, that should be surfaced here, not sprung on you in employment drafts later. If part of the consideration is contingent, define the contingency now or assume the ambiguity will favor the buyer later. Exclusivity deserves more attention than it usually gets because it sounds procedural and is actually strategic. A short exclusivity period may feel aggressive, but it can make sense if the buyer wants broad access and you want pressure to keep things moving. A long exclusivity period with fuzzy economics is usually a bad trade unless the buyer is giving you unusual certainty or unusually strong terms in return. And once exclusivity starts, the leverage story usually changes. If you are actively negotiating a sale, merger, or other exit transaction, you can also learn more about my work on the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page. ### Why Leverage Drops After Exclusivity in a Startup Acquisition Process Once you sign exclusivity, the buyer knows you are not actively running a live market check for a defined period. Meanwhile, the buyer gets deeper diligence access and starts learning where your contracts, approvals, systems, or internal alignment may be weaker than the pitch suggested. From the buyer’s perspective, that is not evil. It is rational. They are optimizing for certainty and downside protection. From your perspective, it means the startup acquisition process becomes much less forgiving after the LOI. ### Why Buyers Use Time and Delay as Leverage It also often feels like buyers elongate the process because delay creates leverage near the end. Sometimes that is just ordinary buyer bureaucracy. Sometimes it is internal approvals, diligence sprawl, or real integration questions. Either way, the practical effect can be the same. If your runway is shrinking, your team is distracted, and everyone on your side is mentally halfway to closing, the buyer can gain leverage simply by letting time do some of the work. You do not need to assume bad faith to notice the pattern. That is why speed is not just a convenience in the startup acquisition process. It is a seller protection tool. If burn is high, customer concentration is real, or morale gets fragile during uncertainty, a long process can soften resistance to last-minute asks on escrow, earnout, retention, or schedule disclosure. It can also make an exclusivity extension feel less like a choice and more like an inevitability. In practice, if you think time pressure could weaken your position, you should negotiate process discipline early instead of assuming the buyer will move quickly because they seem enthusiastic. ### Why the End of Exclusivity Usually Does Not Help Much This is one of the clearest patterns in startup M&A. You think the LOI is where the deal begins. In practice, it is often where your negotiating leverage peaks and then starts to drain away. Even hitting the end of the exclusivity window may not help you much unless you have credible alternative buyers and sufficient runway. If you do not, the buyer may simply ask for another two-week extension. And maybe another one after that. And in many real deals, you are not choosing so much as acknowledging reality. ## Startup Acquisition Process: Due Diligence ### What Happens During Startup Acquisition Due Diligence During acquisition due diligence, the buyer is testing whether your legal, financial, operational, and technical reality matches the story that got the deal this far. This is deeper than fundraising diligence. In a financing, investors may tolerate some cleanup and price around risk. In an acquisition, the buyer is asking a harder question: if we own this company next month, what exactly are we taking on? Theory says diligence is a neutral fact-finding exercise. Reality says it is also a renegotiation engine. Every unanswered question, every missing document, and every sloppy exception gives the buyer a chance to tighten the paper, slow the process, or re-trade the economics. That is why diligence readiness is not clerical. It is leverage preservation. ### Startup Acquisition Due Diligence Checklist by Category - Corporate records and capitalization, including your charter, bylaws, cap table, board approvals, stockholder approvals, SAFEs, notes, and option documentation. - Financial and tax records, including revenue quality, historical statements, debt, payroll, tax filings, nexus questions, and any accounting that required wishful interpretation. - Commercial contracts, especially key customer, vendor, partner, lease, and debt documents, plus change-of-control and anti-assignment provisions. - Employment and equity matters, including offer letters, equity grants, contractor arrangements, restrictive covenants, severance issues, and classification risk. - Intellectual property and open-source software, including invention assignment, chain of title, third-party licenses, code provenance, and infringement exposure. - Privacy, security, regulatory, and litigation issues, especially if you handle sensitive data, sell into regulated markets, or have received serious complaints. ### What Diligence Problems Do to Deal Terms Here is where the startup acquisition process gets concrete. If a major customer agreement requires consent before assignment, that can delay closing or push risk back onto you. If core code was built by a contractor who never assigned IP rights, that issue can move from annoying to central in one afternoon. If your tax filings are inconsistent across states, the buyer may not walk. But they may insist on tighter [indemnification](https://startuplawyer.com/startup-law-glossary/indemnification) or more money in escrow. Not every problem kills the deal. Most of the time, real problems get priced, papered, or pushed into a closing condition. But every real problem does have some type of price. ### How to Respond to Startup Acquisition Diligence Requests Respond quickly, answer directly, and do not hide fixable problems behind vague language. A buyer can live with some issues. What buyers hate is surprise, drift, and selective disclosure. If there is a real problem, explain it plainly, show the fix if one exists, and keep control of the narrative. Slow or incomplete responses make even manageable issues look bigger than they are. And whatever shows up in diligence is likely to show up again in the paper. ## Startup Acquisition Process: The Documents ### What Documents Are Needed for a Startup Acquisition The core document set usually includes the NDA, the LOI, the purchase or merger agreement, [disclosure schedules](https://startuplawyer.com/startup-law-glossary/disclosure-documents), board and stockholder approvals, and a stack of ancillary closing documents. Depending on the deal, those extras may include assignment documents, payoff letters, escrow agreements, support agreements, restrictive covenant documents, employment or consulting agreements, certificates, and funds flow memoranda. If key people are staying or rolling equity, expect a parallel set of side documents that matter more than founders initially think. ### How the Startup Acquisition Purchase Agreement Allocates Risk The definitive agreement is where the polite summary from the LOI turns into actual obligations. This is where you see [representations and warranties](https://startuplawyer.com/startup-law-glossary/representations-and-warranties), covenants, [conditions to closing](https://startuplawyer.com/startup-law-glossary/conditions-precedent), indemnification mechanics, escrow rules, earnout formulas, employee treatment, and payout detail. In most startup acquisitions, diligence and drafting happen in parallel. So every issue the buyer finds can quickly reappear in the paper as a new condition, a broader representation, a tighter covenant, or a more seller-unfriendly remedy. ### Why Disclosure Schedules Matter in a Startup Acquisition Disclosure schedules deserve more respect than they usually get because they are where broad promises meet messy facts. [Founders](https://startuplawyer.com/startup-law-glossary/founder) sometimes treat schedules like annexes their lawyers can finish at the end. That is a mistake. In a startup acquisition process, the schedules are often the real inventory of what is unusual, incomplete, or risky about the business. If they are sloppy, you are not just being untidy. You are buying yourself exposure. ### Who Drafts First in a Startup Acquisition and Why It Matters In a typical negotiated deal, the buyer sends the first draft of the definitive agreement. That matters because the first draft frames the debate and quietly sets a baseline for what will later be called standard. The main exception is a competitive process where the seller can circulate its own form and make buyers react to seller paper. In founder-led deals without a real auction, the buyer’s first draft often has more influence than it deserves. ### Startup Acquisition Terms Founders Should Read More Carefully If you are the founder, pay special attention to [indemnity](https://startuplawyer.com/startup-law-glossary/indemnity) baskets and caps, fraud carveouts, escrow release mechanics, earnout definitions, employment-linked payment conditions, and interim operating covenants. Those are the places where “we agreed on price” can quietly become “we agreed on a very different risk profile.” Many founders spend too much time on defined terms they can pronounce and not enough time on conditions that will actually affect whether and when they get paid. Which brings us to the part most people care about most anyway: the money. ## Startup Acquisition Process: Payout and Proceeds ### How the Startup Acquisition Waterfall Really Works If your company has raised venture money, do not assume sale proceeds flow evenly to everyone. Start with debt payoff, transaction expenses, the [liquidation preference](https://startuplawyer.com/startup-law-glossary/liquidation-preference), option treatment, escrow, holdbacks, management carve-outs, and any earnout or rollover structure. Only then do you get to the real shareholder waterfall. This is the part of the startup acquisition process that turns excitement into arithmetic. If you have multiple preferred rounds, participation features, or unusual side arrangements, the waterfall can get political fast. That is why you should pressure-test payout scenarios early. If you do not understand the waterfall before signing the LOI, you are relying on vibes during one of the few parts of the deal where math matters more than narrative. ### A Startup Acquisition Example of Why Headline Price Misleads Imagine the buyer offers $40 million. That sounds like the answer. Then you start subtracting. Debt payoff. Transaction bonuses. A 10% escrow. Legal and banker fees. Preferred liquidation rights. Option treatment. Then assume another piece of the price sits in a two-year earnout tied to your continued employment. Suddenly the startup acquisition process is no longer about a $40 million deal. It is about how much money arrives now, who gets it, how much remains at risk, and what conditions attach to the rest. ### Why Headline Price Is Not the Real Deal Value I am being blunt because this is where founder disappointment usually lives. The real negotiation is not just price. It is price, timing, certainty, allocation, and tax effect. If you negotiate only one of those, you are not really negotiating the deal. You are reacting to the most flattering number in it. That said, I once had a client who was upset that his acquisition payout was “only” in the mid-seven figures. I told him that a number can feel strangely small in a pro forma waterfall and very large once it is sitting in your bank account. He called me the day after the wire landed to tell me I was right. ## Startup Acquisition Process: Signing and Closing ### Why Signing and Closing Are Not the Same in the Startup Acquisition Process By that point, though, the deal still has to get from paper to money. Some startup acquisitions sign and close at the same time. Others sign first and close later because consents, regulatory filings, debt payoff mechanics, or other conditions still need to be completed. If there is a gap between signing and closing, the definitive agreement will usually impose interim operating covenants that restrict how freely you can run the business. So yes, you may have “done the deal” and still find yourself needing permission for decisions you used to make in ten minutes. ### Startup Acquisition Closing Checklist - Required board and stockholder approvals are in place and correctly documented. - Third-party consents have been obtained where contracts, leases, or debt documents require them. - Disclosure schedules, officer certificates, and other closing deliverables are complete and current. - Debt payoff letters, escrow instructions, and funds flow mechanics are fully settled. - Any employment, consulting, retention, or rollover equity documents for key people are ready to sign. - The parties confirm that closing conditions have been satisfied or waived under the definitive agreement. ### What Delays Startup Acquisition Closing One dry aside from practice: closing is where everyone discovers which supposedly minor checklist item was not minor at all. A missing consent, stale approval, unresolved payoff amount, or signature issue can hold up the wire even when the business terms have felt done for weeks. That is why disciplined deal teams are not being precious. They are protecting the only moment in the startup acquisition process when paper has to turn into money. That kind of friction is normal. Many deals feel a little messy right before they close. The important point is that most of those issues are solvable if the parties are still serious and the process has been managed well. ### Startup Acquisition Funds Flow and Announcement Planning By the end of the deal, everyone is tired. That is exactly why funds flow and communications need extra attention. Make sure the payout paths, escrow allocations, debt payoffs, and recipient details are right. Also decide who says what, and when, to employees, customers, and counterparties. A deal can close cleanly on paper and still feel sloppy if the money moves correctly but the messaging does not. And even after the wire lands, the process is not necessarily over. ## Startup Acquisition Process: Post-Closing Issues ### What Happens After Closing a Startup Acquisition Process After closing, you may still be dealing with indemnity claims, escrow release timing, purchase price adjustments, earnout measurement, tax reporting, transition services, and restrictive covenants. So if part of your payout depends on staying employed or hitting future milestones, post-closing can feel less like the end of the startup acquisition process and more like a second negotiation under somebody else’s roof. ### What Founders Underestimate After a Startup Acquisition Closes What founders underestimate after closing is how fast control stops being theirs. The buyer now controls budgets, systems, reporting lines, and often product priorities. So if your economics depend on an earnout, retention bonus, or continued employment, define the rules while you still have leverage. Otherwise, “we’ll work that out later” was not a plan. It was a donation. Earnout disputes deserve special skepticism. If the metrics are vague, if the buyer controls the inputs, or if your role after closing is unclear, the earnout may function more like contingent optimism than reliable consideration. That does not mean every earnout is bad. It means every earnout should be read as a risk-sharing mechanism, not as cash already in your pocket. And it is one of several reasons deals can still go sideways even after the main agreement is signed. ## What Kills a Startup Acquisition Process The heading is a little dramatic on purpose, but it is worth saying plainly that many of these issues do not automatically end the deal. More often, they change timing, economics, or risk allocation. Serious buyers and serious sellers usually find a way through ordinary problems. The real danger is letting manageable issues turn into trust problems. - Broken IP chain of title, especially from contractors, former team members, or code inherited without clear ownership. - A messy cap table, undocumented promises, or equity grants that were never properly approved. - Change-of-control or anti-assignment consent problems in customer, vendor, lease, or debt documents. - Financial statements that do not support the growth or margin story told in early discussions. - Data privacy, security, or regulatory issues that expand buyer risk in a way no one surfaced early. - Founder expectations anchored to headline price instead of net payout, certainty, and timing. - Overreliance on a vague earnout that functions as a substitute for present-value consideration. - Seller-side misalignment among founders, investors, or key employees late in the process. ### Why Buyers Re-Trade Late in the Startup Acquisition Process In practice, I keep seeing deals wobble because the seller treated diligence like a filing exercise instead of a credibility exercise. A clean room, fast answers, and honest issue-spotting do not guarantee a close. But they do make it much harder for the buyer to weaponize surprise, delay, and uncertainty. Buyers usually do not need a dramatic reason to re-trade a deal. They just need enough friction to make it sound responsible. ### Startup Acquisition Mistakes You Can Still Avoid Some deal damage is hard to avoid. Markets move, buyers change strategy, and boards get cold feet. But a surprising amount of damage is self-inflicted. If you overstate customer durability, ignore consent issues, let internal politics fester, or assume your lawyer can draft around missing facts, you are creating preventable deal risk. Good paper can allocate risk. It cannot erase bad history. Before wrapping up, it helps to separate this process from a few nearby concepts people often blur together. ## Startup Acquisition Terms People Confuse **Acquisition vs acqui-hire.** An acquisition is a purchase of a company or its assets. An acqui-hire is a deal where the buyer is mainly buying the team, and the technology or business may be secondary. **LOI vs definitive agreement.** The LOI frames the deal and the process. The definitive agreement is the binding contract that allocates risk, sets closing conditions, and governs what happens if things go wrong. **Fundraising diligence vs acquisition diligence.** Fundraising diligence asks whether investors want to back the upside. Acquisition diligence asks whether a buyer is comfortable owning the downside too. **Signed deal vs closed deal.** A signed deal means the parties executed the main agreement. A closed deal means the conditions were satisfied, the money moved, and the ownership transfer actually happened. ## Startup Acquisition Takeaways for Founders If you remember one thing, remember this: the startup acquisition process is not just a march from LOI to closing. It is usually a steady transfer of leverage from seller to buyer unless you prepare early, negotiate structure carefully, and stay disciplined about diligence, approvals, and payout mechanics. The founders who do best are rarely the ones with the prettiest story. They are the ones whose company can survive a hostile flashlight, whose stakeholders are aligned, and whose instincts are good enough to know when the bigger number is actually the worse deal. And one last point on tone: most real deals that get this far do end up getting done. Usually not perfectly. Usually not without some re-trading, cleanup, or last-minute irritation. But usually they do get done. ### What to Do This Week If You Are Preparing for a Startup Acquisition - If you have active inbound interest, decide your likely deal structure and identify the three terms you need pinned down before exclusivity begins. - If you are not in a live process yet, run an internal diligence drill on cap table accuracy, IP assignment, major contracts, board approvals, and tax housekeeping. - If your investors are likely to care about timing or payout allocation, model the waterfall now so no one is discovering economics in the final week. - If key employees matter to deal value, decide early which retention asks are acceptable and which should be treated as purchase price economics, not side compensation. - If you suspect your contracts contain consent traps, have someone review the top twenty agreements before you start trading serious deal paper. ## Startup Acquisition Process FAQ ### How does a startup acquisition work? A startup acquisition usually moves from serious buyer interest to an LOI, then to M&A due diligence, definitive documents, signing, closing, and post-closing integration or claims. The exact path changes if the deal is an asset sale, stock sale, or merger. It also changes if third-party consents, debt payoffs, or regulatory issues create a gap between signing and closing. ### What is an LOI in a startup acquisition? An LOI is a letter of intent that sets the main business terms and process expectations before the final agreement is drafted. It is often non-binding on core economics, but exclusivity and confidentiality can be binding. So you should treat the LOI as a leverage document, not a friendly summary. Also, compared with a venture capital term sheet, it is often less specific in the places that later become painful. ### What happens during acquisition due diligence? During acquisition due diligence, the buyer reviews your corporate records, contracts, financials, tax matters, employment setup, IP ownership, privacy posture, and compliance risks to confirm the business they think they are buying is the one that actually exists. If diligence reveals real issues, the result is often a document change, a new closing condition, a price adjustment, or a broken deal. ### What documents are needed for a startup acquisition? The standard package usually includes an NDA, LOI, purchase or merger agreement, disclosure schedules, approval documents, and closing deliverables such as certificates, payoff letters, escrow documents, and funds flow instructions. If key people are staying, add employment, consulting, retention, non-compete where applicable, or rollover equity documents to the list. ### How long does a startup acquisition take? Once an LOI is signed, many startup acquisitions take roughly 60 to 120 days to reach closing, although timing can vary a lot with diligence issues, approvals, consents, buyer process speed, and whether signing and closing are separated. If the seller is disorganized or the structure is messy, the practical answer is usually longer than you hoped. ### What happens after closing an acquisition? After closing, the parties handle integration, escrow tracking, indemnity issues, tax reporting, purchase price adjustments, and any earnout or retention mechanics that continue beyond the wire. If your compensation depends on future milestones or continued employment, post-closing obligations may matter almost as much as the money paid on day one. ### Why do buyers sometimes drag out the startup acquisition process? Sometimes buyers drag out the startup acquisition process because they have real internal approval steps, diligence work, or integration questions to resolve. But delay can also create seller pressure, especially if you are burning cash, operating under exclusivity, or already mentally committed to closing. That does not mean every slow buyer is being tactical. It does mean time can move leverage even when nobody says that part out loud. ### Can a buyer lower the price after signing the LOI? Yes. A buyer can try to lower the price after signing the LOI if diligence turns up real issues, if the documents shift risk in a meaningful way, or if time pressure starts working against you. That is one reason founders should negotiate the LOI carefully and not assume the headline number is safe just because the process feels advanced. ### Is a startup acquisition usually an asset sale or a stock sale? It can be either, and sometimes it is structured as a merger instead. Buyers often like asset sales because they may be able to leave behind more liabilities, while sellers often prefer stock sales or mergers if those structures produce cleaner economics, fewer transfer problems, or better tax results. The right answer depends on risk, taxes, consents, and leverage. ### How should you prepare for startup acquisition due diligence? Start by cleaning up the cap table, board approvals, IP assignments, key contracts, financial records, and tax files before the buyer asks for them. Then build a data room that lets you answer requests quickly and coherently. In practice, diligence readiness is not just administrative. It is one of the easiest ways to preserve leverage. ## Related Topics If you are thinking about exit readiness, diligence, or how startup legal issues affect a sale process, these guides are a helpful next place to go. - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) - [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) ## Questions About a Startup Acquisition or Exit? If you would like to talk through a sale process, diligence, or other acquisition issues, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are actively negotiating a transaction, you can also learn more about my work on the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page. If your company needs broader ongoing support getting ready for a transaction, my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page explains how I typically work with growing companies. And if you want a broader overview of the startup legal journey, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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[When should a startup begin working with a startup lawyer?](#aioseo-when-should-a-startup-begin-working-with-a-startup-lawyer-6) - [What startup legal work can wait, and what should not?](#aioseo-what-startup-legal-work-can-wait-and-what-should-not-17) - [What does a startup lawyer actually do?](#aioseo-what-does-a-startup-lawyer-actually-do-36) - [How much does working with a startup lawyer cost?](#aioseo-how-much-does-working-with-a-startup-lawyer-cost-49) - [Startup legal fees: billing models for startup lawyers](#aioseo-startup-legal-fees-billing-models-for-startup-lawyers-67) - [Outside counsel vs. fractional GC vs. in-house counsel for startups](#aioseo-outside-counsel-vs-fractional-gc-vs-in-house-counsel-for-startups-79) - [How to choose the right startup lawyer](#aioseo-how-to-choose-a-startup-lawyer-91) - [Does law firm size matter when choosing a startup lawyer?](#aioseo-does-law-firm-size-matter-113) - [Does bringing your own contract template or using AI reduce legal fees?](#aioseo-does-bringing-your-own-contract-template-or-using-ai-reduce-legal-fees-123) - [How to manage startup legal work like an ops function](#aioseo-how-to-run-startup-legal-like-an-ops-function-144) - [What working with a startup lawyer is not](#aioseo-what-working-with-a-startup-lawyer-is-not-163) - [The practical takeaway on hiring and working with a startup lawyer](#aioseo-the-practical-takeaway-on-working-with-a-startup-lawyer-164) - [Startup lawyer FAQs](#aioseo-working-with-a-startup-lawyer-faqs-171) - [Related Topics](#aioseo-related-topics-190) - [Questions about working with a startup lawyer?](#aioseo-questions-about-working-with-a-startup-lawyer-198) Working with a [startup lawyer](https://startuplawyer.com/startup-law-glossary/startup-lawyer) is usually about getting legal help early enough to avoid expensive mistakes, keep documents investor-ready, and make better decisions as the company grows. For founders building a venture-backed or venture-aspiring company, that often starts with formation, founder equity, IP assignment, hiring, commercial contracts, and fundraising. As the business scales, startup legal work expands into governance, larger customer agreements, employment issues, financing readiness, and recurring operational decisions that often require more consistent legal support. This guide explains when a startup should hire a startup lawyer, what startup legal fees usually look like, how billing models work, when outside counsel or fractional GC support makes sense, and how founders can manage legal more efficiently. It is general information, not legal advice for your specific situation. ## When should a startup begin working with a startup lawyer? One of the first practical questions founders ask is when to bring counsel in. The short answer is usually earlier than most founders want, but later than some lawyers suggest. You do not need a lawyer for every decision on day one. But you do need startup-focused counsel before mistakes get embedded in your [cap table](https://startuplawyer.com/startup-law-glossary/capitalization-table), your [IP](https://startuplawyer.com/startup-law-glossary/intellectual-property) chain, or your commercial process. If you are still at the entity-formation or early setup stage, you can learn more about my work as a [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer). If you are actively raising capital or reviewing financing documents, you can also read more about my work as a [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer). ### Early signs your startup needs a startup lawyer If you are splitting founder equity, issuing stock subject to vesting, or relying on contractor-built code, bring counsel in early. Missing an [83(b) deadline](https://startuplawyer.com/startup-law-glossary/83b-election), failing to paper IP assignment, or improvising founder vesting is usually cheap to avoid and annoying to fix. By the time diligence starts, these issues stop being abstract. They become delay points. ### When a startup lawyer becomes hard to avoid There are a few clear triggers: If any of those are happening, the real question is not whether to hire counsel. It is what level of counsel you need. In practice, many founders wait until a financing or major commercial deal is already live. That is usually the most expensive time to meet your lawyer, because you are paying for speed, cleanup, and negotiation under deadline. ## What startup legal work can wait, and what should not? Once you know roughly when to bring in counsel, the next question is where to spend legal dollars first. Not every legal task deserves immediate attention. But some issues are cheap to handle early and expensive to fix later, so delaying them is usually false economy. ### What usually should not wait - Founder equity, vesting, and stock issuance paperwork. - IP and invention assignment for founders, employees, and contractors. - Entity formation cleanup if you plan to raise outside capital. - Employee and contractor classification issues. - Option grants and board approvals tied to equity. - Material customer, financing, and strategic partnership documents. These are the categories where delay compounds. If ownership, authority, or core economics are unclear, later transactions get slower and more expensive because your lawyer is no longer just advising. They are also cleaning up the record while someone on the other side is already waiting. ### What can sometimes wait Some work can reasonably wait if your budget is tight and the business is still simple. That does not mean it is unimportant. It means the timing is more flexible if you understand the tradeoff. - Polishing lower-volume internal policies that are not yet operationally important. - Customizing every template before you know where negotiation friction actually shows up. - Some trademark and portfolio strategy decisions if your brand and product scope are still moving. - Building a more formal legal ops stack before basic process discipline exists. A good decision rule is simple: if the issue affects ownership, control, fundraising readiness, hiring risk, or revenue, do not be casual about it. If it mainly affects polish, optimization, or future process maturity, you may be able to defer it without much damage. ## What does a startup lawyer actually do? Once you know what needs attention now, it helps to be clear about what you are actually buying. A good startup lawyer does more than draft documents. The work is part risk triage, part process design, part negotiation support, and part translation. In practice, you are paying for judgment about what matters now, what can wait, and which shortcuts are harmless versus costly. ### What a startup lawyer does at the early stage At pre-seed and seed, the work usually includes [incorporation](https://startuplawyer.com/startup-law-glossary/incorporation), founder stock, invention assignment, contractor and employee forms, option plan setup, commercial templates, privacy terms, and financing documents. For a closer look at customer and vendor agreements, see [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide). If you are following common venture norms, your lawyer is also helping you stay inside the lane that future investors expect. ### What a startup lawyer does as your company scales As the company grows, legal gets more operational. Now the work is customer paper, vendor terms, hiring friction, approvals, board process, data use questions, and financing prep. For a deeper look at employment-side issues, see [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide). In a priced round, your counsel will usually work from [NVCA forms](https://nvca.org/model-legal-documents/) or similar market-standard structures because standardized venture documents usually reduce time and cost. That matters more than it may seem. A startup lawyer often reduces future diligence friction by making today’s documents legible to tomorrow’s investors, acquirers, and counsel. If your formation documents, equity issuances, and board approvals follow recognizable patterns, later review is faster. If they were improvised from mixed templates, every later transaction gets slower and more expensive. For example, imagine you hire a contractor to build core product features before the company is properly formed and without a strong assignment agreement. You may think you bought the code because you paid for it. But payment and ownership are not the same thing. A startup lawyer is often making sure your assumptions line up with what your documents actually say. ## How much does working with a startup lawyer cost? Once you understand the job, pricing becomes easier to frame. Startup legal costs vary by stage, complexity, and how organized you are before the work starts. The cleaner answer is not a single number. It is a range by workstream, plus a warning that bills rise quickly when your documents are messy, your counterparty is aggressive, or your team waits until the deal is urgent. ### Typical startup lawyer cost ranges For standard formation work, founder papering, and initial cleanup, founder-facing market guides commonly place the range around low-thousands rather than tens of thousands. Seed-stage support can move into the mid-thousands or even low five figures once you add hiring, contracts, and equity setup. Financing is where the numbers climb. Market examples commonly show SAFEs as materially cheaper than priced rounds, and Series A company-side fees often move into the tens of thousands, sometimes well beyond that when there are multiple investors, timeline pressure, or complex terms. What actually drives cost is not just the legal issue. It is scope discipline. A one-investor SAFE on standard paper is different from a rolling SAFE round with side letters, custom economics, and a cap table no one has reconciled in months. A priced round with standard terms is different from a round where board control, protective provisions, and unusual liquidation economics are all being pushed at once. ### How to budget for startup legal costs Budget by event, not by month alone. Set a base operating budget for recurring support, then reserve separate budget for financing, employment scaling, and major commercial negotiations. Good startup lawyers usually understand this constraint. Early-stage companies do not have large legal budgets, so budgeting should be about spending deliberately at the moments that carry real risk, not treating every legal question as if it deserves the same level of process. If you try to run all legal through a tiny monthly line item, the cost usually does not disappear. It tends to show up later as rushed or avoidable work. A useful way to budget is to think in three buckets: foundation, events, and overflow. Foundation is the recurring work that keeps the company clean, like template maintenance, hiring support, and routine questions. Events are financings, major commercial negotiations, board changes, and disputes. Overflow is what happens when internal process breaks and counsel has to reconstruct the facts. The first two are normal. The third is what you want to minimize. Theory says the cheapest path is to avoid lawyers until the issue is undeniably legal. In reality, the cheaper path is usually to spend modestly at high-risk moments and keep the rest standardized. Founders often spend too little on formation and financing cleanup, then spend too much later explaining inconsistent documents to investors or investor counsel. ## Startup legal fees: billing models for startup lawyers Cost ranges are useful, but they only tell part of the story. If you understand billing models, you can buy legal services more intelligently. Different fee structures fit different kinds of work. The mistake is assuming one model is inherently better than another. Usually, the real question is whether the pricing model matches the predictability of the task. ### Hourly billing Hourly billing makes the most sense when scope is hard to predict. Negotiated financings, messy commercial deals, disputes, and unusual governance questions often fit here. The upside is flexibility. The downside is cost uncertainty, especially if the matter sprawls or multiple lawyers touch it. ### Flat fee and capped fee Flat fees work well for repeatable work like formation, standard [SAFEs](https://startuplawyer.com/startup-law-glossary/safe), [option plan](https://startuplawyer.com/startup-law-glossary/stock-plan) setup, basic templates, and routine contract review. Capped fees can be useful when the matter might expand but both sides want guardrails. Legal pricing commentary keeps pointing to hybrid models for exactly this reason: predictable work is easier to price cleanly, while strategic work is harder to box in. ### Retainer, subscription, and deferred-fee models Retainers and subscription-style models are useful when legal work is ongoing and operational. You are trading some unused-capacity risk for predictability and faster access. Deferred fees can be founder-friendly in the short term, especially around financings, but they are still real costs and may stack on top of investor counsel fees later. So the right question is not just whether fees are deferred. It is whether the total economics still make sense when the round closes. Whatever the model, ask three simple questions up front: What is included, what is excluded, and what usually causes bills to jump? That conversation alone saves a surprising amount of money because it forces both sides to define scope before the work starts. A good billing relationship is not just about price. It is about fewer surprises. You should also ask who is actually doing the work. One partner with context and one associate with execution can be efficient. Three timekeepers touching a simple matter often is not. If you want startup legal fees to stay rational, staffing and communication norms matter almost as much as the headline rate. ## Outside counsel vs. fractional GC vs. in-house counsel for startups Once you have a handle on cost and pricing, the next question is operating model. This is one of the most useful decisions you can make, because outside counsel, fractional general counsel, and in-house counsel solve different problems. If you choose the wrong model, you either overspend on low-value coverage or under-resource a function that quietly shapes hiring, revenue, financing, and governance. ### Outside counsel Outside counsel is usually the right default at the earliest stage. You get specialist help as needed without carrying a full-time salary. The weakness is that the relationship can stay reactive if no one internally owns legal process. ### Fractional general counsel A fractional general counsel model is a more embedded version of outside counsel. It usually sits on a recurring monthly structure and is designed to provide continuity, prioritization, and business-context judgment. This model is most useful when a company has regular legal needs but not enough volume to justify a full-time GC. If your company is moving beyond one-off legal projects and needs ongoing support with contracts, hiring, fundraising prep, governance, and day-to-day legal issues, see my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### In-house counsel Full-time in-house counsel makes sense when legal questions are constant, cross-functional, and too operational to outsource cleanly. That often happens later than founders think. If your volume is still bursty and event-driven, full-time legal can be premature. If your business has daily contract flow, complex employment issues, or heavy regulatory exposure, the math changes. Here is the tradeoff in plain English: you are trading flexibility for continuity, or continuity for lower fixed cost. That trade is worth making when the volume and strategic value of legal work are high enough that context switching has become its own expense. ## How to choose the right startup lawyer Once you know the model you probably need, the next question is who to hire and how to evaluate the fit. If you are going to spend real money on legal, choosing the right lawyer matters as much as choosing the right billing model. The real test is not whether a lawyer is smart. It is whether they regularly work in your lane and can help you make practical decisions under startup conditions. ### What to look for in a startup lawyer Look for startup-specific pattern recognition. You want someone who regularly handles founder setup, venture financings, hiring, and commercial contracts in companies like yours. It means they should know the patterns, the pressure points, and what is normal at your stage. Ask who will actually do the work, whether they can explain scope clearly, and whether they are comfortable telling you that a problem is small when it is actually small. A good startup lawyer should also understand the economic reality you are operating in. Early-stage companies rarely have unlimited room in the budget for legal, even after a financing. Good startup counsel should understand that and help you spend thoughtfully: careful review where it matters, standardization where it works, and a lighter-touch approach where the risk is lower. Responsiveness matters, but it helps to be realistic about what good responsiveness looks like. You want a lawyer who gets back to you promptly, hits real deadlines, and tells you when something is urgent. Constant availability, by itself, is not always a sign of quality. The better signal is not constant instant access. It is reliable turnaround, clear expectations, and good judgment about when your issue actually needs immediate attention. Startup lawyers are constantly re-prioritizing based on client needs and emergencies. ### Questions to ask before hiring a startup lawyer - What kinds of startups do you work with most often? - Who will staff my matters day to day? - What work do you usually price on a flat fee, and what stays hourly? - How do you prefer clients to send context and comments? - At my stage, what problems do you think are worth solving now versus later? ### Red flags when choosing a startup lawyer Be cautious if pricing stays vague, staffing is unclear, or every issue is framed as urgent and bespoke. Also be cautious if the lawyer seems uncomfortable with standard venture documents, startup equity mechanics, or the pace of commercial negotiations. You do not need the cheapest lawyer or the most expensive one. You need someone who knows where the real edges are and does not create unnecessary work around the rest. ## Does law firm size matter when choosing a startup lawyer? Usually less than founders think, at least at the stage most startups are actually in. In most cases, you should hire the lawyer, not the firm. What matters first is whether the person advising you knows startup patterns, exercises good judgment, and can help you make decisions under real time and budget pressure. Eventually, firm size can matter. If you are dealing with specialized tax, regulatory, international, litigation, executive compensation, privacy, or complex M&A issues, a larger platform can be useful because it brings more benches and more specialties under one roof. But that is typically a later problem, often well beyond Series A. It is also worth remembering that specialized boutiques have been gaining ground for years as clients have become more comfortable buying narrow expertise instead of one-size-fits-all coverage. Many strong boutiques also have relationships with trusted outside lawyers in those other areas, so you do not always need one giant firm to get specialized help when it comes up. A simple decision rule is this: if your legal needs are still mostly startup formation, financing, hiring, commercial contracts, and routine governance, focus on the individual lawyer and how the work will actually be staffed. If your company has reached the point where multiple specialty areas are constantly colliding, then firm depth starts to matter more. Until then, do not confuse institutional heft with better day-to-day counsel. ## Does bringing your own contract template or using AI reduce legal fees? Even if you choose the right lawyer, you still have to decide how to use them efficiently. That is where templates and AI come in. Sometimes they save time and money, and sometimes they create more work than founders expect. If you bring your lawyer a clean, market-standard template or a decent AI-assisted first draft for a routine document, that can cut blank-page drafting time. But if the template is outdated, internally inconsistent, overbuilt for your stage, severely underbuilt, or generated without enough context, review can take just as long as drafting from scratch. Most of the time, it is cheaper and faster to let the startup lawyer start with their own forms. ### When bringing your own template or using AI can help It can help when the document is routine, the deal is low-drama, and you already know the business terms. Think NDAs, simple contractor agreements, basic advisor forms, or a first-pass issue list for a vendor contract. AI tools and templates are increasingly good at producing usable first drafts and speeding clause comparison for standard agreements, especially when a human lawyer reviews the result rather than relying on it blindly. ### When bringing your own template or using AI can backfire It backfires when you are asking a lawyer to fix something that only looks efficient from a distance. I keep seeing founders bring in a form pulled from another company, another jurisdiction, or another stage of growth, then assume review should be quick because the document already exists. But a bad starting point can be slower than a clean start. The lawyer has to identify what is wrong, figure out what assumptions are baked in, and then decide what can be salvaged. That is review plus reconstruction. AI follows the same pattern. It is strong at speed, pattern recognition, and first drafts. It is weaker at business context, deal sensitivity, and knowing which clause matters more than it first appears. Legal industry commentary keeps landing in the same place: [AI can accelerate contract drafting and review, especially for repeatable work, but human oversight is still essential because context, current law, and strategic judgment do not come free with polished-looking text](https://startuplawyer.com/startup-lawyer/ai-didnt-kill-startup-lawyers-it-just-gave-everyone-better-tools). ### When AI or your own contract template can reduce legal fees Use your own template or AI draft when the stakes are limited, the paper is standard, and you mainly want to cut first-draft time. Do not do it to save money on core founder, equity, financing, IP, or major revenue documents unless counsel is meaningfully involved. You are trading drafting speed for review risk. That trade can be worth it for low-risk forms. It is often a bad trade for documents that shape ownership, control, or future diligence. As a practical matter, handing a startup lawyer an AI-generated draft and expecting a fast, inexpensive signoff is usually not realistic. If you want this approach to work, give your lawyer the business context with the draft. Say what the document is for, what terms are fixed, what you are worried about, and whether you want a quick issue-spot or a fuller rewrite. The fastest review is not created by AI alone. It comes from a decent starting draft plus a client who knows what decision they need help making. ## How to manage startup legal work like an ops function That brings us to the broader system. If you want real value from a startup lawyer, treat legal like finance or recruiting: give it intake, ownership, priorities, and rules. Legal gets expensive when every request is a one-off and no one knows which documents are current, who can approve changes, or what your fallback positions are. ### Your basic startup legal ops system - Keep one clean source of truth for formation, financing, board, hiring, and material contract documents. - Create simple intake rules so the team knows when legal must review a document before signature. - Use approved templates for NDAs, contractor forms, offer letters, and common customer paper where possible. - Track deadlines that matter, including equity actions, board approvals, renewals, and financing cleanup items. - Decide which issues are business calls, which are legal calls, and which are both. This sounds basic because it is. But it works. If your startup is growing, build simple playbooks before you think you need a formal legal ops stack. For example, decide in advance which fallback positions you will accept on payment terms, liability caps, auto-renewal, confidentiality carveouts, and governing law. Then the next review starts from policy instead of improvisation. That saves time and outside counsel fees. It also helps to understand what the other side is optimizing for. A large customer is often trying to standardize risk across hundreds of vendors. An investor is trying to make sure governance and economics work predictably across a portfolio. Once you see that, it becomes easier to treat each redline as a workflow problem with a business objective underneath it, not a personal slight. ### What founders over-optimize when working with a startup lawyer Founders often over-optimize the lawyer’s hourly rate and under-optimize the company’s own process. Saving modestly on rate usually matters less than avoiding unnecessary comment rounds, missing signatures, inconsistent documentation, or preventable cleanup in front of investors and customers. But the opposite mistake is common too: paying for more expensive counsel does not automatically produce better outcomes. Higher-cost legal support can become inefficient when routine issues are over-lawyered, too many timekeepers are involved, or enterprise-style process is applied to startup problems that call for speed, judgment, and proportionality. The goal is not to buy the cheapest legal support or the most expensive. It is to build an organized legal process and work with counsel whose experience, staffing, and judgment fit the company’s stage and needs. ## What working with a startup lawyer is not At this point, it also helps to separate a few nearby ideas that often get blurred together. Startup lawyer is not the same thing as litigator, local small-business counsel, or a general commercial attorney who rarely sees venture deals. Those lawyers may be excellent in their lanes, but startup work has its own timing, documentation norms, and financing logic. Legal ops is not the same thing as having a lawyer on payroll. It means building a system around legal work so routine issues move faster and outside help is used well. Fractional GC is not just hourly outside counsel with a nicer label either. The point is deeper context, steadier involvement, and better prioritization. ## The practical takeaway on hiring and working with a startup lawyer If you remember one thing, make it this: startups usually get the most value from legal counsel before legal issues become visible to investors, customers, or employees. The best time to involve a startup lawyer is often before you are cleaning up founder paperwork, negotiating under deadline, or answering diligence questions with incomplete records. The better you run legal internally, the less you spend on avoidable mess. If your company needs recurring support with contracts, hiring, governance, fundraising prep, and day-to-day legal questions, you can read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. - If you are pre-seed, make sure founder stock, vesting, and IP assignment are actually papered and complete. - If you are selling, decide which customer terms can be approved from a template and which ones require legal review. - If you are fundraising, ask counsel for a clear scope, billing approach, and a list of diligence items to clean up before investors ask. ## Startup lawyer FAQs ### Do you need a startup lawyer to start a company? Not always on day one. But many founders need a startup lawyer earlier than they think, especially if they are splitting founder equity, issuing stock, using contractors to build core product, setting up IP assignment, or planning to raise outside capital. If you are aiming for a Delaware C corporation and a venture-backed path, early legal setup is usually worth doing correctly. ### How much does a startup lawyer cost? Startup lawyer cost depends on the work involved. Startup formation and standard early-stage paperwork are often in the low thousands, while seed financings, major commercial contracts, and priced rounds can cost much more. A Series A or other negotiated venture financing can move into the tens of thousands, especially if terms are custom, multiple investors are involved, or the process is rushed. ### What startup legal work should be flat fee versus hourly? Flat fees usually work best for predictable startup legal work, such as company formation, standard SAFEs, option plan setup, and routine templates. Hourly or capped-fee billing usually fits negotiated financings, unusual commercial contracts, disputes, and strategic advice, because the scope is harder to predict. ### Should a startup use outside counsel or a fractional general counsel? Outside counsel is usually enough when legal work is occasional, specialized, or tied to specific events like formation, fundraising, or contract negotiation. A fractional GC makes more sense when legal issues are regular, cross-functional, and operational, and the company needs someone to prioritize across contracts, hiring, governance, and day-to-day legal decisions. ### When does a startup need in-house counsel? A startup usually needs in-house counsel when legal work becomes constant and deeply tied to daily operations. That often happens later than founders expect, although regulated companies or startups with heavy contract volume may need in-house support sooner. Until then, many companies can rely on strong outside counsel or a fractional GC plus better internal process. ### How can founders manage startup legal costs without creating risk? Founders usually manage legal spend best by using lawyers early on issues that are expensive to fix later, such as founder equity, IP ownership, financing readiness, and major contracts. The rest should be standardized where possible. In most startups, controlling legal costs is less about chasing the lowest hourly rate and more about avoiding cleanup, reducing negotiation friction, and matching the billing model to the work. ### Can a startup use AI to draft a contract and have a lawyer review it? Yes, startups can use AI to draft a contract and then ask a lawyer to review it, especially for lower-risk and more standardized documents. But the savings are real only if the draft is decent and the review scope is clear. For founder arrangements, equity, IP ownership, financing documents, or major customer contracts, AI plus light legal review often creates more false confidence than real efficiency. ### Does bringing your own contract template reduce startup legal fees? Sometimes. Bringing your own contract template can reduce legal fees if the template is current, market-standard, and close to the deal you actually need. But if the template is outdated, overbuilt, underbuilt, or taken from a different stage or jurisdiction, your lawyer may spend more time fixing it than they would starting from a better form. ## Related Topics If you are thinking through when to hire startup counsel or what kind of legal support makes sense, these guides are a helpful next place to go. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) ## Questions about working with a startup lawyer? If you’d like to talk through your startup’s legal needs, I’d be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are still getting the company set up, you can learn more about my work as a [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer). If you are preparing for a priced round or negotiating venture financing terms, my [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page may be a helpful next step. And if you are looking for more ongoing support as the company grows, you can read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. If you want a broader overview of the startup legal journey, our *[Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap)* is a helpful next place to go. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [The Ultimate Pre-Incorporation Checklist](https://startuplawyer.com/incorporation/the-ultimate-pre-incorporation-checklist) **Published:** April 22, 2026 **Author:** Ryan Roberts **Content:** ***TL;DR:** If your startup is pre-incorporation, you can still lock down the things that usually blow up later: who owns what, who can bind the company, and whether your IP is actually yours. The expensive problems aren’t abstract legal issues. They’re diligence surprises like a cofounder who “thought” they owned 50%, contractor code with unclear ownership, a name you can’t use, or a contract signed by the wrong person. This checklist helps, but it’s not a substitute for incorporating, and most startups should form an entity sooner than they think so you can assign IP cleanly, open a real bank account, sign with clear authority, and issue equity without improvising.* You can build a real business pre-incorporation. Plenty of great companies did. But you can’t build a real business before you have basic “company facts” that survive contact with investors, banks, and buyers. That’s what this pre‑incorporation checklist is: the minimum set of steps that keeps “we’ll do it later” from turning into “we’re fixing this under a term sheet deadline.” This applies to you if you’re pre‑incorporation (or even newly incorporated), you have a cofounder or two, you’re writing code or building product, and you’re planning to raise a pre‑seed/seed round (or even just open a bank account without improvising). The key misconception is that [incorporation](https://startuplawyer.com/startup-law-glossary/incorporation) is the first legal step. In practice, incorporation is just the container. The mess usually comes from what happened *before* you had the container: who contributed what, who owns it, what you promised people, and whether anyone had authority to do any of it. ## Why pre‑incorporation mistakes are so expensive in real startup deals Most early startup legal work is cheap because it’s optional. You can pick a quiet week, make a plan, and do it thoughtfully. It becomes expensive when it’s no longer optional. That moment usually arrives when a third party shows up with leverage: an investor, an acquirer, a bank, a key hire, or a strategic partner. Now you’re not just “getting organized.” You’re proving ownership, authority, and clean cap table history to someone who can say no. There’s also a quieter version of this problem that shows up before any third party is involved: you never managed expectations with your cofounder, advisors, or early helpers. If people are operating on different assumptions about ownership, roles, decision rights, or “promised equity,” you can be on shaky ground before you even have a corporation. In the worst cases, that mismatch doesn’t just create legal cleanup. It blows up trust, fractures the team, and kills the startup before it’s even “born” through the incorporation process. And even when it doesn’t kill the company, internal ambiguity doesn’t stay internal for long, because it eventually leaks into cap table fights, signature authority confusion, and last-minute cleanups right when you need everyone aligned. ## The pre‑incorporation checklist (the boring stuff that prevents future mess) You’ll notice a theme: this checklist is not about being fancy. It’s about being unambiguous. If you do these items, you make it easy for a future investor, acquirer, or lawyer to say, “OK, I see what happened here.” 1. Write down the founder deal in plain English. Who does what, who owns what, and how decisions get made when you disagree. If it is not written, you do not have “alignment,” you have optimism. 2. Agree on founder vesting early. Use a market default (often four years with a one‑year cliff) unless you have a specific reason not to. Vesting is how you avoid permanent cap table passengers. 3. Track cash contributions, expenses, and reimbursements. Decide whether founder money is a loan, a contribution, or “we’ll figure it out.” Future you will hate the third option. 4. Pick one home for key documents and version control. If your cap table lives in three spreadsheets and two text threads, diligence will feel like archaeology. 5. Lock down IP ownership before you ship. Founders and contractors should be under written invention assignment or IP assignment terms so the company actually owns the product. 6. Confirm you can use your name. A domain and a state entity name are not trademark clearance, and forced renames happen at the worst times. 7. Decide who has authority to sign and commit the company. If everyone can sign everything, you will eventually sign something you did not mean to sign. 8. Open a bank account the right way and separate funds. Mixing personal and company money creates accounting problems, tax problems, and credibility problems. 9. Set a basic confidentiality baseline. Use NDAs when appropriate, label confidential materials, and stop casually forwarding sensitive decks to “helpers.” 10. Document advisor and early helper arrangements. If someone is helping in exchange for equity or cash, write it down with vesting or clear deliverables. 11. Stop casual equity promises. “We’ll give you 1%” becomes a real expectation even if you meant it as a compliment. 12. Do basic tax planning hygiene around future equity and compensation. If you are planning to issue restricted stock, understand time‑sensitive items like 83(b) elections before you miss them. 13. Be deliberate about where you incorporate and why. Delaware C‑Corp is common for venture-backed startups, but your facts should drive the timing and entity choice. 14. Stop collecting paper you cannot later explain. Unsigned drafts, mystery cap tables, and one-off side letters do not look like “scrappy.” They look like risk. If you read that list and think “this is all obvious,” good. The win is not learning it. The win is actually doing it. The rest of this article goes deeper on the buckets that most often create expensive surprises: founder economics, IP, naming, authority and banking, and early equity and tax hygiene. ### 1) Write down the founder deal in plain English (before you start remembering it differently) If you have more than one founder, your first legal document is not your certificate of incorporation. It’s your shared understanding of who is building what, who owns what, and what happens if someone leaves. “We’re 50/50” is not a plan. It’s a placeholder. Placeholders are fine until the first stress test: one founder stops showing up, you bring in a CTO, you raise money, or you try to sell. Then the placeholder turns into a negotiation, and now it’s personal. - Write a one‑page founder memo: roles, expected time commitment, and the ownership split with a sentence explaining why. - Decide on vesting economics now, even if the formal paperwork comes at incorporation. - Keep a simple log of cash contributions and reimbursable expenses so you do not later argue about “who paid for what.” - Pick one shared folder for important docs and put the memo there on day one. ### 2) Agree on founder vesting pre-incorporation (so leaving is survivable) Investors like vesting because it keeps incentives aligned. You should like it because it prevents a departed founder from becoming a permanent passenger on your cap table. Market norm in U.S. venture deals is that founder equity vests. Often it looks like four years with a one-year cliff, sometimes with tweaks based on how long you’ve already been working on the company. Concrete example: you and a cofounder start building, split “ownership” on a shared spreadsheet, and six months later your cofounder takes a full-time job elsewhere. If you never set vesting expectations, your choices are bad. You either live with the split, or you renegotiate under resentment. If you did set vesting expectations early, the story is boring. Boring is good. - Pick a vesting baseline and write it down before you incorporate so it becomes paperwork, not a debate. - If work started before formation, decide whether anyone gets “credit” up front, and be explicit about how much. - Align vesting with roles and time commitment, not just ego and origin stories. - Decide what happens if a founder leaves: good leaver vs. bad leaver concepts, and who controls repurchase decisions once you have a board. ### 3) Track pre-incorporation cash contributions, expenses, and reimbursements (because you will forget) Early-stage bookkeeping mistakes don’t look dramatic. They look like Venmo screenshots, founders floating subscriptions on personal cards, and a vague sense that “we’ll true it up later.” Later, “later” shows up as a diligence question: was that money a loan, a capital contribution, revenue, or a reimbursement. You don’t need GAAP. You need a consistent story and a simple record that supports it. - Keep a shared expense log with date, vendor, amount, payer, and “why this was needed.” - Decide whether founder-paid items are reimbursable expenses or founder loans, and write that decision down. - Save receipts in one place so you are not rebuilding history from bank statements. ### 4) Pick one home for key pre-incorporation documents and version control (diligence is not a scavenger hunt) If your “company records” are split across personal inboxes, five Google Docs, and one heroic cofounder’s laptop, you are not moving fast. You are just postponing the day you have to reconstruct what you did. This matters because the question an investor or acquirer asks is not “did you mean well.” It’s “can you produce the documents.” A simple shared folder with clean naming is often the difference between a calm diligence process and a weekend fire drill. - Founder memo and any written founder agreements or emails that confirm the deal. - Contractor and advisor agreements (even if they are simple). - IP assignment paperwork and any open source dependency notes. - A running cap table spreadsheet until you have proper cap table software. ### 5) Lock down IP ownership before you ship (make sure the company owns the product) Founders assume the answer is “the company.” Pre‑incorporation, that is often not true, because there may not be a company yet. Even after incorporation, it is not automatically true for contractors, advisors, and early collaborators unless you paper it. The usual fix is an invention assignment agreement. In plain English, it says: anything I create for the company belongs to the company, and I will sign the paperwork needed to prove it later. For contractors, you also want a work‑for‑hire style agreement plus an assignment, because contractor defaults can be surprisingly unfriendly to founders who like surprises. Concrete example: you hire a developer on a marketplace, pay them, ship the MVP, and later a seed investor asks for your contractor IP assignments. You realize you have invoices and Slack messages, but no assignment language. You can probably get it signed later, but now you are asking a stranger to do legal paperwork because your financing depends on it. That conversation is rarely smoother over time. Another common issue is “I built this at my last job, but it is not related.” Maybe. The question is not your intent. It is what your old employment agreement says, what resources you used, and whether there is any credible argument your employer owns it. You want to clear that risk early because acquirers, in particular, have a low appetite for IP ambiguity. Do not over‑optimize the open source conversation this early. You do not need a heavyweight compliance program pre‑incorporation. You do need to avoid the obvious landmines: do not copy code from random repos without understanding the license, and keep a simple list of major third‑party components so you can answer diligence questions later without guessing. - Use written contractor agreements that include IP assignment. - Have each founder sign an invention assignment at or immediately after incorporation. - Keep company work in company-controlled systems (repos, drives) as soon as you can. - Keep a lightweight list of major open source and third‑party dependencies. ### 6) Confirm you can use your name (your domain is not a legal clearance) Founders routinely treat naming like a design problem. Later it becomes a legal problem. A trademark is the thing that stops someone else in your space from using a confusingly similar name. In the U.S., rights can come from actual use, not just registration. Buying the domain and forming an LLC with a matching name does not mean you are clear. Concrete example: you build modest traction, a podcast mentions you, and then you get a letter from an older company with a similar name in an adjacent category. Now you are choosing between a rename or a fight. Either is distracting. The cheapest time to avoid this is before you ship a brand, print swag, and hard‑code your name into everything. - Do a basic clearance search before you fall in love with the name (Google is not enough, but it is a start). - Check the USPTO database for identical and confusingly similar marks in related categories. - If the name matters to your go‑to‑market, talk to a startup lawyer about a real clearance and filing strategy. - Pick a name you can spell over the phone. This is legal advice adjacent to common sense. ### 7) Decide who has authority to sign and commit the company pre-incorporation Pre‑incorporation, you are not a company. You are a person making promises about a future company. That is not automatically bad, but it is a place where founders accidentally create ambiguity about who is on the hook. Concrete example: you sign a software subscription “for the company” before the company exists, then you incorporate and assume it transferred. Later you try to cancel or negotiate, and the vendor points out that the signer is the customer. This is rarely catastrophic, but it is exactly the kind of sloppy thread that shows up in diligence and makes your life harder than it needs to be. - Decide who can sign contracts and set a simple approval threshold for anything material. - When you sign pre-incorporation, be explicit about whether you are signing personally or on behalf of a future entity, and plan to paper an assignment or replacement agreement after formation. - Use company email and a consistent signature block so counterparties are not guessing who the “customer” is. - Once incorporated, memorialize authority in written consents, and keep those consents in your doc folder. ### 8) Open a bank account the right way and separate funds (credibility is accounting) Separating personal and “company” money is the other predictable mess. If you are mixing funds, it becomes difficult to explain whether something was a loan, a capital contribution, revenue, or a reimbursement. Investors care because it affects your books and your cap table story. The IRS cares for its own reasons. - Decide who is allowed to sign contracts, and keep a simple approval rule. - Once incorporated, use board or founder consents for material actions (opening bank accounts, signing big contracts, issuing equity). - Open a real company bank account as soon as you can and stop using personal accounts for business flows. - If a founder pays for something personally, track whether it is intended as a loan or a reimbursable expense. ### 9) Set a basic confidentiality baseline (before you start emailing your roadmap around) Most confidentiality problems are not espionage. They’re casual oversharing: sending a deck to a “helper,” forwarding customer lists, or letting a contractor reuse credentials because “it’s faster.” At the pre-incorporation stage, you don’t need a compliance program. You do need a baseline that makes later diligence and security questionnaires less awkward: you treated sensitive information like it was sensitive. - Use NDAs when it is actually helpful, such as deep product discussions with non-investor third parties. - Keep your customer list, pricing, roadmap, and source code in access-controlled systems. - Turn off link-sharing by default and grant access by person. - If you use contractors, make sure confidentiality terms are in the contractor agreement, not just implied in Slack. ### 10) Document pre-incorporation advisor and early helper arrangements (good intentions don’t count as paper) If someone is helping in exchange for equity or cash, write it down with vesting or clear deliverables. Otherwise you’re not “moving fast.” You’re creating a future disagreement with receipts. Concrete example: an early advisor introduces you to three customers, you say “we’ll take care of you with equity,” and two years later they claim you promised 2%. You remember meaning “some options later if it works out.” Nobody is lying. You just did not define the deal when it was easy. - Use an advisor agreement that states scope, term, and what the person gets if they help. - If you are granting equity, make it vest over time or be earned against clear milestones. - Be explicit about whether the relationship is advisory, contracting, or employment. The paperwork differs. ### 11) Stop casual pre-incorporation equity promises (this is how you create “ghost equity”) I use “ghost equity” to mean the situation where someone believes they own part of the company, you believe you were just being generous in conversation, and there is no clear document that resolves the mismatch. That mismatch tends to surface at the worst possible time, like right before a financing, when you are already asking everyone to sign things. Pre-incorporation matters still matter in the future. Rule of thumb: do not attach a percentage to gratitude. If you want to compensate someone with equity, use a document that says exactly what they get, when they get it, and what happens if they stop helping. - Avoid “you have 1%” conversations unless you are ready to define the instrument, vesting, and timing. - Keep your cap table in one place and treat it like a financial record, not a vibes document. - When you promise something, write a follow-up email that states what was discussed, even before formal docs. ### 12) Get ready for tax and equity paperwork (so you don’t miss 83(b) when it actually matters) If you’re pre-incorporation, you’re usually not issuing stock yet. But you should still plan for the moment you do, because some of the most painful “tax mistakes” are really “missed paperwork deadlines” that happen right after formation. Example: an 83(b) election is a filing you may want to make after you receive restricted stock (common for founders) so you can be taxed, if at all, when the stock is cheap rather than later as it vests when it may be worth more. It is time-sensitive. If you only learn about it after you’ve already issued founder stock, you are already late. This is also where founders over-optimize. You do not need a tax dissertation pre-product. You do need a simple plan for the first equity issuances and the deadlines they trigger, so you don’t step on a rake in your first week as a real company. - When you do issue equity, calendar any time-sensitive filings immediately and keep proof of submission. - Make sure you know the mechanics ahead of time: who prepares the form, where it gets sent, and what “proof” you will keep in your records. - Keep your personal addresses and legal names consistent in your records so paperwork does not get delayed by avoidable clerical errors. ### 13) Be deliberate about where you incorporate and why (default is not the same as correct) Delaware C-Corp is the default for U.S. venture-backed startups because it is familiar to investors, it has predictable corporate law, and most financing templates assume it. That does not mean you must sprint to Delaware on day one. But even in this pre-incorporation phase, you should be planning on your incorporation. If you are pre-product and not fundraising yet, you can often wait. If you are about to raise money, issue equity, or sign material contracts, you usually want the entity decision made and executed cleanly so you are not retrofitting structure under pressure. - If you expect venture capital, plan for a Delaware C-Corp at or before your first priced round, often earlier. - If you are unsure, optimize for reversibility and simplicity rather than clever structures. - Do not let entity choice substitute for product progress. Get it right, then move on. ### 14) Stop collecting paper you cannot later explain (random documents are not a strategy) A lot of founder mess is not “missing documents.” It is documents that exist but create more questions than answers. If you cannot explain what a document was supposed to do, it will look like hidden risk to someone diligencing your company. This is something that founders have trouble with both pre-incorporation and post-incorporation. - Unsigned drafts that look final. - Spreadsheets labeled “cap table FINAL v7.” - Side letters that promise special economics or control. - Email threads that function as contracts but are missing key terms. - “Advisor equity” notes with no vesting, no instrument, and no board approval. ## Theory vs. reality: the point is not pre-incorporation legal perfection, it is being financeable and acquirable Theory says you should not do anything until you have a clean Delaware C‑Corp, a full document set, and a lawyer-approved process for every action. Or, that you aren’t a ‘real business’ pre-incorporation. Reality is that early companies move fast, founders do things out of order, and plenty of venture financings still close. What changes the outcome is not whether you were perfectly buttoned-up on day 12. It is whether your story is coherent and fixable, and whether the fixes require renegotiating human relationships. In the investment rounds I see, investors care most about (1) a clean cap table, (2) clear IP ownership, and (3) no mystery obligations to third parties. They care less about whether your early advisor agreement used the most current template. They care a lot about whether an ex‑cofounder can credibly claim they own half the company. And things that happened in the pre-incorporation matter just as much as those that happen after incorporation. A practical decision rule: if a mistake could make an investor or acquirer doubt ownership, authority, or enforceability, fix it now. If it is mostly about cosmetics, process polish, or theoretical risk that almost never comes up at seed, park it. Your time is scarce. ## If you remember one thing… **Pre‑incorporation is when you create the facts**. Fundraising and M&A is when someone audits them. If you spend a few hours now during your pre-incorproration phase making ownership, IP, authority, and early promises unambiguous, you dramatically reduce the odds that you will be renegotiating your own company under deadline later. ## Don’t use this pre-incorporation checklist as an excuse to wait forever to incorporate This pre-incorporation checklist is helpful precisely because it lets you reduce risk before you have an entity. But it’s not a substitute for actually forming one. Most startups should not wait too long to incorporate because incorporation gives you a real legal and operational container: cleaner IP ownership (everything can be assigned to one place), clearer authority to sign contracts, easier banking and bookkeeping, and a structure to issue equity to founders and hires. It can also help separate business liabilities from personal ones, which is the kind of benefit you only appreciate after the problem shows up. The common timing mistake is waiting too long until a term sheet, a big customer contract, or a key hire forces the issue. At that point, you’re doing formation and cleanup under deadline, which is exactly when small ambiguities can turn into expensive negotiations. - You’re about to take outside money (even a friends-and-family SAFE) and you want clean paperwork. - You’re about to grant equity to anyone (cofounders, advisors, early employees) and need a real cap table. - You’re signing material contracts or committing to terms where “who is the customer” matters. - You want a real company bank account and to stop mixing personal and business funds. - You’re building valuable IP and want a clean assignment story from day one. ## FAQ (questions founders actually ask) **Do I need to incorporate before I talk to investors?** No, but you should be able to explain your founder ownership, your IP ownership story, and who can sign on behalf of the “company.” In practice, many pre‑seed conversations happen pre‑incorporation. By the time you are signing a term sheet, you will almost always need a real entity. **What is the single most common pre‑incorporation diligence problem?** IP assignment gaps, especially contractor work and early founder work that never got formally assigned to the company. It is fixable most of the time. It is just much easier when everyone is still friendly and reachable, especially during the pre-incorporation phase. **How clean is “clean enough” for a seed round?** Clean enough means your cap table is coherent, your founders and contractors have assigned IP, and there are no side promises that change economics or control without being documented. Investors do not need you to be perfect. They do need you to be explainable. **Can I sign contracts pre-incorporation, or should I wait?** You can sign before you incorporate, but be clear about who is actually signing and who is legally responsible. If the entity doesn’t exist yet, the signer is usually on the hook until the agreement is properly assigned or replaced after formation. If it’s a material contract, this is a strong signal that it’s time to incorporate and clean up authority. **What’s the fastest “minimum viable” way to get incorporated without overthinking it?** If you’re raising venture money, the usual path is forming a Delaware C-Corp, issuing founder equity with vesting, getting IP assignments signed, and setting up basic banking and recordkeeping. The mistake is trying to optimize every detail upfront. Get to a clean, standard setup you can explain, then go back to building. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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You are not the client’s [investment banker](https://startuplawyer.com/startup-law-glossary/investment-banker), and you should not pretend to underwrite the leverage. But you are a counselor who sees how financing terms collide with runway, governance, and the next fundraise…overleverage. The right approach is to flag structural risk early, force clarity on downside scenarios, and make sure the founders and board are getting competent financial advice before they accept covenants and repayment obligations that can quietly take control of the company. ## 1) Stay in Your Lane, but Translate Perceived Overleverage Into Startup Reality Your technical capacity matters. Even if you are comfortable reading a credit agreement, that does not automatically qualify you to conclude that a [leverage level](https://startuplawyer.com/startup-law-glossary/leverage-debt) is “safe” for this particular startup. Startups have volatile revenue, uncertain timing for the next equity round, and limited ability to cut costs without harming product execution. Overconfidence is dangerous because it can cause founders to treat a legal review as a financial green light. What you can do is translate leverage-related terms into day-to-day constraints. In startup deals, the red flags often sit in covenants and control mechanics: minimum cash or liquidity covenants, tight financial covenant thresholds, aggressive reporting and field exam rights, “material adverse change” style discretion, cash dominion triggers, sweeping events of default, cross-default provisions, mandatory prepayment triggers, and broad security interests that include IP. You can also spot when the debt will limit future financings, for example, lender consent requirements for new equity, additional debt, acquisitions, or even certain commercial contracts. If the company has not pressure-tested the acquisition with a real operating model, recommend that it do so immediately. The lender’s underwriting model is not the company’s plan. Encourage the founders to involve a CFO, head of finance, FP&A consultant, or independent advisor who can run downside cases, map covenant headroom, and estimate how much time the deal buys or burns in runway terms. For venture-backed startups, it is also reasonable to suggest that the board and key investors review the capital structure implications before the company commits. ## 2) Counsel the Founders and Board: Ask the Questions They Are Avoiding Your job is not limited to mechanics. You can help founders and directors see the second-order effects of leverage in a venture context, especially when timelines are tight and optimism is doing a lot of work. You do not need to declare that the deal is “overleveraged” to be useful. Instead, surface the operational and governance implications and require a decision that is informed, documented, and owned by the right stakeholders. Ask questions that connect the documents to startup reality: What does runway look like after debt service in the base case and in a downside case? What happens if the next equity round slips by two quarters? Which covenants are most likely to trip first, and how much headroom do we actually have? Will the lender need to consent to future financings, hiring plans, acquisitions, or major customer contracts? What is the plan if integration takes longer than expected and revenue lags? Are we relying on synergy projections to stay compliant? If the team cannot answer, that is a signal to slow down and get the model right. Frame your intervention as risk management and governance hygiene, not veto power. For example: “I cannot validate the economics, but these financing terms can constrain the company and create default risk if performance softens or the next round is delayed. I recommend we review a downside model with an independent finance resource and confirm the board approvals and investor consents we will need before signing.” Follow up in writing so the company has a clear record of what was flagged and how it was addressed. ## 3) Governance and Professional Responsibility in a Startup Context In a venture-backed company, leverage decisions are also [governance decisions](https://startuplawyer.com/startup-law-glossary/corporate-governance). If you see terms that could predictably trigger a default, collapse liquidity, or hand practical control to a lender, it is hard to justify staying silent. You should also be alert to process failures: missing board approvals, unclear authority to sign, overlooked investor consent rights, or communications to investors or lenders that may be incomplete or misleading. You must not facilitate misconduct. In extreme situations, you may need to advise against a course of action, refuse to paper a problematic approach, or withdraw, depending on the facts and the rules that apply to you. ## Practical Advice in Overleverage Scenarios - **Do** raise leverage risk early, before the team falls in love with the acquisition and deadline pressure takes over. - **Do** translate covenants and control provisions into operational consequences (runway, hiring flexibility, product spend, and “consent required” bottlenecks). - **Do** confirm governance: board approvals, signing authority, and any investor consent rights or protective provisions that are triggered. - **Do** push for real downside modeling by someone qualified, and make sure the board sees it. - **Do** document the advice and the decision in a clean email or memo, and ensure board minutes reflect the risk discussion. - **Don’t** posture as an investment banker or certify that a leverage level is prudent if you have not done the analysis. - **Don’t** ignore IP and collateral terms. A broad lien package can change the company’s options in the next equity round. - **Don’t** let speed crowd out basic consent checks, disclosure hygiene, and contingency planning. For startup counsel, speaking up is part of the job. Your value is helping the company make board-quality decisions under pressure, with clear records, clean approvals, and a capital structure, including overleverage, that does not quietly sabotage the next 12 to 18 months. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits --- ### [Include Confidentiality Clause in Letter of Intent](https://startuplawyer.com/acquisitions/include-confidentiality-clause-in-letter-of-intent) **Published:** December 18, 2006 **Author:** Ryan Roberts **Content:** A [letter of intent](https://startuplawyer.com/startup-law-glossary/letter-of-intent) (LOI) often kicks off serious negotiations, and those talks usually require sharing sensitive information. For startups, the confidentiality clause is not optional. It is the guardrail that lets [founders](https://startuplawyer.com/startup-law-glossary/founder) disclose enough to move a deal forward without accidentally giving away the company’s competitive edge. ## What the Confidentiality Clause Should Cover At a minimum, the LOI should define what counts as “[Confidential Information](https://startuplawyer.com/startup-law-glossary/confidential-information).” Many parties use a broad definition that treats all non-public information exchanged during diligence and negotiation as confidential unless it is clearly marked otherwise. That approach is common because it reduces ambiguity and prevents a later argument about whether a specific spreadsheet, metric, roadmap, or customer list was protected. ## Standard Exclusions That Keep the Confidentiality Clause Reasonable Most confidentiality provisions include carve-outs so the obligation is realistic and enforceable. Typical exclusions include information that becomes public through no fault of the receiving party, information already known before disclosure, information independently developed without using the confidential materials, and information received lawfully from a third party. LOIs also usually address legally compelled disclosure, such as a subpoena, by requiring prompt notice and reasonable cooperation so the disclosing party can seek a protective order. ## Confidentiality of the LOI Terms and the Negotiations Beyond protecting shared documents, parties should decide whether the terms of the LOI and the existence of the negotiations are confidential. For startups, keeping deal talks quiet can matter because rumor can distract employees, spook customers, or move competitors. If the parties want secrecy, the LOI should state that the LOI itself, the negotiations, and any term sheets or drafts are confidential, subject to limited exceptions such as disclosures to professional advisors and potential financing sources who are also bound by confidentiality. ## Duration and Survival After the LOI Expires The confidentiality obligation should survive the end of the LOI, since diligence often continues and the parties may walk away without a definitive agreement. Many LOIs specify a fixed term, such as one to three years, while trade secrets are typically protected for as long as they remain trade secrets. The key is to avoid a clause that quietly expires the moment the LOI terminates, which can leave a startup exposed right when the relationship ends. ## Practical Handling: Access, Use Limits, and Return or Destruction A good clause limits use of confidential information to evaluating the transaction and restricts sharing to people with a need to know. It also helps to address practical steps: whether information must be marked confidential, whether summaries and notes are covered, and whether the receiving party must return or destroy materials if talks end. Even a simple statement that the receiving party must protect the information with at least reasonable care can improve enforcement and set expectations for how diligence will be conducted. In practice, the best LOI confidentiality clauses are specific enough to prevent misunderstandings and simple enough that both sides will follow them. If you are a founder, treat confidentiality as a first-order issue, not boilerplate. If you are the counterparty, clear confidentiality terms make diligence smoother and reduce friction later. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits --- ### [When to Use an Earnout Provision](https://startuplawyer.com/acquisitions/when-to-use-an-earnout-provision) **Published:** December 20, 2006 **Author:** Ryan Roberts **Content:** If you’re selling your startup and the buyer proposes an earnout, the short answer is this: earnouts are usually a sign of unresolved risk or disagreement, not free upside. Sometimes that risk really does need to be bridged. Often, it’s a warning light. This matters most if you’re a founder selling a venture‑backed company where price, timing, and post‑closing control are already tight. Earnouts can work—but only in a narrow set of situations, and usually only if you understand what problem the buyer is actually trying to solve. The biggest misconception is thinking an earnout is just “extra consideration if things go well.” In real M&A deals, it’s more accurately a way to shift execution risk back onto you after you’ve already sold the company. Let’s unpack when an earnout provision actually makes sense, when it usually doesn’t, and how this plays out in real startup negotiations. ## **Why Earnouts Show Up in Startup Acquisitions** In practice, earnouts show up when the buyer and seller disagree on future performance, not current value. You think the business is about to inflect. The buyer thinks the projections are optimistic. Rather than fight over price, the buyer says: “Let’s tie part of it to performance.” That’s the theory. In reality, earnouts are often used to solve one of three problems: 1. **Revenue durability risk** – The buyer isn’t confident customers will stick post‑close. 2. **Founder dependency** – The business relies heavily on you personally. 3. **Integration uncertainty** – The buyer doesn’t know how the product will perform inside a larger org. And in any of these risks, the buyer wants to have some mechanism to control price. ## **The Founder Assumption about the Earnout That Gets People in Trouble** Here’s the assumption I hear all the time in M&A discussions: “If we hit our plan, we’ll get the earnout. We were going to do that anyway.” That assumption ignores two things that matter a lot in actual deals: First, you no longer control the company the same way after closing. Reporting lines change. Budgets change. Priorities change. Sometimes the buyer’s incentives quietly diverge from yours. Second, earnouts are usually drafted around metrics you don’t fully control—even if they look objective on paper. Revenue targets depend on pricing authority. Product milestones depend on headcount approvals. Customer retention depends on integration decisions you don’t make. This is where theory and reality split. ## **Theory vs. Reality: How and Earnout Actually Performs** In theory, earnouts align incentives. In reality, they’re closer to a delayed negotiation over value—with fewer levers for you. In venture‑backed startup acquisitions, full earnout payouts are less common than founders expect. Partial payouts are more common. Disputes are common enough that sophisticated buyers draft aggressively around discretion and interpretation. From a startup lawyer’s perspective, the risk isn’t that the buyer is acting in bad faith. It’s that the earnout becomes subordinate to the buyer’s broader business goals, which is exactly what they paid for. This is why many experienced founders treat earnouts as contingent consideration they should discount heavily, not upside they rely on. Typically, earnouts are either “remote” possibility of achievable, or they are a virtual layup. Most founders have a good sense about whether they’ll achieve the earnout. ## **When an Earnout Actually Makes Sense** Despite all that, there are situations where an earnout provision is reasonable. The cleanest case is early‑stage or pre‑revenue technology where value is genuinely tied to near‑term milestones that both sides agree are achievable and measurable. Another is where you’re intentionally rolling into an operating role post‑close and want part of your economics tied to continued performance—effectively blending acquisition consideration with compensation. Earnouts can also make sense where: - The earnout period is short (12–18 months) - The metrics are simple and binary - You retain meaningful operational authority Those conditions are rarer than they sound, but when they exist, earnouts can be a rational bridge. ## **Where Stage and Leverage Change the Answer** Stage matters a lot. In early startup acquisitions, earnouts are more common and more tolerated because uncertainty is real and price sensitivity is high. In later‑stage or growth‑equity‑backed exits, earnouts usually signal leverage imbalance. If you have competitive tension or a strong standalone business, buyers typically solve valuation gaps with price—not contingencies. Market conditions matter too. In softer M&A markets, earnouts show up more frequently because buyers are cautious and capital discipline tightens. That doesn’t mean you should treat them casually. ## **What Founders Over‑Optimize (and Why It Rarely Helps)** Founders often focus intensely on the percentage of the earnout or the headline target number. That’s usually the wrong lever. What matters more is: - Who controls the inputs - How disputes are resolved - Whether the buyer has affirmative obligations to support the earnout In real M&A negotiations, small drafting choices around discretion and operational support often matter more than the nominal earnout size. ## **The Practical Takeaway** If you remember one thing, remember this: **An earnout is not free upside—it’s deferred risk.** Sometimes that risk is worth taking. Often it should be discounted heavily in your mental math. If the earnout is essential to the deal, focus less on the headline number and more on whether the structure gives you a fair shot. And if the buyer won’t move on price but insists on an earnout, that’s useful information about how they’re underwriting the deal. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits **Tags:** earnout --- ### [Every Situation is Unique When Choosing an Entity](https://startuplawyer.com/incorporation/every-situation-is-unique-when-choosing-an-entity) **Published:** December 11, 2006 **Author:** Ryan Roberts **Content:** If you’re choosing an entity and deciding between an LLC and a Delaware C-Corp for your startup, here’s the direct answer: **if you plan to raise venture capital, issue equity broadly, or ever want a clean acquisition process, you will usually end up as a Delaware [C-Corp](https://startuplawyer.com/startup-law-glossary/c-corporation)**—either immediately or after an expensive “we should’ve done this earlier” conversion. If you’re building a profitable, closely held business (or you have unusual tax facts), an [LLC](_wp_link_placeholder) (or sometimes an S-Corp) can be the right call. The biggest misconception is that entity choice is a vibe decision (“LLCs are simpler,” “Delaware is for big companies,” “I can always change later”). In real startup law, entity choice is mostly about incentives, taxes, and what your future investors and acquirers can tolerate without adding friction. Let’s walk through what actually matters, when “it depends” is real, and how to make a decision when starting your startup that won’t haunt your venture financing. ## **Why this shows up in real startup and venture deals** Entity choice isn’t just about filing a form with a Secretary of State. It sets the default rules for: - **How ownership works** (units vs. shares, classes/series, voting) - **How economics work** (distributions, liquidation preferences later, option pool mechanics) - **How taxes work** (pass-through vs. corporate-level tax, allocations, K-1s) - **How financings work** (SAFEs, priced rounds, preferred stock, protective provisions) - **How exits work** (asset sale vs. stock sale friction, rollover equity, rep-and-warranty structure) In venture financing, investors aren’t only underwriting your product risk. They’re underwriting legal and tax risk too. The “wrong” entity isn’t fatal—but it can create delays, added legal bills, and the kind of cleanup work that always shows up when you’re already under time pressure. A startup lawyer’s job here is partly technical and partly practical: pick the structure that matches the most likely path, while keeping your downside manageable if the path changes. ## **The common founder assumption about choosing an entity** Most founders start with one of these assumptions: 1. **“LLCs are easier and cheaper.”** 2. **“Delaware is for later.”** 3. **“I’ll just convert when investors tell me to.”** 4. **“My CPA said LLCs are best for taxes.”** Each has a kernel of truth. None is a complete decision rule. Yes, an LLC can be cheaper to set up (though not always meaningfully cheaper if done correctly). Yes, you *can* convert later. And yes, there are tax scenarios where an LLC is genuinely better. But the incomplete part is this: **entity choice is not just your preference—it’s a compatibility question with your likely capital, compensation, and exit strategy.** Venture capital has strong preferences for reasons that are annoyingly rational. ## **How choosing an entity actually works in practice (LLC vs. C-Corp vs. S-Corp)** **The venture default: Delaware C-Corp** If you’re aiming for a typical venture path—pre-seed/seed now, priced round later, option pool, multiple funding rounds, maybe an acquisition—Delaware C-Corp is the market norm. Why? - **Preferred stock is the language of venture financing.** VCs invest in preferred stock with negotiated rights (liquidation preference, anti-dilution, protective provisions). C-Corps handle that cleanly. - **Equity compensation is standardized.** Stock options (ISOs/NSOs), restricted stock, early exercise, 83(b) elections—this is the well-worn venture path. LLC “profits interests” can work, but they’re more complex and less familiar to many employees. - **Cap tables are cleaner and more scalable.** LLC operating agreements can be customized heavily, which is great until you need everyone to understand them quickly in a deal room. - **Investor tax issues matter.** Many venture funds have limited partners that don’t want pass-through income or state filing complexity. K-1s and unrelated business taxable income (UBTI) can be deal-friction. Put differently: venture capital isn’t allergic to LLCs because LLCs are “bad.” They’re allergic because LLCs create **administrative and tax spillover** into the fund and its LP base, and because venture docs are built around corporate mechanics. ## **Where an LLC shines when choosing an entity** LLCs can be excellent when: - You expect **profits and distributions** relatively early (or you’re optimizing for tax efficiency while profitable). - You expect a small number of owners for a long time. - You want **flexible economics** (special allocations, distribution waterfalls, bespoke governance). - You’re building something more like a modern “startup-shaped business” than a venture rocketship. Real example: a founder-owned services platform that will throw off cash and may never raise institutional venture. An LLC can be a smart choice—especially if the goal is cash generation rather than maximizing a future equity valuation. ## **The middle child: S-Corp** An S-Corp is sometimes suggested as a “best of both worlds.” In startup contexts, it’s usually a niche answer. S-Corps have restrictions: limited number of shareholders, generally U.S. individuals (no VC funds, no foreign investors), one class of stock (with limited flexibility). Those constraints often collide with venture financing and standard employee equity programs. S-Corp can make sense for a founder-owned business with steady profits and payroll planning. For a venture trajectory, it’s often a short-lived stop that you unwind later. ## **Where stage and leverage actually change the answer when choosing an entity** Here’s a practical stage-based way to think about choosing an entity. **If you’re pre-seed / seed and genuinely targeting venture financing** Default to a Delaware C-Corp early, even if you’re not “ready.” The reasons are boring and therefore important: - You’ll likely issue equity to founders and early employees. - You’ll likely use SAFEs or convertible notes. - Investors will expect Delaware docs and standard corporate governance. - Converting later can create tax and legal complexity, especially if you’ve issued interests, allocated profits/losses, or brought on many members. If your plan is “raise a venture round in 6–18 months,” it’s rarely worth optimizing for a slightly cheaper initial setup that increases the chance of a messy conversion. **If you’re bootstrapping, cash-flowing, or unsure you want venture** This is where “it depends” can be real. If you’re not planning to raise venture, the investor-compatibility argument weakens when choosing an entity. Now taxes, distributions, and governance flexibility matter more. An LLC (or sometimes an S-Corp) can be a better fit. But be honest with yourself: “I’m not planning to raise” sometimes means “I’m planning to raise, but I don’t want to admit how likely that is.” A useful test: if you’re already pitching angels, building a high-growth story, or recruiting engineers with equity expectations, you’re behaving like a venture-bound startup even if you’re telling yourself you’re not. **If you’re later-stage (priced rounds already)** By the time you’re doing priced venture financing, this decision about choosing an entity has usually been made for you. Most later-stage venture investors will not want to deal with LLC mechanics. If you’re somehow still an LLC, you’ll almost certainly be converting (and paying for it). ## **The sports analogy (because incentives are the whole game)** Choosing an entity is like choosing a formation in football before you know exactly how the opponent will line up. You can tell yourself you’ll “adjust at halftime,” but the cost of switching isn’t just drawing a new play. It’s substituting players, changing assignments, and burning clock while the game is happening. In startup terms, conversion isn’t just paperwork. It’s renegotiating equity, cleaning up tax history, managing consents, and explaining the structure to investors who would rather be discussing valuation and traction. If you’re likely to play a venture-style game, start in a venture-compatible formation. ## **Concrete examples founders actually run into when choosing an entity** **Example 1: The “LLC now, SAFE later” mismatch** You start as an LLC because it’s “simple.” Six months later, angels want SAFEs. SAFEs are designed for corporations issuing equity later. You can paper a SAFE-like instrument in an LLC, but you’re already drifting away from market documents. The next investor asks for Delaware C-Corp anyway. Now you’re converting under deadline, and everyone’s legal bill goes up. **Example 2: The employee equity problem** You recruit a key engineer and offer “equity.” In an LLC, that may mean a profits interest. Profits interests can be great, but they require careful drafting, valuations, and education. Many employees (and many recruiters) understand stock options better. If you want standard equity compensation mechanics, C-Corp wins on execution. **Example 3: Acquisition diligence and cleanup** An acquirer looks at your structure. They want to buy stock, assume a clean cap table, and avoid unexpected tax exposure. If your LLC operating agreement has complex allocations or your membership transfers weren’t documented perfectly, diligence takes longer, reps get heavier, and escrow discussions become more painful than they needed to be. None of these kill deals automatically. They just create friction. And in venture and M&A, friction gets priced. ## ## **Theory vs. reality: “You can always change later” (yes, but…)** In theory, converting an LLC to a Delaware C-Corp is routine. In reality, it’s routine only when you convert early, before things get complicated. The conversion risk increases when: - You’ve brought on multiple members (especially with different economics) - You’ve made special allocations or distributions - You have profits (tax history starts to matter) - You’ve granted interests to service providers without clean documentation - You’ve raised money on non-standard instruments - You operate in multiple states and filings have piled up Also, the “tax-free conversion” story can be true, but it’s not magic. Your specific facts matter, and your CPA needs to be aligned with your startup lawyer on what you’re actually doing—not just what entity type sounds tax-efficient in the abstract. This is where founders sometimes **over-optimize**: they focus intensely on theoretical tax efficiency in year one, when the bigger economic driver is whether the company can raise capital, recruit talent, and exit cleanly later. If you’re pre-revenue and venture-bound, the tax savings you’re imagining may be small relative to the cost of complexity and future cleanup. ## **What VCs typically care about (even if they don’t say it politely)** Most VCs won’t give you a philosophical essay about entity choice. They’ll just say, “Delaware C-Corp, please.” Behind that is a practical checklist: - Can the fund invest without creating messy tax reporting? - Can the company issue preferred stock on standard documents? - Is employee equity straightforward? - Will future financings be clean and fast? - Will an acquisition be clean? In other words: they’re optimizing for deal velocity and predictability. That’s not hype. That’s how venture works. If your company is the rare exception where an LLC is truly optimal, you’ll usually know because you have a specific, concrete reason (tax, governance, ownership profile) and you’ve pressure-tested it against future financing and hiring plans. ## **The practical takeaway (if you remember one thing…)** **If you think there’s a meaningful chance you’ll raise institutional venture capital, start as a Delaware C-Corp and move on.** The legal and economic system of venture financing is built around that structure, and fighting the system is rarely a good use of founder time or legal budget. If you’re genuinely building a profitable, closely held business where distributions and tax efficiency are central, an LLC (or sometimes an S-Corp) can be the better choice—but make that decision with eyes open about what you’re giving up in venture compatibility. And if you’re not sure which path you’re on, don’t pretend uncertainty is a plan. Pick the structure that matches the most likely future, not the most flattering story you can tell yourself this week. ## **A few FAQ-style questions founders actually ask** **Do I have to be a Delaware C-Corp to raise venture capital?** No, but if you’re raising institutional venture, you’ll almost always be required to become one. Some investors will invest pre-conversion with a clear conversion condition, but that just shifts cost and timing pressure onto you. **What if I’m already an LLC—did I mess up?** Probably not. Many startups start as LLCs. The key is whether you’ve added complexity (members, allocations, grants, profits) that makes conversion harder. The earlier you address it, the cheaper and cleaner it usually is. **Is an LLC always better for taxes?** Not always. LLCs are pass-through entities by default, which can be tax-efficient in certain profit scenarios, but they can also push taxable income to owners and create multi-state filing issues. For venture-backed startups that reinvest rather than distribute profits, the practical tax “benefit” often matters less than founders expect. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Accelerator Documents for Startups Should Be Easy](https://startuplawyer.com/seed-funding/accelerator-documents-should-be-easy) **Published:** September 18, 2013 **Author:** Ryan Roberts **Content:** Startup deal documents evolve for good reasons. Market lessons get written into templates, investors learn what breaks in practice, and founders get smarter about what is worth negotiating. The problem is not evolution. The problem is over-engineering, especially when accelerators ask startups to jump through legal hoops just to get into the program, including difficult accelerator documents, and receive a small check. ## Typical Accelerator Documents: Simple Equity or a Convertible Security Most [accelerators](https://startuplawyer.com/startup-law-glossary/accelerator) invest using a straightforward structure: a purchase of [common stock](https://startuplawyer.com/startup-law-glossary/common-stock), a [convertible note](https://startuplawyer.com/startup-law-glossary/convertible-note), or another convertible security like a [SAFE](https://startuplawyer.com/startup-law-glossary/safe), often paired with a pro rata or preemptive right so the accelerator can maintain its ownership percentage in later rounds. Done right, this is clean, fast, and founder-friendly. You can understand the economics in one sitting, close quickly, and get back to building. ## Where Accelerators Go Wrong: Complexity Without a Payoff Convertible notes have gotten more complex over time, with features like valuation caps and other terms that reflect hard-earned experience. Some of that complexity is legitimate. But sometimes it is just deal over-engineering with startups. If you want an example of how far notes can drift from “simple,” consider the proliferation of clauses around price caps and related concepts (for example, [price cap regulators](https://startuplawyer.com/seed-rounds/price-cap-liquidation-preference-windfall-regulators)). The bigger issue is when accelerators import that same complexity into their own onboarding documents for no practical reason. ## A Red Flag: Requiring a Charter Amendment Just to Join If an accelerator insists on [preferred stock](https://startuplawyer.com/startup-law-glossary/preferred-stock), it can force a startup to amend its certificate of incorporation before the company has even started the program. That is a bad trade for founders. It introduces filing fees, extra counsel time, and coordination overhead. Worse, it stretches the time to close, which is the opposite of what an accelerator investment is supposed to do. Founders may relocate, start the curriculum, and still be waiting on paperwork before the accelerator funding actually lands. ## The Cost of Complicated Accelerator Documents Complicated accelerator documents are not a sign of sophistication. They are usually a sign that the accelerator is optimizing for its own legal comfort at the expense of founder speed. The first consequence is goodwill. Startups remember how you treat them at the start, and heavy paperwork creates immediate friction. The second consequence is selection. Great teams have options, and they will walk if terms feel one-sided or draconian. The third consequence is wasted time. Every extra signature block and custom provision delays closing, delays program momentum, and delays the moment the founder can focus fully on execution. ## Best Practices: Protect the Accelerator Without Burdening the Startup - **Default to common stock or a standard convertible instrument** unless there is a clear, defensible reason to do otherwise. - **Minimize company-side changes** such as charter amendments, new preferred series, or new governance rights. - **Use simple post-closing covenants** if you need operational protection, such as basic reporting, notice obligations, or compliance confirmations. - **Keep diligence lightweight** and aligned to the size of the check. - **Make timing a product feature** by committing to a fast close and sticking to it. ## Conclusion: Speed and Trust Beat Paperwork Accelerators compete on founder experience and outcomes. That starts on day zero with the documents. If your onboarding package feels like a priced venture round, you are doing it wrong. Keep the investment mechanics simple, close quickly, and earn the right to ask for more later when the relationship and the company have actually matured. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Of Mice and Mentors](https://startuplawyer.com/board-of-directors/of-mice-and-mentors) **Published:** December 4, 2013 **Author:** Ryan Roberts **Content:** [Mentors](https://startuplawyer.com/startup-law-glossary/mentors) can be a force multiplier for early-stage startups, but [incubators](https://startuplawyer.com/startup-law-glossary/incubator) routinely let the dynamic drift into something messier. Founders show up looking for guidance, and too often they get soft pitches, status games, and pressure to formalize relationships before anyone has earned that level of trust. Good mentorship speeds teams up. Bad “mentorship” quietly taxes them. ## When an Incubator Bubble Creates a Mentor Bubble Incubators and accelerators concentrate attention, access, and ambition. That is their entire pitch. But when you pack founders into a high-signal environment without strict norms, you also create a bazaar of opportunism. The “mentor bubble” is what happens when advice becomes a lead-in to getting paid, getting equity, or getting a role. If founders feel like every conversation has a hidden ask, the program is failing at its most basic job: creating a safe place to learn fast. ## Mentors Should Pay-It-Forward, Not Require Immediate Payback The right mental model is simple: mentorship is generosity first, optional upside later. Most mentors mean well, but incubators attract a minority who treat early-stage founders like underpriced labor or easy deal flow. When someone joins a mentor roster primarily to angle for a co-founder slot, a consulting retainer, or a fast advisory grant, that is not mentorship. It is prospecting. Incubator mentoring is not “co-founder dating,” and it is not a pay-to-play access model. A mentor who repeatedly pitches services, pushes for a title, or implies they will disengage without compensation should not be treated as “well connected.” They should be treated as a program risk. Founders should be able to say no without fearing social or professional consequences, and incubators should actively enforce that norm. ## Incubators Need Clear Protocols for “Escalating” Mentor Involvement If incubators do not set explicit rules, they are implicitly choosing chaos. Of course some mentor relationships evolve into advisory roles, investments, contractors, or hires. That is fine when it is founder-led and appropriately timed. What is not fine is leaving founders to navigate a confusing social maze where the price of continued attention is unclear. Programs should publish simple protocols that make the default behavior obvious. - **Timing guideline:** Encourage mentors to avoid soliciting advisory equity or paid work during the core program unless a founder initiates it. - **Disclosure:** Require mentors to disclose any commercial interest (consulting, recruiting, investment intent) when it becomes relevant. - **Opt-in process:** If an advisor grant is discussed, route it through an optional, founder-initiated step so startups do not feel obligated. - **Standard terms education:** Provide founders with baseline guidance on typical advisor equity ranges and vesting so they can evaluate requests confidently. - **Conflict handling:** Offer a program contact (for example, the managing director) for founders to raise concerns privately. [Founders](https://startuplawyer.com/startup-law-glossary/founder) already pay to be in the room, whether that payment is fees, equity, or months of attention. So when a mentor asks for an “advisor grant” mid-program, it can feel like a second invoice disguised as mentorship. Incubators should not shrug at that dynamic. Clear rules protect founders, protect well-intentioned mentors, and keep the program from sliding into a transaction culture. ## Navigating the Fine Line with Mentors Before and After Demo Day Mentorship can legitimately turn into an advisor relationship or a business arrangement, but incubators often pretend the power dynamics are symmetrical. They are not. The danger zone is the run-up to demo day and the weeks after it, when founders are exhausted, hungry for validation, and highly sensitive to social signals. That is exactly when subtle pressure tactics work best, which is why programs should take extra care during this window. **For founders:** Do not confuse access with obligation. Take the meeting, take the advice, and keep your cap table and commitments for people who have proven sustained value. If someone proposes equity, paid work, or a formal title, slow it down. Ask for terms in writing, benchmark against market norms, and get an outside read. If they react poorly to reasonable diligence, that tells you everything. **For mentors:** If you want to help, help. Do not use “mentoring” as a pretext for selling, recruiting, or extracting equity. If you see a genuine longer-term fit, state it plainly, give the founder space, and make “no” painless. The fastest way to damage your reputation in an ecosystem is to be the person founders warn each other about. Great incubator mentorship compounds: founders get sharper, faster, and more confident, and mentors earn real long-term relationships. But that only happens when programs protect the boundary between guidance and extraction. If you run an incubator, treat the “mentor bubble” as an operating problem, not a personality quirk. Set norms, enforce them, and design the program so founders can learn without feeling like every coffee chat comes with a price tag. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Boards and Observers --- ### [Filing a Charter Is Not a Startup Incorporation](https://startuplawyer.com/incorporation/filing-a-charter-is-not-a-startup-incorporation) **Published:** August 18, 2010 **Author:** Ryan Roberts **Content:** I’ve noticed a lot of recent articles promoting that a startup can “[skip the lawyer](https://startupmeme.com/put-down-that-wallet-why-startups-may-not-ned-a-lawyer-to-form-a-corporation/)” 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 startup incorporation than simply filing the [articles of incorporation](https://startuplawyer.com/startup-law-glossary/articles-of-incorporation) with the Secretary of State. The 19 other “tasks” they list? Little or no value. Want to [vest your founders’ shares](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time)? Can’t do that through an incorporation service. In fact, typical incorporation services do not even offer a [stock purchase agreement](https://startuplawyer.com/startup-law-glossary/stock-purchase-agreement). And you can definitely forget about a [technology transfer agreement](https://startuplawyer.com/startup-law-glossary/technology-transfer-agreement) or anything else IP-related. Documents like these are the critical components of a proper startup incorporation. When you use an online incorporation service to incorporate your startup, you aren’t getting a deal on incorporation. Instead, you are overpaying for 1/10th of a proper startup incorporation. If all you want to do is file a charter, you can “skip the lawyer.” And you can skip the incorporation service as well. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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I’ve represented several India-based startups through venture capital financings. To name just a few, clients have included [Freshworks](https://www.freshworks.com/) (formerly FreshDesk), [WizRocket](https://clevertap.com), and [Shopalyst](http://shopalyst.com/). They, along with other clients, have closed financings with the India-based or branches such as [Accel Partners](https://www.accel.com/), [Kalaari](http://www.kalaari.com/), Sequoia, [Helion](http://www.helionvc.com/) and [Matrix](https://www.matrixpartners.com/), and not to mention with several US venture capital counterparts. The common denominator with these entities is that such investment has come through a Delaware corporation. Note that even India-based VCs will invest in Delaware entities, although they of course invest in a private limited or another country’s entity (e.g., Singapore). There’s many different reasons to structure the investment through the US entity, such as making the financing compatable with future US-based investments or just speed. And, of course, there are different tax reasons which either make the US-entity favorable or at least neutral with respect to a foreign jurisdiction registration. My India-based clients tend to relay to me that the biggest difference regarding the venture capital process when you’re incorporated in India and outside India can be seen in how quick or how delayed the investment process can be closed. India has government regulations on foreign investment coming into the country; VC funding for a company incorporated in India will have to cross certain clearance checks, and sometimes may need approval from the finance ministry, and this delays the process. For a company incorporated outside (i.e., Delaware), the process is much swifter, since these regulations are not applicable. So, this post is intended to highlight some of the differences, and provide a general overview of the process and how it works in the US as opposed to in India. But the reality is, it’s not that different. I’ll also walk you through the various documents you will likely find having to execute to complete the financing process. ## The Private Limited Entity in India Most India-based startups either have an existing private limited or will form one soon after incorporation of their US entity. The private limited will typically house the India-based employees and will handle most, if not all, of the development work of the startup. The presence and incorporation of this private limited into the financing will actually result in the majority of the differences between a financing solely in the US and one in India. The private limited most typically ends up being a subsidiary of the US corporation and all investment during a financing will go through the US corporation in order to make sure that any IP owned or developed by the private limited is now owned by the US corporation (where their money is being invested). Making a private limited entity a subsidiary is a time-consuming process (based on Indian law and regulations), the timeframe can vary here, but it usually falls between 60 and 180 days. Although some clients have experienced longer delay. Therefore, we sometimes see finalization of the subsidiary process as a post-closing covenant, in order to avoid delaying the financing. Some VCs require that each founder enter into an employment agreement with the private limited to further ensure that all IP is protected. Others will include a laundry list of conditions to close relating specifically to the subsidiary (comply with all Indian law, transfer domain names/IP to the US corporation, that the US corporation form a private limited, etc.). Of course, then there are those VCs that will insist on both… Also, sometimes the private limited will have to become a party and signatory to the financing. Whether or not the private limited will become a party usually depends on the importance it plays in the startup and how long it has been around, though the VC could just want to be extremely careful and include it regardless. Similarly, the VC will want to make sure that the private limited will also be subject to various representations and warranties, protective provisions and sometimes they will even want the VC director, if there is a representative of the VC on the company’s board of directors, to also be on the board of the private limited in order to further protect their investment. ## The Venture Capital Term Sheet Unlike in the US, the process generally begins with the founders receiving a term sheet from a VC prior to having formed a US corporation. As discussed above, sometimes the founders will have a private limited based in India, and sometimes they will not. Because of these issues, the VC will generally have each founder sign the term sheet. Another reason for the founder execution is that India-based financings sometimes include the requirement that founders make certain representations and warranties in the stock purchase agreement, where founders making representations and warranties in a US-based VC deal is somewhat rare. In the US, a term sheet is usually not given until well after the formation of a US corporation and therefore, the corporation itself, and not the founders, can execute the term sheet, and founder representations and warranties are less common. Most of the venture capital deal terms are similar to US terms. Economic terms like liquidation preference, anti-dilution, etc. are usually similar to their counterparts in US-based venture capital financings. Control terms like board seat(s), board observers, and protective provisions (i.e., investors’ right to approve certain actions) are also prevalent. However, there tends to be more protective provisions in an India-based US VC financing than a US-only VC financing. There are sometimes customary India-based terms incorporated relating to the potential exit. Usually, they will have a period of 5-7 years and if an exit does not occur by then, the VCs will require that the startup purchase their shares back or assist them in selling them to a different entity of the VCs choice. This is much more robust than a typical “redemption” provision in the certificate of incorporation. And, similar to US-based venture capital financings, many founders in India-based startups assume that once the term sheet is signed, the deal is about closed. But in reality, there’s still a long way to go. ## The Venture Capital Closing Procedure Typically (regardless of geography), the startup’s lawyer drafts the financing documents (discussed in more detail below) and prepares a pro forma for the round. In India, however, it is sometimes customary for investors’ counsel to take the first pass at drafting. The pro forma helps calculate the price per share and provides a snapshot of the company’s post-financing ownership. India-based VCs often want to “hammer out” the pro forma before the term sheet is fully executed, while US counterparts more commonly finalize it during document drafting. Before documents are signed and money is wired, there is typically significant due diligence. The VC and its counsel (along with company counsel) will want to confirm that key corporate records are in order, including: (i) incorporation and governance documents, (ii) stock issuances to founders (and employees, if applicable), (iii) IP filings and assignments, and (iv) financial statements. If issues surface, they usually need to be addressed before closing, which can delay the timeline. Overall, the process (term sheet negotiation through closing) often takes about 4–6 weeks. There is usually no true shortcut if you want the deal done carefully, with a reasonable amount of diligence and negotiation. Some deals take longer than six weeks, especially when logistics slow down wiring (internal VC procedures, banking cutoffs, or regulatory hurdles can all play a role). ## The Venture Capital Transaction Documents The forms and language of the documents will vary by financing. The goal of this section is to provide a brief overview of the main “transaction documents,” so you have a practical sense of what you and your startup are signing up for. While there are differences deal to deal, there is also meaningful standardization: India-based venture financings, like their counterparts in the US, often draw from the [National Venture Capital Association (NVCA) model documents](https://nvca.org/model-legal-documents/). **Stock Purchase Agreement (SPA):** This is the primary agreement for the financing. As the name implies, it is the document under which the shares are purchased. The SPA typically covers the purchase price, the number and class of shares sold, representations and warranties by the company (and often founders) and by the investors, and the conditions to closing. A few additional notes regarding the SPA: (i) if the company has convertible debt, the holders are often parties to the SPA and apply their outstanding debt to purchase shares in the round; (ii) conditions to closing in India-based deals can be more detailed than in typical US financings, even if they do not always lengthen the overall timeline; and (iii) where the company is effectively international, there are often additional representations and warranties on topics such as FCPA and other cross-border compliance issues. **Amended and Restated Certificate of Incorporation (COI):** The amended and restated COI is typically the only primary transaction document that is filed with the secretary of state. The economic and control rights of the different classes and series of shares are set forth here. As a result, a COI that might have been two pages at incorporation can become 20+ pages after a preferred stock financing. Perhaps the most important (or at least the most negotiated) part of the COI is the liquidation preference. In simple terms, the liquidation preference provides downside protection. For example, if the company sells for an amount at or near the total capital invested, investors may receive their money back first and the remaining stockholders may receive little or nothing. If the company has a strong exit, investors will typically convert and take their pro rata share instead of a preference payout. The COI will also usually include protective provisions (actions that require investor approval). These commonly include: (i) authorizing additional shares, (ii) changing the rights of investor-held stock, (iii) approving a liquidation event, (iv) changing the authorized number of directors, and (v) declaring or paying dividends. This list is not exhaustive. Other common terms in the COI include anti-dilution protection and redemption rights. Anti-dilution provisions can adjust an investor’s effective price per share (typically through an additional share issuance mechanism) if the company later issues stock at a lower price, subject to customary exclusions (e.g., option grants to service providers, shares issued for certain business purposes, and shares issued upon conversion of preferred stock). Redemption rights, where included, can require the company to repurchase investor shares after a specified period, providing an additional form of downside protection. **Investors’ Rights Agreement (IRA):** The IRA covers investor rights that are not set forth in the COI. Common provisions include: (i) information rights (financial statements, inspection rights, etc.), (ii) board observer rights, (iii) preemptive rights, and (iv) registration rights. The IRA may also include post-financing covenants covering topics such as compliance (including FCPA), insurance, employee agreements and equity grants, and director indemnification. **Right of First Refusal and Co-Sale Agreement (ROFR):** This agreement gives the company and, typically, the investors a right of first refusal on certain future issuances and transfers, along with co-sale (tag-along) rights in certain founder sale scenarios. In practical terms, if a key founder wants to sell shares, investors may have the right to participate in that sale on the same terms. Typically, the company’s right of first refusal applies first, followed by the investors’ right. Occasionally, India-based investors negotiate for priority over the company, which is uncommon in most US deals. In addition, VCs in India sometimes negotiate more expansive ROFR and co-sale rights than US counterparts. **Voting Agreement:** A voting agreement is common, particularly if investors are receiving a board seat (often controlled by the lead investor). The agreement helps ensure that the agreed board composition can be maintained. It also commonly includes drag-along provisions. In India-based deals, drag-along terms are often longer and more detailed than in many US-only deals. There can also be extensive voting provisions relating to the company’s Indian private limited subsidiary (or soon-to-be subsidiary), which some investors require to ensure that negotiated control rights flow down to the operating entity. ## The Venture Capital Ancillary Documents Same caveat as above: these documents vary by financing. You will see only some of them in any given deal, and they can vary more widely than the core transaction documents. Although “ancillary documents” are generally less controversial, they are still important. **Consent of the Board:** The consent of the board of directors is an ancillary document that you will most certainly see every time. Basically, this consent summarizes the transaction and serves as the corporate approval of the transaction. This written consent is in place of a physical meeting (which, technically, could also work) and investors will generally require that the written consent be used, for the sake of recordation. The following things are examples of what are typically approved via board consent: (i) authorizing the filing of the Amended and Restated Certificate of Incorporation, (ii) the financing and all financing related documents themselves, (iii) increases to the option pool, (iv) indemnification agreements for the directors, (v) increasing the board size and appointing the new investor director(s), (vi) amendments to RSPAs (if vesting schedules are being modified or added), and (vii) restated bylaws. This list, though, is definitely not exhaustive and the board consent will vary by financing. **Consent of the Stockholders:** Similar to the consent of the board, you will see the consent of the stockholders in every transaction. Again, this is a summary of the transaction but it is generally shorter than the consent of the board because the approval of the stockholders is not required for every single part of the transaction. Again, this is in place of a physical meeting of the stockholders. At a minimum, the stockholders’ consent will approve: (i) the amended and restated certificate of incorporation, (ii) the financing (typically), (iii) the indemnification agreements, and (iv) any increase to the option pool. **Management Rights Letter (MRL):** MRLs usually give the investor certain rights. Usually these rights include: (i) the right to attend board meetings and receive all documentation/information that the board members receive (if the investor is not represented on the board), (ii) the right to inspect the books and records, and the facilities of the startup, and (iii) generally, the right to advise and consult with the startup founders/management. If a VC asks for an MRL it is because one (or more) of the investors in the fund is a pension plan basically subject to ERISA. This means that there are rules and regulations that must be followed. And, since pension plans make up such a large pool of potential investors and if all these rules and regulations had to be followed, said potential investors would never be invested in VCs, an exception was made. In order to take advantage of this exception, the VC has to have the above-described rights. **Indemnification Agreements:** Indemnification agreements protect board members. If you are going to have an investor on the board, they will almost always ask for an indemnification agreement. It is also a good idea for all of your board members to have one, including the founders. Basically, the company will indemnify the board members for decisions they make which result in liability. While there are typically indemnification rights in the COI and the Bylaws, an indemnification agreement gives the directors more comfort in knowing that they have a direct agreement with the Company regarding such rights and that this agreement can therefore only be modified with said director’s consent. **Legal Opinion:** The legal opinion is not always seen and tends to appear only in larger deals. The attorney for the startup will certify (offer an “opinion”) as to the current status of the startup in terms of its cap table and standing. **Founder Stock Restriction Agreements**: These agreements can take different forms (such as just a “Founder Agreement” or an amendment to a prior agreement) but all do just about the same thing: restrict founder stock. Most investors will want to make sure that the founders have certain vesting and other restrictions attached to their stock and will include these desires in the term sheet, if any. These will usually be seen if there is a change in the vesting schedule. Most VCs in India (like their US counterparts) are usually fine with reasonable vesting schedules and will not reset the vesting clock entirely to go back on a 4-year schedule. **Founder Agreements**. These agreements typically deal with restrictive covenants, such as non-competition and non-solicitation. The India-based VCs also typically desire a bit more coverage here than US counterparts. ## Conclusion As mentioned before, there are a lot of similarities between raising money in the US and doing so in India. However, there are also differences for the most part based on the Indian private limited entity and customary terms in India-based financings. The India-based VCs and companies do a great job of closing on typical US-based terms, but with some accommodations based on the startup’s fact pattern or customary terms in India. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [AI Didn’t Kill Startup Lawyers. It Just Gave Everyone Better Tools.](https://startuplawyer.com/startup-lawyer/ai-didnt-kill-startup-lawyers-it-just-gave-everyone-better-tools) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** > “It’s always been difficult to make a good record. To be perfectly honest with you, it’s really about the person that’s pushing the buttons. No matter what type of equipment you have, you still have to have a certain talent to be able to make a good record. > > Everything that I used to do is a lot easier to do. Everything is a lot faster, and that’s what I’m most excited about.” > > -Dr. Dre AI is everywhere in startup law world right now. Founders are using it to review term sheets and draft whole sets of complex documents. Lawyers are demo’ing the latest tools like it’s a product launch…because, honestly, it kind of is. So let’s skip the sci‑fi debate and talk about the only question that matters for the startup world: ## ***What does AI actually change in real startup deals, where money, control, timelines, and risk are on the line?*** Here’s the honest answer: AI is going to make some startup legal work faster. It’s going to make some work cheaper. And it’s going to make a lot of people feel more confident than they should. But the work product will be improved. Let’s be clear up front: most startups don’t fail because of a bad term sheet. They fail because the product doesn’t work, the market doesn’t care, or the team runs out of time or money. Legal structure is rarely the cause of death. But when companies *do* survive, legal decisions quietly shape who has control, flexibility, and options at the moments that matter. AI doesn’t eliminate risk. It reshuffles it and makes it easier to miss until it’s already locked in. ## **The Tools Changed. The Work Didn’t.** Law has been “disrupted” before. PCs replaced typewriters and quietly eliminated entire layers of clerical and administrative support. Word processing didn’t just make drafting faster, it wiped out dictation pools and pushed revision work directly onto lawyers. Email collapsed deal timelines and shifted negotiation from episodic and deliberate to constant and compressed. The internet made legal research instant, and just as importantly, made it cheap to feel informed without necessarily being right. Each shift thinned out junior, mechanical, or support‑heavy work. The lower layers of the stack shrank. Expectations rose. And tolerance for slow, process‑driven work dropped. AI fits squarely into that lineage. It’s climbing the stack faster than prior tools, handling work that once belonged to junior lawyers and support staff, but it’s still a tool upgrade, not a philosophical break. What hasn’t changed is the top of the stack. The hardest part of the job remains helping people make good decisions when the stakes are asymmetric, the information is incomplete, and the tradeoffs are real. ## **Where AI Actually Pulls Its Weight** In many cases, AI genuinely shifts power toward founders. It lowers the cost of understanding documents, strips away mystique, and lets people ask better questions earlier, often before looping in counsel at all. AI is legitimately excellent in startup law for: - producing a first draft that’s “good enough” - summarizing long, messy documents - translating legal concepts into plain English - spotting obvious internal inconsistencies - generating issue lists and checklists Used well, this is a real productivity unlock. Founders get oriented faster. Lawyers spend less time grinding and more time advising. But here’s the line people blur too easily: AI is great with language. Startup deals are about incentives. And incentives don’t live in the words. They live in the context. The problem isn’t access to information. It’s deciding what *to do* with it when tradeoffs collide. ## **Not Everything Moves Faster—But the Product Gets Better** Here’s what I’ve seen in practice using some of the available AI tools: On simpler, more mechanical tasks, AI can be dramatically faster. First drafts. Summaries. Turning scattered comments into a clean pass. That kind of work is often much faster, and the time savings are real. Sometimes the right call is to accept imperfect terms to move quickly. Speed can be a form of leverage. Over‑optimizing early structures can be as damaging as ignoring them entirely. But as deals get more complex, the speed gains taper off quickly. Different founders have different risk tolerances. Different investors have different views of what’s “standard” or “market.” And leverage varies deal by deal. Once you’re dealing with real negotiation dynamics, bespoke risk allocation, or decisions that depend on timing, leverage, or future rounds, AI doesn’t suddenly make the work move faster. The pace often looks about the same. What *does* improve, especially in complex deals, is the quality of the work product. Drafts are cleaner. Issues surface earlier. Explanations are tighter. The advice is more focused. And once the final negotiations are done, the end result documents are simply better. And that’s the point most people miss: this is why AI eats junior, drafting‑heavy work first, but doesn’t replace senior lawyers whose value lives in prioritization, leverage, and judgment. In real deals, the danger isn’t moving fast. It’s moving fast without knowing *what you’re trading away* to do it. ## **Judgment Is Still the Bottleneck** Startup outcomes rarely turn on whether a document “looks standard.” They turn on whether someone made the right calls on the small number of terms that actually matter. A common scenario: A founder gets a term sheet. They run it through AI and ask, “Is this market?” The model says yes. The founder relaxes. What the AI doesn’t flag is that the term sheet quietly shifts board control earlier than necessary and stacks protective provisions in a way that limits flexibility later. Nothing is technically “wrong.” It just reallocates power. The founder then spends limited leverage negotiating something cosmetic, maybe a definition or a minor carve‑out, because that’s what looks unusual on paper. Meanwhile, the control terms sail through. Next round, that structure becomes the new baseline. That’s not a drafting problem. That’s a judgment problem. When I say “judgment,” I don’t mean vague wisdom or seniority. I mean a very specific skill: knowing which two or three terms in *this* deal are worth spending leverage on, even when everything looks “market” in isolation. AI can surface the terms. It can’t reliably tell you which ones are worth spending leverage on without understanding the full context of the deal. That’s the gap between theory and practice. In theory, AI can draft documents, summarize market terms, and suggest negotiation points. In practice, the failure modes are consistent: - Smooth language can still allocate risk badly. - It knows what’s common, not what you can win *here and now*. - It expresses confidence even when the answer depends on context it doesn’t have. Use the tool. Just don’t confuse fluency for judgment. ## **Hip Hop Production: The Analogy** Producers like Dr. Dre started with two turntables and a mixer, looping drum breaks from funk records. The tools were basic. The judgment wasn’t. What mattered was taste: what to sample, when to bring it in, what to leave out, and who actually belonged on the track. Then the technology exploded. DAWs. Plug‑ins. Unlimited tracks. Instant recall. That shift didn’t create a thousand Dr. Dres. And it didn’t make Dr. Dre less necessary. Better tools lowered the barrier to production, but they didn’t eliminate the need for restraint, sequencing, or someone who knew when *not* to add another layer. In some cases, they made it easier to overproduce, and harder to tell the difference between activity and quality. The tools improved, but the music didn’t get better (arguably) without producers who knew how to use them. AI works the same way in law. It makes production easier. It does not manufacture taste, restraint, or judgment. Cheaper studios didn’t just preserve old producers, they created entirely new ones. What changed wasn’t who *could* make music, but how quickly people could get from idea to artifact. What didn’t change was the cost of bad taste at scale. ## **The Part That Actually Worries Me** Here’s the concern I don’t hear discussed enough: AI may mean founders spend even less time understanding what they’re signing. This isn’t about founders being careless or unsophisticated. Most founders are already juggling product, hiring, fundraising, and survival. They triage by necessity. The risk isn’t that founders stop thinking. It’s that AI makes it easier to *feel* done thinking sooner, especially when the output sounds fluent, familiar, and reassuring. If AI becomes a stand‑in for engagement (i.e. *“the tool said it’s standard”)* founders will ask fewer questions and move faster. The consequences usually don’t show up right away. AI should help founders engage more intelligently. It shouldn’t replace engagement altogether. ## **So What Actually Changes?** AI will make startup legal work sometimes faster, sometimes cheaper, and definitely more accessible than it’s ever been. That’s progress. It strips away friction and makes it easier to engage earlier and more intelligently with decisions that used to be opaque by default. As deals become more complex (nuanced terms on SAFEs, priced rounds, control negotiations, bespoke risk allocation) the work still tends to benefit from experienced legal judgment. Not because the tools stop working, but because the tradeoffs get narrower and the consequences compound. What doesn’t change is that tools don’t set priorities. They don’t know when speed matters more than structure, or when today’s convenience becomes tomorrow’s constraint. AI gives everyone the studio. Judgment still determines the final record. Time to drop some beats. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) **Tags:** startup law --- ### [Multiple Classes of Common Stock: Power, Perception, and Practical Limits](https://startuplawyer.com/incorporation/multiple-classes-of-common-stock-power-perception-and-practical-limits) **Published:** March 25, 2026 **Author:** Ryan Roberts **Excerpt:** 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. **Content:** Multiple classes of common stock are one of those startup law topics that tend to surface when founders start thinking seriously about control. You hear about Class A and Class B structures from public companies, late‑stage startups, or advisors who’ve seen them used well…and sometimes poorly. Used thoughtfully, multiple classes of common stock can solve real problems. Used reflexively, they can add complexity without much payoff. This article explains what these structures actually are, why founders consider them, how investors tend to view them, and when they meaningfully affect outcomes. The goal is not to discourage their use, but to put them in proper context so founders can decide when they help, or when simpler approaches work just as well. ## **What “Multiple Classes of Common Stock” Actually Means** Common stock is the equity founders and employees usually hold. It typically carries voting rights, participates in upside if the company succeeds, and sits behind preferred stock in a liquidation. A multiple‑class common stock structure means the company has more than one type of common stock with different rights. In practice, this almost always appears as Class A Common Stock, Class B Common Stock, and occasionally additional classes. The labels themselves are not important. What matters are the rights attached to each class. A typical early‑stage setup looks like this: - **Class A Common Stock** –> Often held by founders and may carry multiple votes per share. - **Class B Common Stock** –> Commonly issued to employees, advisors, or later common holders, usually with one vote per share. Economically, these classes are usually identical. If the company sells and there is value left after preferred stock, Class A and Class B participate pro rata. The distinction is almost always about voting and governance, not economics. ## **Why Founders Use Multiple Classes of Common Stock** Founders usually consider this structure for one of three reasons. **Preserving Voting Control** As companies raise capital and issue equity, founders naturally worry about dilution—not just of ownership, but of voting power. A high‑vote class of common stock can allow founders to retain voting control even as their economic ownership declines. For companies where founder vision and continuity matter, this can be a legitimate goal. **Addressing Founder Asymmetry** Not all founders contribute in the same way or stay equally involved over time. Multiple classes of common stock can separate economics from governance when founders have different roles, timelines, or commitments. This can be cleaner than side agreements, provided the structure is transparent and well‑documented. **Creating Governance Stability** In some businesses—particularly those with long product cycles, regulatory exposure, or mission‑driven goals—founders may want governance stability that extends beyond early financings. In those cases, multiple classes can be part of a broader governance design rather than a defensive move. ## **How Investors Usually Think About It** Most venture investors are not philosophically opposed to multiple classes of common stock. But they are pragmatic. Investors already negotiate for control through preferred stock terms: board composition, protective provisions, consent rights, and vetoes over major actions. Those mechanisms are familiar and well‑understood. When investors see Class A and Class B common stock, their focus is usually less on the class names and more on a few practical questions: - Who controls the board? - When, if ever, does high‑vote common convert? - Does this structure affect exit decisions? If the answers are clear and reasonable, investors often accept the structure, especially if the company has leverage. If the answers are vague or absolute, resistance increases. ## **Control in Theory vs. Control in Practice** This is where expectations need calibration. A helpful way to think about this is the difference between owning the steering wheel and owning the fuel gauge. Voting control can determine who turns the wheel day to day. Economics determine how far the company can actually go—and when it needs to stop. In venture‑backed companies, economic realities tend to assert themselves earlier than founders expect. Board composition, preferred stock rights, and capital needs usually drive outcomes long before common‑stock voting mechanics do. That doesn’t make Class A / Class B structures irrelevant. It just means their influence is real but bounded. ## **Common Structural Features** While details vary, most multiple‑class common structures share a few features. **High‑Vote Founder Common** One class (typically Class A) carries multiple votes per share and is held by founders. Class B carries one vote per share and is issued more broadly. This structure is well‑known from public companies but is less common (and often more constrained) in early‑stage startups. **Conversion Mechanics** High‑vote common almost always automatically converts into single‑vote common upon certain events, such as: - A new financing (less often) - A founder transferring shares - An IPO These conversion triggers are where much of the real negotiation happens. **Sunset Provisions** Some structures automatically collapse after a period of time or once ownership drops below a threshold. Sunsets are increasingly common and often make the structure more palatable to investors. ## **Practical Applications: How This Gets Used** Despite the attention they get, multiple classes of common stock are used in fairly specific situations. **Early‑Stage Alignment** Some companies adopt Class A and Class B common very early to address founder alignment or formation issues. In these cases, the structure is often temporary and simplifies as the company matures. **Founder Transitions** When a founder steps back operationally but remains a significant owner, multiple classes can separate economics from governance during the transition. Clear conversion mechanics are key here. **High‑Leverage Companies** In capital‑efficient or founder‑led businesses with strong leverage, dual‑class common may persist longer. The goal is usually stability rather than entrenchment. **Internal Administration** Occasionally, companies use separate common classes for administrative reasons, such as managing voting or information rights for employees. These uses are more operational than strategic. Across these scenarios, multiple classes tend to function as tools, not permanent power structures. ## **How This Gets Negotiated** Multiple classes of common stock rarely headline term sheets. They surface during diligence and charter review. If the company has leverage, investors may accept Class A and Class B with guardrails. If not, collapsing the classes often becomes part of closing. Investors rarely trade economics for common‑stock voting control. Founders sometimes expect this to be a major bargaining chip. In practice, it usually isn’t. ## **When Multiple Classes Make Sense** Multiple classes of common stock can make sense when: - Founder leadership is central to company value - The business requires long‑term strategic continuity - The structure addresses a real governance problem They work best when paired with clarity, conversion mechanics, and an understanding of how control actually shifts over time. ## **What Still Matters More** Even where multiple classes are used, other factors usually matter more: - Board composition - Protective provisions - Founder vesting and incentives - Financing terms and dilution - Exit dynamics These issues drive most outcomes, regardless of how many classes of common stock exist. ## **The Practical Takeaway** Multiple classes of common stock are neither a silver bullet nor a red flag. They’re a legitimate governance tool that works best when used deliberately and with realistic expectations. If you remember one thing, make it this: use Class A and Class B common to solve specific problems, not hypothetical ones. Decide whether the structure fits your company’s leverage, stage, and goals…or whether a simpler, market‑standard approach will get you to the same place with less friction. That judgment, more than any label in the charter, is what tends to matter most in real deals. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Par Value for Startup Stock: What It Is, What to Set It At, and Why It Matters](https://startuplawyer.com/incorporation/par-value-for-startup-stock-what-it-is-what-to-set-it-at-and-why-it-matters) **Published:** March 28, 2026 **Author:** Ryan Roberts **Content:** 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 from. This applies to you if you’re forming a Delaware C‑corp, issuing founder stock, or getting ready for your first venture financing. The biggest misconception is that par value affects how investors price your company or how much your shares are “worth.” It doesn’t. What it *does* affect is paperwork, accounting entries, and—if you get it wrong—avoidable friction later. Let’s walk through how this actually works in practice. ## **What par value actually is (and what it isn’t)** Par value is the minimum legal price per share that your corporation can issue stock for under state corporate law. In Delaware, that number is set in your certificate of incorporation. That’s it. Par value is not: - A valuation of your company - What investors think your stock is worth - What the IRS uses to judge fair market value - A proxy for how “serious” your startup is Think of par value like the face value printed on an old paper stock certificate. It exists because corporate statutes require it, not because modern venture markets rely on it for economic meaning. In real startup law practice, par value is closer to a compliance checkbox than a negotiating point. ## **The common founder assumption (and why it’s incomplete)** Founders often assume that setting a very low par value—like $0.00001 per share—somehow protects them, or that setting a higher one signals confidence. Neither is really true. Setting a low par value doesn’t lower your valuation, and setting a higher one doesn’t impress investors. Venture capital pricing is driven by negotiated price per share in a financing round, not by par value buried in your charter. Where par value *does* show up is in: - How much cash founders technically have to pay for their shares - How your balance sheet records “common stock” versus “additional paid‑in capital” - Whether your corporate documents are internally consistent Those are real considerations—but they’re operational, not strategic. ## **What most startups actually set (market norms)** In U.S. venture‑backed startups, especially Delaware C‑corps, par value is almost always set **very low**. Common market norms: - $0.00001 per share - $0.0001 per share - Occasionally $0.001 per share Once you get above that range, you’re no longer “wrong,” but you are making life slightly harder for no real upside. Why? Because founders usually buy millions of shares. A higher par value means founders technically need to write a bigger check at formation. That money isn’t economically meaningful—but it’s still real cash. In practice, investors don’t care which number you picked, as long as it’s sensible and consistent. ## **One place par value *can* matter: Delaware franchise taxes** There’s one important caveat to all of this, and it has nothing to do with valuation or investor perception. It has to do with Delaware franchise taxes. Delaware calculates franchise tax using two alternative methods: one based largely on **authorized shares**, and another based on **assumed par value capital**. You’re required to pay whichever method produces the lower tax—but your par value choice affects which method applies and how expensive the result can be. Two common traps I see in practice: **No‑par value stock.** If your charter authorizes stock with *no* par value, Delaware generally forces you into the authorized shares method. If you’ve authorized millions of shares (which most startups do), that method can produce a surprisingly large tax bill—even when the company is early‑stage and revenue‑light. **Unnecessarily high par value.** At the other extreme, setting a high par value can inflate the company’s assumed par value capital, particularly once you have real assets on the balance sheet. That can also drive franchise taxes higher than founders expect. This is why most venture‑backed startups land in the boring middle: a very low, non‑zero par value. It keeps flexibility, avoids edge cases in the tax formulas, and minimizes the risk of an avoidable annual surprise from Delaware. This isn’t about clever tax planning. It’s about not creating a self‑inflicted compliance problem that shows up years later, when fixing it requires a charter amendment and extra fees. ## **What founders usually worry about too much** Founders sometimes fixate on par value because it feels like an early lever they control. In reality, it’s one of the least important economic choices you’ll make. What matters far more: - How much equity you authorize - How you structure vesting and option pools - How you price your first venture financing - How your charter handles control and liquidation Par value doesn’t meaningfully affect any of those. ## **The practical takeaway** **If you remember one thing, remember this:** Set par value low, keep it standard, and don’t overthink it. For most startups, that means: - Choose a low, non‑zero par value - Make sure founder stock is properly issued and paid for - Sanity‑check par value and authorized shares together to avoid franchise‑tax surprises - Move on to decisions that actually affect ownership and outcomes Par value is startup law housekeeping. Necessary—but not strategic. ## **Quick FAQs founders actually ask** **Does par value affect my 409A valuation or taxes?** It doesn’t affect your 409A valuation—those are based on fair market value, not par value. But it *can* affect Delaware franchise taxes, especially if you use no‑par stock or set par value unnecessarily high. **Can investors force us to change par value later?** In practice, no. It’s not a negotiating point in venture financings. **Will a buyer care about par value in an acquisition?** Only to confirm your stock was validly issued. Clean paperwork matters more than the number itself. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [When a Founder Is Also a Professor: Customizing a Confidential Information and Inventions Assignment Without Tripping Over University Rules](https://startuplawyer.com/incorporation/when-a-founder-is-also-a-professor-customizing-a-confidential-information-and-inventions-assignment-without-tripping-over-university-rules) **Published:** March 28, 2026 **Author:** Ryan Roberts **Content:** 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 academic appointment. University IP policies, sponsored research rules, and consulting limitations can conflict directly with what most startup lawyers would otherwise consider market‑standard startup law. This comes up most often at the pre‑seed and seed stage, but it doesn’t disappear later. Venture capital investors will care. Acquirers will care even more. And the biggest misconception I see is that this is just a disclosure issue or a box‑checking exercise. It isn’t. Here’s how this actually works in practice—and how to customize a CIIAA so you protect your company without violating university requirements or creating an acquisition‑killing problem down the line. ## **Why this issue shows up in real startup and venture deals** A CIIAA is meant to do one basic thing: make sure the company owns what it thinks it owns. In U.S. startup law, that usually means assigning inventions created in the scope of your work for the company, protecting confidential information, and preventing founders from walking away with core IP. If you’re a founder who only works for the startup, this is mostly straightforward. But if you’re also a professor, you’re operating under two overlapping IP regimes that were never designed to align. Universities often claim rights to inventions created within the scope of academic employment, developed using university resources, or arising from sponsored research. A standard startup CIIAA often claims all inventions related to the company’s business, and sometimes everything created during your engagement. Those claims can collide in ways that aren’t obvious until diligence—or worse, an acquisition—when someone finally asks, “Who actually owns this?” ## **The common founder assumption (and why it’s incomplete)** The assumption usually sounds like this: “I know my university has an IP policy. I’ll disclose it, and we’ll deal with it later if it ever matters.” That’s incomplete for two reasons. First, universities don’t just care about disclosure. Many have affirmative requirements around assignment language, notice obligations, publication rights, and how exclusions must be documented. A standard CIIAA can put you out of compliance the moment you sign it—even if no one notices right away. Second, venture capital and M&A diligence doesn’t care about intent. Investors and acquirers look at signed documents, not explanations. If your CIIAA says the company owns everything and your university policy says the university owns some of it, that ambiguity is a real risk—not a theoretical one. This is one of those startup law issues where clean drafting early saves enormous time, legal fees, and leverage loss later. ## **Understanding university policies (and why they matter more than you think)** University intellectual property policies are the silent partner in every professor‑founder startup. They’re not background paperwork. They’re the rules that determine who owns inventions, when rights attach, and whether your company can actually commercialize what it builds. Most universities claim ownership of inventions created: - within the scope of academic employment, - using university facilities, labs, or equipment, or - as part of sponsored research or grant‑funded projects. The details vary widely. Some policies are narrow and practical. Others are expansive and aggressively drafted. That variation matters in real venture and M&A outcomes. The practical mistake founders make is assuming these policies are passive. They aren’t. Universities tend to enforce them selectively but seriously—often when a startup becomes valuable, raises institutional venture capital, or enters acquisition diligence. In practice, this means reading the actual policy, identifying what triggers ownership, and drafting your CIIAA so it respects those rules instead of colliding with them. Investors and acquirers see this as a credibility signal, not a concession. ## **How this actually works in real deal rooms** At formation or early financing, most investors are fine with reasonable, clearly drafted carve‑outs for university obligations. What they don’t like is vagueness, undefined overlap, or “we’ll fix it later” language. The goal isn’t to weaken the company’s IP position. It’s to allocate risk transparently so everyone understands what the company does—and does not—own. Think of this like a film rights deal. If three studios all think they own the sequel, nobody finances the movie. The same logic applies here. Clean boundaries are financeable. Ambiguity isn’t. ## **Customization #1: A precise university IP carve‑out (not a blanket exception)** The most important customization is a narrow, well‑defined carve‑out for university‑owned IP. A common mistake is excluding “any invention subject to university policy.” That sounds safe, but it’s usually too broad and alarms investors because it creates uncertainty about the company’s core assets. Instead, the carve‑out should be limited to IP that the university actually owns or affirmatively claims under its written policy—typically inventions created within the scope of academic employment, using material university resources, or governed by sponsored research agreements. Precision matters. Venture capital investors are far more comfortable with a narrow, intelligible carve‑out than a sweeping exclusion that could swallow the business. ## **Customization #2: A prior inventions schedule that actually does work** Most CIIAAs include a schedule of prior inventions. Professors often treat it as optional or perfunctory. It isn’t. If you’ve done academic research, published papers, built lab tools, developed software, created datasets, or even written internal research code before the company—even if you believe it’s unrelated—you should list it. This does three practical things: 1. It creates a clear boundary between pre‑existing academic work and company IP. 2. It reduces later disputes about derivation or overlap. 3. It gives acquirers confidence that diligence won’t turn into archaeology. In real startup law practice, this schedule is one of the most underused risk‑reduction tools founders have. ## **Customization #3: Sponsored research and grant‑funded work** Sponsored research agreements and government grants often include obligations that are incompatible with a standard startup IP assignment. These can include publication requirements, restrictions on commercial use, march‑in rights, or licensing preferences in favor of the sponsor or government. Your CIIAA should explicitly exclude inventions arising from sponsored research governed by those agreements unless and until the university formally assigns them to the company. This doesn’t weaken the company’s position. It makes it accurate—and accuracy is what survives venture and M&A diligence. ## **Customization #4: Confidentiality obligations that reflect academic reality** Universities frequently require academic freedom to publish and disclose research results. A standard startup confidentiality clause can unintentionally put you in breach of those obligations. The fix isn’t to water down confidentiality. It’s to align it with reality by excluding information that is already public through academic channels or required to be disclosed under existing university agreements. Good startup law doesn’t pretend conflicts don’t exist. It resolves them cleanly on paper. ## **Customization #5: Multiple universities mean multiple policies** If you have more than one academic affiliation—adjunct roles, joint appointments, visiting positions—you need to address each policy explicitly. A single generic reference to “my university” is rarely sufficient. In practice, this means identifying each institution and making clear which activities fall under which role. Yes, it’s more drafting up front. But it’s far less painful than explaining inconsistencies to a venture fund or acquirer later. ## **The role of tech transfer offices (and what they actually care about)** Founders often assume university tech transfer offices are adversarial by default. In reality, most care about three things: - preserving the university’s rights under its policies, - avoiding accidental waiver of those rights, and - ensuring compliance with sponsored research obligations. A thoughtfully customized CIIAA that respects those boundaries often reduces friction rather than creating it. Sloppy or over‑aggressive documents tend to invite scrutiny. ## **Stage matters more than founders expect** At pre‑seed, investors are usually focused on whether the issue has been identified and handled credibly. By a priced Series A or later, investors expect clean documentation and a coherent story about IP ownership. By M&A, ambiguity becomes expensive. Buyers will push risk back onto you through escrows, indemnities, or price adjustments. This is why addressing the issue early—when changes are cheap and leverage is high—pays off. ## **Theory vs. reality: why over‑claiming IP usually backfires** The theory some founders hear is simple: assign everything to the company and sort it out later. In reality, over‑claiming IP creates ambiguity, invites university pushback, raises diligence red flags, and weakens negotiating leverage in acquisitions. Clean, credible limitations are usually stronger than aggressive language that doesn’t reflect how universities actually operate. ## **How investors usually think about this** Most experienced venture capital investors have seen this before. They generally care about whether the company owns its core commercial IP, whether university claims are clearly identified, and whether there’s a realistic path to licensing or assignment if needed. They care much less about edge cases that don’t affect real outcomes. Handle this cleanly early, and it rarely becomes a blocking issue in venture financing. ## **How this surfaces in M&A (and why it matters more then)** Acquirers are less forgiving than VCs. In M&A diligence, buyers want to know who owns each patent, dataset, and codebase—and whether any university rights attach. Ambiguity here can lead to escrows, special indemnities, price reductions, or deal delays. This is one of those areas where a well‑drafted early‑stage CIIAA quietly pays off years later. ## **The part founders often over‑optimize (and what usually matters more)** Founders sometimes obsess over whether a carve‑out is “too broad” by a sentence or two. What usually matters more is clear definitions, accurate schedules, and consistency with university documents. In real deals, clarity beats cleverness every time. ## **If you remember one thing** A standard CIIAA assumes you have one employer, one set of IP rules, and one place where your work lives. If you’re a professor, none of that is true. What actually matters isn’t trying to force everything into the company by default. It’s being precise about what the company truly owns, what the university may own, and why the boundary makes sense on paper. Clear carve‑outs, accurate schedules, and alignment with real university policies do more to protect your startup than aggressive language that can’t survive diligence. In practice, the best outcome isn’t “the company owns everything.” It’s that a reasonable investor or acquirer can read your documents and understand the IP story without guesswork. If you get that right early, this issue almost never derails a venture financing or an acquisition later. ## **Common questions founders ask** **“Can’t we just fix this later if the university ever raises an issue?”** You can try—but later is when leverage is worse, documents are harder to change, and third parties are involved. Fixing this at formation or early financing is cheap. Fixing it during diligence is not. **“Will investors push back if my CIIAA has university carve‑outs?”** Not if they’re narrow, clear, and grounded in actual university policy. Investors worry about ambiguity, not honesty. Sloppy carve‑outs are a problem; thoughtful ones usually aren’t. **“Do I really need to worry about this if I’m just at pre‑seed?”** Yes. Pre‑seed is when expectations are flexible and cleanup is easy. Waiting doesn’t make the issue smaller—it just means you’ll be negotiating it later with less leverage and more scrutiny. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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It’s not. The short answer is this: **an LOI usually sets the economic headline and the deal process—but it does not lock in the outcome**. It gives structure and momentum to an acquisition, but very little legal certainty. That gap between perception and reality is where founders get surprised. This matters because once you sign an LOI, the leverage in the deal often starts shifting—sometimes subtly, sometimes fast. If you misunderstand what the LOI actually does in practice, you can give up more control of the acquisition process than you realize, long before the definitive documents are signed. ## **Why LOIs Show Up in Almost Every Startup Acquisition** In startup and venture‑backed M&A, LOIs exist for one main reason: they make it rational for both sides to spend real time and money finishing the deal. Before an LOI, everyone is speculating. After an LOI, everyone is investing in the acquisition. From the buyer’s perspective, the LOI justifies: - Deep diligence - Internal approvals - Deal team time - Opportunity cost (not chasing other targets) From your perspective as the seller, the LOI: - Anchors valuation and structure - Narrows the deal to one buyer - Creates a path to closing That’s the theory. In reality, the LOI is also where expectations harden—and where misunderstandings begin. ## **The Common Founder Assumption (and Why It’s Incomplete)** Here’s the assumption I hear most often in real client conversations: “Once we sign the LOI, the deal is basically done unless something blows up.” That’s emotionally understandable—and legally wrong. In U.S. startup acquisitions, most LOIs are expressly non‑binding on the core deal terms. Courts generally enforce what the document actually says, not what one side hoped it meant. What the LOI really does is set the default path forward, not the final destination. Think of it less like a contract and more like a heavily penciled‑in outline. It’s persuasive, it’s influential, and it’s hard to ignore, but not final. ## **What an LOI Actually Locks In** Let’s be precise. In most startup acquisitions, an LOI reliably does four things. **1. It Anchors Price and Structure** The single most important function of the LOI is anchoring. Even if the purchase price is non‑binding, it becomes the reference point for everything that follows. Future discussions don’t start from zero; they start from the LOI. That anchor affects: - Cash vs. stock mix - Earnouts or holdbacks - Treatment of option holders - Allocation between consideration buckets In practice, moving meaningfully *up* from the LOI price after signing is rare. Moving down is not. **2. It Sets the Deal Narrative** The LOI quietly answers questions that will echo through diligence and drafting: - Is this framed as a clean acquisition or a “strategic hire”? - Is growth the story—or risk mitigation? - Are reps and warranties expected to be light or heavy? Once that narrative is set, reversing it is difficult without friction. In real deal rooms, lawyers, bankers, and executives refer back to the LOI constantly—not because it’s binding, but because it’s the shared reference point. **3. It Triggers Exclusivity (and That’s Binding)** Almost every LOI includes exclusivity, and this part *is* binding. Exclusivity means: - You stop talking to other buyers - You stop running a process - Your alternatives narrow This is where leverage often shifts. Once exclusivity starts, the buyer knows you’ve taken other options off the table, even if the economics aren’t final. If there’s one provision founders routinely under‑appreciate, it’s this one. **4. It Commits You to a Process Timeline** LOIs typically outline: - Diligence periods - Drafting timelines - Target signing and closing windows While not always enforceable, these timelines shape behavior. Missed deadlines tend to benefit the buyer more than the seller, especially if exclusivity continues rolling forward. ## **What an LOI Usually Does *Not* Do** Now let’s talk about what founders often assume the LOI accomplishes—but usually doesn’t. **It Does Not Guarantee Closing** Even with a signed LOI, closing risk remains real. Deals fall apart after LOI for reasons like: - Diligence findings that change risk perception - Internal buyer politics or budget shifts - Market changes (financing dries up, stock price drops) - Re‑trading economics under the guise of “details” The LOI doesn’t prevent this. At best, it makes walking away reputationally uncomfortable—not legally impossible. **It Does Not Freeze Legal Terms** Founders sometimes believe that if legal terms aren’t mentioned in the LOI, they’ll be “market standard” later. Sometimes they are. Sometimes they aren’t. Key items often left vague or omitted: - Indemnification caps and survival - Escrows and holdbacks - Non‑competes and non‑solicits - Founder rollover obligations (to a lesser extent) These issues get negotiated later, when leverage may be weaker. That doesn’t mean you must negotiate everything upfront—but you should understand what you’re deferring. **It Does Not Eliminate Leverage Dynamics** An LOI doesn’t stop leverage from moving. It often accelerates it. Once you: - Announce internally - Distract your team with diligence - Pause other strategic conversations …your practical alternatives narrow. Buyers know this, even when everyone is acting in good faith. ## **A Quick Sports Analogy** Think of the LOI like a football team winning the coin toss in overtime: It doesn’t decide the game, but it sets the conditions under which the rest of the game is played. If you treat it like a victory, you’ll be unprepared for what follows. ## **Where Stage and Context Change the Outcome** Not all LOIs behave the same way. Stage matters. **Early‑Stage or Acqui‑Hire‑Driven Deals** In smaller or talent‑driven acquisitions: - LOIs are often lighter - Economics are more flexible - Cultural fit can override paper terms But the downside risk is higher. Deals can disappear quickly if priorities shift. **Venture‑Backed, Priced‑Round Startups** This is the most common context where LOI misunderstandings hurt. Here: - Valuation anchoring matters a lot - Investor consent dynamics kick in - Post‑closing liability allocation becomes real In these deals, the LOI’s silence on key points is often intentional—and not always in your favor. **Late‑Stage or Platform Acquisitions** At later stages: - LOIs tend to be more detailed - Buyers invest more upfront - Re‑trading is reputationally costly Even here, though, the LOI is not a guarantee. It’s a roadmap with off‑ramps. ## **Theory vs. Reality: Why “Non‑Binding” Still Shapes Everything** Here’s the reality check founders don’t always hear: Even when an LOI is non‑binding, people should behave as if it does. Lawyers draft from it and negotiators reference it. Challenging the LOI later is possible, but it requires leverage, clarity, and a willingness to slow things down. Many founders don’t want to do that once momentum builds. ## **What Founders Commonly Over‑Optimize (and Why It Usually Matters Less)** Founders often fixate on: - Whether the LOI is binding - Whether language is “too vague” - Whether it looks aggressive or friendly Those things matter less than: - **The economic anchor** - **The scope and length of exclusivity** - **What issues are intentionally deferred** I’d much rather see a clean, simple LOI with thoughtful economics than a heavily lawyered document that ignores leverage reality. ## **How This Is Actually Negotiated in Real Deal Rooms** In practice, sophisticated buyers expect pushback on: - Price mechanics - Exclusivity length - Deal certainty signals They do *not* expect founders to blindly accept first drafts. A calm, experience‑based response—especially one grounded in market norms—is usually well received. Over‑lawyering or posturing is not, but advisors can help you decide where perfection actually matters. ### **The Practical Takeaway** If you remember one thing, remember this: An LOI doesn’t close your deal. It sets the leverage environment in which your deal will either succeed or quietly deteriorate. Treat it as a strategic document, not a ceremonial one. Before you sign: - Be clear on what’s anchored—and what isn’t - Understand how exclusivity shifts leverage - Decide consciously which issues you’re deferring That mindset will serve you far better than trying to make a non‑binding document feel binding. ## **A Couple Real Questions Founders Ask** **“Should I ever refuse to sign an LOI?”** Yes—if exclusivity or economics materially misalign with reality and the buyer won’t move. Walking away early is often cheaper than unraveling later. **“Can I renegotiate after signing?”** Sometimes. But it’s easier with leverage *before* exclusivity than after. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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The short answer is simple: a 409A is a **tax compliance tool** designed to protect you and your employees from ugly IRS outcomes. They are not a statement of what your company is actually worth, and not a negotiating lever in venture financings or M&A. This matters most if you’re a founder at the pre‑seed or seed stage granting common stock options, though the confusion tends to follow companies well into priced rounds. The biggest misconception I see is treating a 409A like a mini‑valuation of the business, instead of what it really is: a defensible way to set the exercise price of common stock for tax purposes. Here’s why this shows up so early and so often in real startup law conversations. ## **Why 409A valuations exist in the first place** A 409A valuation exists because the tax code cares deeply about whether employees receive stock options at a discount. If your option strike price is set below fair market value, the IRS can treat that discount as immediate taxable income—plus penalties and interest. That’s a bad outcome for employees, and it can become a serious company‑level problem. Section 409A was designed to prevent that. It creates “safe harbors” that let you rely on an independent valuation if it’s obtained and used in good faith. Do that, and the risk of the IRS second‑guessing your option pricing drops dramatically. That’s it. That’s the job. A 409A valuation is there to manage tax risk. Nothing more. ## **What a 409A valuation is *not*** This is where founders tend to over‑optimize. A 409A valuation is not a proxy for enterprise value. It’s not a reflection of investor pricing. And it’s not a signal to the market about what your company is “really worth.” In real venture deals, investors do not price preferred stock off your 409A. Acquirers don’t rely on it to decide what they’ll pay for the company. And experienced startup lawyers aren’t trying to squeeze it up or down to make a narrative point. The reason is straightforward: preferred stock and common stock are fundamentally different instruments. Preferred stock comes with liquidation preferences, control rights, downside protection, and economics that common stock doesn’t have. A 409A valuation is simply trying to account for that difference using accepted models so the common stock price is defensible for tax purposes. The gap between your last preferred round price and your common stock value isn’t a bug. It’s the point. ## **How this plays out at the pre‑seed and seed stage** If you’re early—pre‑seed or seed—the 409A will almost always come in well below your most recent financing price. Founders sometimes panic when they see that spread. They shouldn’t. At this stage, the company is risky, illiquid, and unproven. Common stock reflects that risk. A lower 409A makes it possible to grant options at prices that are meaningful to employees without creating tax problems. That’s a feature, not something to “fix.” In practice, early‑stage 409As are usually treated as a box to check: get it done, document it properly, and move on. The economic stakes are relatively modest, and the upside of aggressive positioning is minimal. ## **Where the analysis changes later** As the company matures, raises larger priced rounds, or moves closer to liquidity, the dynamic shifts. The spread between preferred and common narrows. Valuations move faster. Option grants become more expensive. Compensation strategy starts to matter in real dollar terms rather than just cap table math. At later stages, a sloppy or overly aggressive 409A can create real friction—especially in audits, secondary transactions, or acquisition diligence. This is where founders start to feel the difference between a valuation that’s merely “cheap” and one that’s actually defensible. The goal doesn’t change, but the margin for error does. ## **Theory vs. reality in deal rooms** There’s a lot of blog content that treats 409A valuations as something to game. In real deal rooms, that’s not how they’re discussed. Investors care about ownership, governance, and exit economics. Lawyers care about whether the valuation will stand up if it’s ever challenged. Most of the time, everyone else just wants it done correctly and on time so hiring doesn’t stall or deals don’t get delayed. No one wins points for a clever valuation. You only notice it when it goes wrong. ## **The practical takeaway of 409As** If you remember one thing, make it this: **a 409A valuation is about tax risk management, not company value**. Get it done properly. Update it when required. Don’t read more into the number than it’s designed to support. And resist the urge to optimize something that usually doesn’t drive real‑world outcomes. ## **Common follow‑up questions founders ask** **Does a higher 409A help me in fundraising?** No. Investors price preferred stock based on forward‑looking risk and return, not compliance valuations. **Can I push my 409A lower to grant cheaper options?** You can ask questions and make sure assumptions are accurate, but pushing beyond what’s defensible usually creates more risk than upside. Usually there’s only a bit of wiggle room. **Will acquirers look at my 409A in M&A?** Sometimes—but typically as a diligence item, not a value anchor. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring **Tags:** 409A --- ### [280G in Startup Acquisitions: What Founders Actually Need to Know](https://startuplawyer.com/acquisitions/280g-in-startup-acquisitions-what-founders-actually-need-to-know) **Published:** March 31, 2026 **Author:** Ryan Roberts **Excerpt:** 280G in Startup Acquisitions **Content:** If you’re selling your startup and someone mentions “280G,” the short answer is this: **yes, it can materially affect your payout—but only in specific, predictable situations**. Most founders hear about 280G late in the process, assume it’s some abstract tax trap, and then over‑optimize the wrong things under time pressure. Here’s the part people usually miss. 280G is not a deal‑killer rule. It’s a tax rule that reallocates economics, sometimes meaningfully, sometimes barely at all, depending on your role, your compensation history, and how the acquisition is structured. If you understand when it actually bites, you can plan around it. If you don’t, you end up negotiating blind. This applies primarily to founders and senior executives in U.S. venture‑backed startups facing an acquisition, especially where equity acceleration is on the table. The biggest misconception is that 280G “wipes out” your proceeds. In real startup M&A, that’s rarely true, but it does quietly shift incentives in ways that matter. Let’s walk through how this actually plays out in practice. ## **What 280G Is and Why It Exists (Without the Tax Lecture)** Section 280G of the Internal Revenue Code is aimed at so‑called “excess parachute payments.” In plain English, it’s designed to penalize large change‑in‑control payouts to certain executives…because that “might” be an end-run around stockholder proceeds. Here’s the core mechanic you need to understand: If a covered individual receives change‑in‑control payments worth more than 3× their historical “base amount” (roughly their average W‑2 compensation over the prior five years), then: 1. The excess portion is subject to a 20% excise tax, paid by the individual (not the company), and 2. The company loses its tax deduction for that excess. What counts as a change‑in‑control payment? Cash bonuses, severance, and (crucially for startups) accelerated vesting of equity tied to the acquisition. ## **Who 280G Actually Applies To (And Who It Doesn’t)** 280G only applies to “disqualified individuals.” In startup terms, that usually means: - Founders who are officers or meaningful shareholders - The CEO, CFO, or other named executives - Occasionally a senior hire with meaningful equity and compensation history It does **not** apply to most rank‑and‑file employees, but it often can apply to early founders who took minimal compensation for years because their base amount is so low that the math easily crosses above the threshold. \*\*\*There’s also a critical carve‑out: **280G does not apply to private companies if shareholders approve the payments in advance**, provided strict disclosure and voting rules are followed. This is commonly referred to as the **private‑company 280G exemption**, and in venture‑backed startups it’s often what is used to avoid such taxes. ## **The Founder Assumption That Usually Backfires** A common assumption is that shareholder approval is always the clean or available answer. Sometimes that’s true. Sometimes it isn’t. The missing variable is timing and leverage. Shareholder approval requires full disclosure of all parachute payments, a vote of disinterested shareholders, and enough runway to run the process correctly. In a cooperative, well‑paced deal, this is often manageable, as there are various time-based constraints and order-of-action requirements to obtain the shareholder approval exemption. In a rushed or buyer‑controlled process, it can become operationally and politically fraught. ## **How 280G Actually Gets Negotiated in Real M&A Deals** In practice, 280G shows up in one of three ways. **Shareholder approval.** When available, this is often the cleanest path. It preserves agreed economics and avoids individual‑level excise taxes, but it only works if identified early and executed correctly. **Cutback provisions.** Common, simple, and frequently misunderstood. A cutback protects the executive from the excise tax but reduces payout. Founders often accept these without fully appreciating the economic trade‑off. **Gross‑ups.** Rare to the point of near extinction in venture‑backed acquisitions. They’re generally unacceptable to buyers and investors. Thus, these solutions may not be available or and are certainly not interchangeable. ## **Theory vs. Reality: 280G in Practice** Theoretical discussions of 280G often treat it as something founders can either ignore entirely or strip out of the deal. In reality, it’s neither. What matters is alignment between founders, investors, and buyers. 280G sits at the intersection of retention, optics, and net economics. Optimizing any one of those variables in isolation often produces worse overall outcomes. This is why experienced startup lawyers raise 280G early, not because it’s catastrophic, but because it’s easier to shape and frame earlier. In most cooperative deals, if the cap table is aligned on the transaction and the waterfall, obtaining shareholder approval is usually manageable. Earlier is better. That said, buyer counsel may not prioritize 280G at the outset, and it sometimes surfaces innocuously as a one‑line diligence request. ## **The Practical Takeaway** If you remember one thing, remember this: 280G (potentially) reallocates economics; but ensure it’s addressed by counsel and tax advisors. What actually matters: - Whether you’re a covered individual - Whether payments realistically exceed the threshold - Whether shareholder approval is feasible in context What usually doesn’t: - Worst‑case theoretical tax math - Kill your deal - Treating 280G as a moral or fairness issue rather than a mechanical one ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits --- ### [When to Say No to Investment Money](https://startuplawyer.com/venture-capital/when-to-say-no-to-investment-money) **Published:** April 1, 2026 **Author:** Ryan Roberts **Content:** If you’re raising money for a startup, the short answer is this: you should say no when the capital comes with terms, timelines, or people that predictably and materially reduce your options to build, to raise the next round, or to sell the company later. You’ll hear some version of “lawyers kill deals” any time a round gets tense usually because the lawyer is being painted as risk‑averse. But in real venture financing, **bad deal structure kills more deals than lawyer risk‑aversion ever will**. If the incentives are misaligned, no amount of drafting talent turns it into a healthy relationship; the documents just record the problem in nicer formatting. The reason this matters is simple: in venture, the money isn’t just cash. It’s governance, signaling, and long-term leverage, with most of it invisible until you need something (a bridge, a down round, an acquisition) and discover who can say “no.” To be clear: I’m not pretending founders always have the luxury of choice. Sometimes you’re making the least-bad decision you can, between taking imperfect capital and watching the runway hit zero. That pressure is real, and it doesn’t say anything about your judgment or your ambition. In those moments, the goal isn’t to find a perfect deal; it’s to protect your ability to keep building. If you have to compromise, try to compromise on price before you compromise on the terms and control points that can permanently take options off the table. ## **The problem isn’t “bad investors.” It’s misaligned incentives you can’t renegotiate later.** Founders tend to talk about investors like dating: chemistry, vibes, red flags. Investors tend to talk about founders like underwriting: risk, upside, narrative. Both frames miss what matters most in a venture deal: incentives and control points. The investor you take today gets a set of tools: information rights, protective provisions, board influence (even if they “don’t need a seat”), pro rata rights, and informal gravity in future rounds. Those tools aren’t evil. They’re how venture capital works. But they’re also how a bad-fit investor can slow you down without ever “doing” anything dramatic. Here’s the practical reality: you rarely regret dilution as much as you regret being trapped in a governance and signaling structure that makes the next 24 months harder. ## **A movie analogy** In *The Godfather*, the line isn’t “I’m going to harm you.” It’s “I’m going to make you an offer you can’t refuse.” (Ok not all investors are brutal as Don Vito Corleone but it’s just a fun analogy.) Some startup financings are like that, except the “can’t refuse” part is internal: you’re low on runway, your team is watching, and you’re tired of pitching. The offer is “good enough,” and you tell yourself you’ll clean up the edges later. But in venture financing, the edges *are* the deal. And you don’t get a rewrite without leverage. ## **The three categories of “say no” (even if the valuation looks fine)** **1) Money that breaks your next round** A seed round is not just capital. It’s also a signaling event. The price, structure, investor mix, and story you lock in becomes the baseline that future investors react to. You should seriously consider saying no if the round creates an obvious next-round problem, such as: - **A valuation that’s too high for your actual traction**, especially if you don’t have a credible path to “grow into it” before you need more cash. An overpriced seed can force a down round (or a disguised down round) later, which often triggers investor pain, founder morale issues, and recruiting friction. - **A structure that sophisticated investors hate**. Examples: weird side letters that grant special vetoes, aggressive liquidation preferences at early stages, or debt-like terms dressed up as “seed equity.” Some of these are technically negotiable later, but only if your next lead investor is willing to spend political capital fixing your old deal. Many won’t. - **A cap table that becomes unleadable**. Too many small checks, unclear ownership, and no one with enough skin in the game (or credibility) to anchor the next raise. Concrete example: You take a “hot” seed round at a high valuation from investors who don’t really do follow-on. Twelve months later, your metrics are good-but-not-legendary. A new lead looks at your price and your investor base and says, “If you were truly crushing it, you wouldn’t be back so soon, and your insiders would be stepping up.” That’s not always fair. It’s also how deal rooms work. **2) Money that creates a governance hostage situation** Early-stage founders often over-optimize for valuation and under-optimize for who can block you. In U.S. venture documents, a lot of “control” doesn’t look like control. It’s protective provisions, consent rights, board approvals, and informal influence. If you take money from someone who is likely to use those levers defensively (or unpredictably) you can end up spending more time managing your investor than your company. Red-flag patterns that justify a “no”: - **An investor who wants control without responsibility.** For example: they insist on strong veto rights, but they don’t have a real platform, don’t follow-on, and don’t have the reputation to help you raise. That’s asymmetric downside for you. - **Unreasonable approval rights** tied to routine operating decisions: budget, hiring executives, taking on ordinary debt/leases, changing comp, entering partnerships. Some of these are normal at later stages; they are often a tax at seed. - **A board dynamic that will be structurally dysfunctional.** If a lead insists on a board seat but doesn’t have the temperament (or experience) for early-stage governance, you don’t have a “strong partner.” You have, at a minimum, a quarterly distraction. Concrete example: You accept a seed lead who “moves fast” and prides themselves on being “tough.” Six months later you need to do a bridge round. They now have effective veto power over your financing options. They push for punitive terms “to protect the downside.” Other investors see the internal conflict and either demand harsher terms or walk. From a startup law perspective, this is why “standard docs” is not the same as “standard outcomes.” The paper may be NVCA-ish; the behavior is not. **3) Money that distorts your strategy (and then punishes you for it)** This one is subtle: you take money because you need runway, and the investor pushes you toward a strategy that maximizes *their* return profile, not your company’s best path. Most venture capital has a power-law mindset: they’re optimizing for outcomes where one or two companies return the fund. That can be fine…if your company actually fits that model. But if your company is more likely to become a solid, profitable business, or a strategic acquisition, the wrong investor can turn that into a bad time. Warning signs: - They push you to chase growth channels that don’t fit your product or market maturity, because “that’s what venture-backed companies do.” - They treat reasonable acquisition interest as a moral failing (“too early to sell”), even if the offer is strategically strong for you. - They assume more money is always the answer, which tends to create hiring plans you can’t unwind without reputational damage. Concrete example: You take a large seed (or early Series A) from a fund that wants you to be a category winner. Two years later you have real product-market fit in a niche and an acquisition offer that’s meaningful for you. The investor blocks or poisons it because it doesn’t fit their fund math. You can’t force the deal without them, and now you’re gambling on a much narrower path. That’s not “bad behavior.” It’s incentives. Of course, this is a rare occurrence but still worthy of mention. ## **Theory vs. reality: “If the terms are bad, we’ll just renegotiate.”** In theory, you can always fix things when you’re doing well. In reality, renegotiations happen when: 1. a new lead demands cleanup as a condition to invest, or 2. the company is struggling and insiders demand concessions. Neither is a founder-friendly moment. Also, most “cleanup” isn’t about rewriting history. It’s about adding complexity: consent agreements, side letters, carve-outs, special approvals. You don’t end up with a clean cap table. You end up with a cap table that requires a map. This is why startup lawyers are often more conservative than founders expect. We’ve seen how a seemingly minor early concession becomes a recurring negotiation tax. ## **What founders commonly over-optimize (and why it matters less)** You can absolutely spend weeks fighting over a slightly better valuation. And sometimes you should. But founders frequently over-optimize valuation while ignoring: - **Who is actually leading** (and whether they can credibly lead again) - **Follow-on appetite** (do they reserve? do they support bridges?) - **Reputation in deal rooms** (do later investors like working with them?) - **Governance friction** (do they escalate everything into a “principle”?) The boring truth: an extra couple points of dilution is usually survivable. A misaligned lead investor is a recurring operating expense. ## **A practical “say no” checklist you can use this week** When you’re looking at a term sheet (or even a “friendly” SAFE), ask yourself: 1. **Does this money increase or decrease my ability to raise the next round?** If it forces an unrealistic trajectory, it’s not help—it’s a deadline. 2. **Who can block me, and over what decisions?** If the investor can block financings, M&A, or core operating moves without also being the kind of partner who can help you, you’re taking on leverage against yourself. 3. **What does this investor do when things get slightly off-plan?** Not “when things are great.” Slightly off-plan is the default state of startups. 4. **Am I taking this because it’s good money, or because I’m tired and scared?** Be honest. The market does not reward emotional exhaustion with better terms. 5. **If this investor disappears after the wire, do I still like this deal?** That question strips out the fantasy value and leaves you with the structure. ## **The practical takeaway (if you remember one thing)** *The worst money isn’t expensive money. It’s money that reduces your options.* In venture financing, you’re not just selling a slice of economics. You’re adding a long-term counterparty with real levers. If that counterparty’s incentives, temperament, or fund model doesn’t fit your likely path, the “cost” shows up later…in slower decisions, harder fundraising, and fewer strategic exits. If you’re staring at a term sheet and feeling relieved more than excited, slow down. Relief is not diligence. ## **Quick FAQs founders actually ask** **“Is it ever rational to take a down round just to survive?”** Yes. Survival can be rational. But treat it like emergency surgery: do the minimum necessary to live, and be honest about the long-term consequences (dilution, morale, signaling). **“What if the only money available has bad terms?”** Then your real decision may be operational, not legal: cut burn, extend runway, reduce scope, or find non-dilutive options. **“Can a bad-fit investor really hurt an M&A deal?”** Absolutely. Consent rights, board votes, and even informal pressure can slow or block a sale process. Also, acquirers do diligence on cap tables and investor dynamics; visible dysfunction can become a deal risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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But “AI-native” legal service providers revive an older, nerdier question: corporate structure. When a company calls itself an AI-powered law firm, is it one entity, two entities, or something in between? And if the answer is “two,” it’s hard not to think back to Atrium. [Crosby.AI](https://crosby.ai/) (often branded simply as Crosby), fresh off their [$60M Series B financing](https://www.law.com/legaltechnews/2026/03/31/legal-contracting-startup-crosby-secures-60m-in-series-b-round/), is a prominent new entrant. It calls itself an “AI-powered law firm” for high-volume commercial agreements (NDAs, MSAs, DPAs) with fixed pricing and fast turnaround. The [reported model](https://www.forbes.com/sites/rashishrivastava/2026/03/31/why-this-ai-law-firm-is-ditching-the-billable-hour/) is straightforward: AI handles much of the first pass, and a lawyer owns the review and final sign-off, backed by the usual table-stakes (a real firm, malpractice coverage, and pricing that’s more product than timesheet). What I’m most curious about is the setup that makes that possible, especially in a U.S. market that generally limits outside ownership of law firms. ## The “two-entity” question: where does the tech company end and the law firm begin? Once you mix “venture-style” software building (models, engineers, product) with a regulated profession, one question pops up fast: if there’s outside capital involved, where does it sit? In other words, what part is the law firm, what part is the tech company, and how do they relate? That’s not a “gotcha.” It’s basic diligence: who’s providing the legal service, who owns the tech, and how the two are connected. ## Atrium is the closest comparison (and a useful cautionary reference) [Atrium](https://www.ycombinator.com/companies/atrium) is the closest recent precedent because it made the dual-entity model mainstream in startup circles. Launched in 2017, Atrium set up (1) a venture-funded tech company building software and (2) a separate law firm delivering legal services using that software. The split was largely about compliance: in most states, nonlawyers can’t own a law firm or share in legal fees. So the investment typically goes into the tech company (equity-friendly), while the law firm stays lawyer-owned. Reporting on Atrium described the tech side funding platform development and helping finance the law firm’s overhead by making loans to the law firm through intercompany agreements. Atrium later shut down its startup operation in 2020. The takeaway isn’t “this can’t work.” It’s that the model has built-in tensions: - **Venture timelines vs. legal services reality:** trust, relationships, and risk management don’t always scale like software. - **Unit economics:** even with automation, lawyers still need to supervise high-stakes calls. - **Regulatory lines:** the structure has to preserve lawyers’ independence while the tech company pursues growth. So is Crosby “like Atrium”? Potentially in plumbing, but not necessarily in scope. Atrium aimed broad at the startup legal stack. Crosby’s positioning is tighter: high-volume contracting, fixed fees, fast turns, with AI doing first pass and a lawyer accountable for the final work. That narrower wedge may matter more than the label. However, I suspect that as Crosby grows, so will their service offering. ## Why the two-entity model exists: nonlawyer ownership Why the corporate structure gymnastics? Because in most U.S. states, nonlawyers generally can’t own law firms, and law firms generally can’t share legal fees with nonlawyers. There are potential exceptions (D.C., and newer reforms in places like Arizona and Utah are at least starting down that path), but the baseline is still lawyer ownership and control. Thus, where are the VCs to put all their investment money? It’s possible Crosby uses that familiar split: a lawyer-owned firm delivers the legal services, while a separate company owns or operates the technology. If so, it’s structurally similar to Atrium, even if Crosby’s wedge (and the underlying AI) is different. In many jurisdictions, that separation may be the cleanest or most defensible way to build fundable software alongside a lawyer-controlled practice. In other words, since VCs can’t invest directly into law firms, they’ll invest in the adjacent tech company. The more useful “Crosby vs. Atrium” angle is practical. Atrium paired big ambition with a complicated build. Crosby, at least as positioned today, looks like a tighter wedge: standardize a narrow contracting workflow and sell it at a predictable price. Either way, the corporate structure is doing real work, separating the entity that can take outside investment from the entity that can deliver legal advice. Crosby is also a reminder that “AI law firm” is often a corporate design pattern: a regulated professional practice next to a fundable technology business. Atrium popularized that pattern in startup circles almost a decade ago. Crosby may be the next iteration and less “law firm of the future” theater, more a focused attempt to make the two-entity model more operational. ## Why I’m paying attention Personal note: I own venturelaw.ai and startuplawyer.ai. That’s part of why I’m interested in how Crosby’s structure is put together and, more broadly, in understanding how these “AI-native” firms actually operate in practice (from fully automated workflows to lawyer-plus-ops teams behind the scenes). I’m cheering for the outcome…and still curious about the plumbing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [A “Clean Cap Table” Doesn’t Mean What You Think](https://startuplawyer.com/venture-capital/a-clean-cap-table-doesnt-mean-what-you-think) **Published:** April 2, 2026 **Author:** Ryan Roberts **Content:** If you’re fundraising and someone tells you to “clean up your cap table,” they usually don’t mean “have fewer stockholders.” They mean: make your ownership record reliable, documentable, and free of surprises. That means no missing signatures, no mystery SAFEs, no side letters you forgot about, and no equity you can’t actually prove. This matters most at Seed and Series A, when a venture investor is trying to underwrite risk quickly. A “clean” cap table is really a startup law and process question: can investor’s counsel diligence your equity without finding something that changes the deal economics or control? The misconception is thinking “clean” means “simple.” In real venture financing, “simple” is nice; “provable” is non‑negotiable. ## **Why “clean” keeps coming up in venture deals** Every priced round has a moment where the conversation stops being “we like the company” and becomes “can we close this without stepping on a landmine.” That’s where your cap table becomes the fastest proxy for whether the company is administratively investable. Think of it like version control. A cap table that lives in someone’s inbox, a half‑updated spreadsheet, and three different e‑signature folders is the legal equivalent of “production runs off a laptop.” It might work until it really doesn’t. Investors (and your startup lawyer) want a single, auditable source of truth. In practice, the “clean cap table” request is shorthand for three things: (1) ownership is clear (who owns what, on what terms), (2) the rights attached to that ownership aren’t weird or undisclosed, and (3) the paperwork actually exists and is enforceable (board approvals, stock purchase agreements, option grants, SAFE/notes, IP assignments, and the boring signature pages everyone forgets). ## **The common founder assumption: fewer holders = cleaner** I get why this myth survives. If you have 63 angel investors, a tiny option pool, 17 SAFEs, and 4 convertible notes, it feels…not clean. And yes, a crowded cap table can create practical friction (communications, consents, information rights). But a long list of holders is rarely what blows up a venture financing. What blows it up is ambiguity: the angel who wired money but never signed the SAFE; the advisor who “got 1%” but there’s no board consent; the early consultant with an unsigned IP assignment; the option grants that were promised but never approved. That’s not a “too many people” problem. That’s a records-and-rights problem. ***Example:*** You think you have “two standard SAFEs.” In diligence, the investor’s counsel finds one SAFE includes an MFN or a side letter with information rights, and the other SAFE is missing a signature page. Now the question isn’t “how many holders?” It’s “does that unsigned SAFE even exist, and if it does, are we about to import a nonstandard right into the whole round?” That’s a venture financing delay you can feel in your soul. ## **What “clean” means to a startup lawyer doing diligence** If you asked me to sanity‑check your cap table before a Seed or Series A, I’m not counting bodies. I’m looking for whether the cap table ties out to the legal documents and whether any holder has rights that don’t show up where they’re supposed to. - The company’s charter and stock authorizations match what you issued (no phantom preferred, no “we ran out of shares” surprise). - Every equity issuance was properly approved (board, and stockholder approvals where required) and is actually documented. - SAFEs/notes are complete, signed, and consistent (or any differences are known and intentional). - The option plan exists, option grants were approved, and vesting/acceleration terms aren’t a hidden economic time bomb. ***Example:*** You told a key engineer they had options starting six months ago, but the board never approved the grant and there’s no paper trail. In “theory,” you can fix it by approving the grant now. In reality, the investor’s counsel will ask: what’s the effective grant date, what’s the strike price, do you need a 409A valuation, and did you accidentally create a compensation/tax mess that needs cleanup before closing…or do you punt until after the close and have the engineer get options with a much higher exercise price? That’s how a small administrative gap turns into a deal timeline (and incentive compensation) problem. ## **Stage and leverage: what investors will tolerate (and what they won’t)** At Pre‑seed, people hand‑wave more. At Seed, you start seeing “clean up these three things before we sign.” By Series A, the investor is usually wiring real money into preferred stock with more rights, and the diligence list gets sharper, not because lawyers love billing, but because the cost of a mistake is higher. A lot of holders is usually tolerable if the terms are standard and the records are tight. What’s rarely tolerable at any stage is a cap table that forces the investor to guess. Missing signatures, inconsistent SAFE terms, equity “promises,” or undisclosed rights are the things that change deal economics and risk allocation. That’s why venture investors focus on it. And if you’re thinking longer‑term: in M&A, “clean” becomes painfully literal. The buyer wants to pay the right people the right amounts, get clean releases, and avoid post‑closing surprises. A messy cap table doesn’t just slow diligence; it can show up as a bigger escrow, special indemnities, or a purchase price haircut…because the buyer is pricing the risk of not actually acquiring what they think they’re acquiring. ## **Theory vs. reality: “We’ll just fix it later” is not a plan** In theory, almost any cap table problem is curable. You can chase signatures. You can ratify old board actions. You can paper over a missing document with a replacement agreement. You can even unwind an issuance if you really have to. In reality, “later” means “during your financing,” when you have the least time, the most pressure, and the worst leverage. The investor is trying to close; you’re trying to close; and nobody wants to discover that a former contractor has veto rights because of an old side letter (yes, I’ve seen the cousins of this problem). Meanwhile, founders often over‑optimize the headcount of their cap table—how many angels, how many SAFE holders—because it’s visible. The stuff that actually matters is the invisible plumbing: approvals, signatures, and whether the rights in your documents match the story you’ve been telling. ## **What to do before your next venture financing** If you want to make a startup lawyer (and a VC) relax, do a quick pre‑diligence sweep before you start negotiating terms: - Pick one cap table system of record and reconcile it to your executed documents (don’t trust the spreadsheet because it “looks right”). - Gather every SAFE and convertible note and confirm signatures, side letters, and any nonstandard terms. - Confirm your option plan and grants were actually approved and issued as documented (and that you have a current 409A valuation if needed). - Ask your startup lawyer to flag anything that could create a consent requirement or a surprise right in a priced round (information rights, pro rata, vetoes, or odd liquidation preferences). ## **If you remember one thing…** A “clean cap table” is not a beauty contest for minimalism. What actually matters is whether your ownership and rights are clear and provable. What usually doesn’t matter is whether you have 8 holders or 80, as long as the terms are standard and the paperwork is real. What you should do differently next time: treat equity admin like product infrastructure…boring, essential, and much cheaper to build before you need it. ## **Quick FAQs founders actually ask** **Does having lots of SAFE holders scare off venture capital?** Usually not by itself. What scares people off is not knowing what those SAFEs say, whether they’re signed, and whether any holder has a nonstandard right that will reappear in the priced round. **What’s the fastest way to “clean” a cap table before a round?** Reconcile your cap table to executed documents, then fix the gaps in order of risk: missing signatures/approvals first, inconsistent terms second, and anything that creates surprise consents or economics third. **Should I consolidate angels into an SPV to make the cap table “clean”?** Sometimes it’s helpful, but it’s not a substitute for good startup law hygiene. If you’re considering an SPV, make sure you’re solving a real consent/communication problem…not just chasing a cosmetic “fewer names” outcome. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Founder Loans: How to Avoid Cap Table Poison](https://startuplawyer.com/equity/founder-loans-how-to-avoid-cap-table-poison) **Published:** April 3, 2026 **Author:** Ryan Roberts **Content:** 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 hate founders funding their own companies. The risk is that a loan quietly turns you into a creditor, and creditors have rights that don’t play nicely with how early-stage companies are usually funded, priced, and sold. This mostly matters at the pre-seed and seed stages, where you’re still assembling a real cap table and you don’t have the clean “institutional” deal terms yet. The biggest misconception is thinking, “It’s my money, so it can’t hurt me.” In startup law, you can absolutely hurt yourself with your own money. ## **Why founder loans show up (and why it’s tempting)** You’re short on cash. Payroll is coming. AWS doesn’t care about your runway narrative. Your customers are “close” (which is founder-speak for “not signed”). You have three options: 1. Put in personal money 2. Raise outside money (which takes longer than your bank account would like) 3. Don’t pay the bills (which is not a strategy, it’s an event) A founder loan feels like the grown-up version of option #1. You’re not “giving” the company money, you’re lending it, which sounds safer. You can tell yourself you’re being prudent: if the company works, you get paid back; if it doesn’t, well, at least you tried. *A lot of founder “loans” don’t start as a conscious financing decision*. They start as you covering a bill here, a vendor there, then reimbursing yourself “later.” You’re not trying to become a creditor—you’re just trying to keep the company alive. The issue is that those drips can quietly add up to a number that suddenly feels real, and at that point you understandably want (a) credit for having funded the business and (b) a clean way to unwind it without hurting the company. And if you’ve read enough about venture financing, you may also think: “Investors like to see founders have skin in the game.” True. They just usually mean equity risk, not a repay-me-first instrument sitting above everyone. ## **The key founder loan distinction: loan vs. contribution vs. SAFE** Most of the potential mess here comes from mixing up three different buckets. **1) A true loan (debt)** This is “company owes you money,” typically evidenced by a promissory note. A real loan usually has: - a principal amount, - an interest rate, - a maturity date, - and a statement that it’s debt. Once you do that, you’re not just a founder. You’re a creditor. **2) A capital contribution (equity funding without new shares)** This is “I’m putting money into the company and not expecting repayment as a debt.” Practically, it often gets treated like [paid-in capital](https://startuplawyer.com/startup-law-glossary/paid-in-capital). There may or may not be additional shares issued, depending on how it’s structured. This is generally the cleanest if you truly don’t need repayment before an outside financing. But, you typically want to avoid selling common stock at a fixed price, especially early, and then you have to figure out what valuation. **3) A convertible instrument (SAFE or convertible note)** This is “I’m funding now, and it converts into equity later,” usually at a discount and/or valuation cap. This is the dominant early-stage market norm in venture and startup law land. A founder can use a SAFE too, but it’s less common, for a simple reason: you already own the company. The instrument is mostly useful for third parties. For founders, the clean question is usually “is this debt that gets repaid, or equity risk like everything else?” But it’s not uncommon to see a founder use this method but still somewhat struggle with the economic terms like a [discount or price](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap) cap. ## **Where founder loans go sideways in practice** Here are the issues that actually drive outcomes. **Problem #1: You accidentally create a repayment priority fight** In a vacuum, a $50k founder note seems harmless. In the context of a seed round, it can become the main diligence issue. Investors don’t love seeing cash they just put in immediately leak back out of the company to repay insiders. They’ll ask, sometimes bluntly: “Are we funding the business, or paying founders back?” Market norm: new venture capital money is supposed to buy runway and growth, not refinance founder debt. Not never, but investors treat it as something that needs a specific rationale and tight limits. What happens in a real term sheet negotiation: - You get a financing offer. - Diligence discovers founder debt. - The investor proposes: “Repay it at closing” or “Convert it” or “Subordinate it.” - You realize you don’t have a clean answer because the “loan” was a Google Doc and vibes. **Problem #2: A maturity date becomes a ticking legal clock** A promissory note with a maturity date isn’t just a formality. When it matures, the company technically owes the money then. If it can’t pay, you’re in default territory. Now, are you going to sue your own startup? Probably not. But defaults have consequences: - they can trigger disclosure obligations, - they complicate representations in venture financing documents, - and they create leverage for the investor to demand cleanup. If you want to create a founder-friendly situation, don’t give yourself a document that forces you to choose between enforcing it and admitting it’s not real. **Problem #3: Interest is not “free” (and it creates paperwork drag)** Even modest interest provisions add complexity: - accrual calculations, - tax reporting considerations, - and “how much is actually owed now?” questions during diligence. At the pre-seed/seed stage, you want fewer moving parts, not more. A startup lawyer reviewing your round would rather see a clean cap table and simple instruments than founder debt with bespoke economics. Further complicating the interest issue is if you have in fact ‘dripped in’ the investment into 17 different installments (in addition to creating the legal document that reflects it). **Problem #4: It can look like inside preference, even if you meant well** Put yourself in an investor’s seat for 30 seconds. You’re about to invest in a company that has: - founder common stock, - a SAFEs stack, - and also founder debt that’s payable before any equity distribution. Even if the loan was used for payroll and servers, it still reads like: “Founder gets paid back first, then everyone else takes the equity risk.” That perception matters in venture deals. It affects trust and it changes the negotiating temperature. This is why most investors will want it either repaid or converted, as they won’t want to sit behind your debt after the equity financing. **Problem #5: M&A and wind-down scenarios get messy fast** Here’s where “cap table poison” becomes real. Imagine a small acquisition. Not a unicorn exit. A decent $8M sale that saves the team and returns something. In an asset sale or merger, the purchase price typically goes to the company, then gets distributed (after paying creditors). If you’re a creditor, you may be entitled to repayment before equity holders see proceeds. Now you’re negotiating a sale while wearing two hats: - founder trying to maximize outcome for the cap table, - creditor trying to get repaid. That’s not automatically wrong. But it’s exactly the kind of conflict-of-interest fact pattern that makes acquirers and their counsel ask more questions, request more consents, and slow down closing. In the worst case, it can blow up deal dynamics inside your own board or stockholder base. There’s a lot of waterfall negotiation at this point, and having founder debt outstanding only further complicates it. ## **Market norms: what sophisticated investors usually want to see with your founder loan** In most early venture financings, investors are not philosophically opposed to founders funding their companies. They just want the structure to be clean and non-extractive. Common “market” outcomes I see in practice: 1. Treat it as a capital contribution if it’s small and you don’t truly need repayment. (Small is relative and likely under $10k) 2. If it must be debt, make it explicitly subordinated to new money and often to ordinary trade payables. 3. If there’s a financing coming, convert it into the financing securities (or into a SAFE/note that matches the stack). Getting some economic incentive here isn’t out of the question, but the investor will likely want your conversion to happen “immediately prior to” their investment. 4. If repayment is allowed, it’s usually capped and tied to a real liquidity event or excess cash, not “immediately after closing.” There’s also an unspoken norm: the earlier the stage, the less tolerance there is for bespoke insider economics. Pre-seed companies get financed on simplicity and trust. Complex insider debt reads like the opposite. ## **The “theory vs. reality” reality check** **Theory:** “A loan is safer for you because you get paid back first.” **Reality:** If your company is good enough to attract venture capital, the financing will come with cleanup expectations, and your “priority” will be negotiated. If your company is not good enough to attract venture capital and it fails, your “priority” is often meaningless because there’s no money to pay anyone. Put differently: founder loans often feel like downside protection. In real startup outcomes, they more often function as upside friction. That’s why you’ll hear experienced [startup lawyers gently steer founders away from founder debt](https://startuplawyer.com/seed-rounds/selling-your-startup-with-convertible-debt) unless there’s a specific reason it needs to exist. Or worst case, manage the founder’s expectation that a relatively large sum of founder loans will get paid back at the next round. ## **When founder loans are actually a good idea** There are situations where it’s sensible, even investor-friendly. 1. Short-term bridge with a clear near-term repayment source Example: you’re waiting on a signed customer contract with a real payment schedule, or a grant reimbursement, and you’re covering timing. 2. You’re protecting the company from worse debt If the alternative is a predatory lender or a merchant cash advance-style product, founder debt can be the least bad option. 3. You’re doing it to support a priced round mechanics issue Occasionally, a founder loan can help solve a closing gap or expense issue (tax payments) in a way that’s cleanly documented and repaid as part of the round with full investor awareness. 4. Later-stage companies with real governance and budgeting Once you’re later-stage, with a board, financial controls, and proper approvals, insider loans can be treated more like any related-party transaction. The stigma fades when the company is mature enough to manage it. ## **How to do a founder loan without poisoning your next venture financing** Most founders I talk to are pretty indifferent on structure in the abstract. You don’t care whether we call it a note, a SAFE, or if a small amount, a capital contribution. You care about two things: (1) not doing something that spooks a future venture financing or complicates an acquisition, and (2) not feeling like you donated a meaningful amount of personal money without any recognition. That’s a reasonable instinct, the trick is picking a structure that gives you clarity and “credit” without creating insider priority problems later. If you take nothing else from this, take this: **the “poison” isn’t the loan—it’s the ambiguity and the priority.** Here’s the practical playbook I’d use if you were sitting across the table from me. **1) Decide what you really need: repayment right, or recordkeeping?** If you mainly want to track how much you put in, consider a capital contribution. It’s simple and doesn’t create creditor optics. If you truly need repayment, own that and paper it correctly. **2) Keep terms boring** Early-stage founder loans should not read like private credit deals. Avoid: - aggressive interest, - weird fees, - tight maturity dates that create default issues, - extremely favorable economics that act like a recap to your existing cap table, - and any security interest (a lien) unless you have an extremely good reason. **3) Get proper approvals** Even in a founder-controlled company, document that the company authorized the debt. If there are other stockholders, consider whether they should consent. This is basic startup law hygiene and it makes diligence easier later. **4) Make subordination explicit (if you expect venture financing)** If you think venture capital is in your future, assume the lead investor will want founder debt subordinated at the least, but most likely converted into equity. You can bake that in upfront rather than letting it become a closing-week negotiation. **5) Be transparent with investors early** Don’t let founder loans surface as a surprise in diligence. Surprises don’t kill deals often, but they do change pricing, leverage, and trust. A clean email summary to the lead investor (amount, purpose, terms, and your proposed treatment at closing) goes a long way. **6) Don’t over-optimize the “fairness” math** Founders sometimes obsess over whether the loan should convert at a discount, have interest, or get special treatment relative to other early money. In most seed deals, that level of optimization doesn’t meaningfully change outcomes. What changes outcomes is: - whether the company has enough cash, - whether the cap table is clean, - and whether the financing can close without drama. If you want to “win” your next venture financing, optimize for closability, not for squeezing an extra $3k of theoretical economics out of your own bridge money. ## **The practical takeaway** **A founder loan is fine when it’s a simple, disclosed bridge—and it becomes cap table poison when it creates hidden repayment priority or cleanup drama in your next financing or M&A.** If you’re early-stage and you’re betting on venture financing later, structure your founder funding so it behaves like founder risk, not like insider seniority. If you’re unsure which bucket you’re in, consider defaulting to subordinated debt without any conversion mechanics (and just have honest conversations with the prospective investor at the next financing). Fixing founder debt in diligence is almost always more expensive than getting it clean upfront, but sometimes punting the conversation without aggressive documents is easier. ## **Quick FAQs founders actually ask** **Can I just “pay myself back later” without paperwork?** You can, but it’s exactly the kind of informal related-party transaction that becomes a diligence headache. If money is moving, document what it is: compensation, reimbursement, capital contribution, or debt. Plus, a new investor may be a little worried that you’ll rack up ‘unsubstantiated’ debt later, so expect a few additional guardrails in your deal documents. **Will venture investors make me waive or convert the founder loan?** Often, yes. Not because they’re hostile, but because they want new money going into the business, and they want the cap table and creditor stack to be clean. As the amount of your founder loan increases, so does the likelihood that an investor will want it converted to equity rather than paid back. **Is a founder SAFE better than a founder loan (convertible debt or promissory note)?** It can be cleaner for venture financing optics because it behaves like equity. But if you’re a founder, the simplest question is still: are you expecting repayment like a creditor, or are you taking equity risk like everyone else? Answer that first, then pick the instrument. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Board observers may not get a formal vote, but they usually get the two things that matter more in practice: information and presence. That’s often enough to influence board discussion, direction, and sometimes outcomes that aren’t great for your startup. This is mostly a seed-through-Series B issue. That’s when you’re building governance habits, you don’t have a lot of slack, and you’re still one bad quarter away from your board getting “helpful” in ways you didn’t ask for. The biggest misconception is thinking no vote means no power. ## **What board observers are (and why the label seems a little soothing)** A [board observer](https://startuplawyer.com/startup-law-glossary/board-observer) is typically someone an investor designates who can attend board meetings (sometimes committees too) and receive board materials, without being a director. That “not a director” point matters because directors owe fiduciary duties to the company and all stockholders. Observers generally don’t. They might be bound by confidentiality, but their job is still to represent the investor’s interests, and they can do that while describing themselves as “just an observer.” Also, it’s often hard to just say “no” to the request for a board observer position in the first place. By the time the observer right is on the table, you’re usually negotiating in a narrow lane: you want the round, you want speed, and you don’t want to die on a hill that makes you look difficult. ## **Not all board observers are equally risky** Here’s a distinction on types of board observers: - **A board observer from a venture fund that already has a board seat tends to be less problematic.** In practice, this board observer is often there to support the partner/director, continuity, internal fund workflow, follow-ups, and getting questions teed up efficiently. - **A board observer from a strategic investor that doesn’t have a board seat is often more active (and more complicated).**The board observer role becomes their main channel of influence, and strategic incentives (commercial leverage, competitive sensitivity, future acquisition optionality) don’t always line up neatly with what’s best for your cap table. This isn’t about assuming bad faith. It’s about acknowledging that incentives exist, and the “observer” label doesn’t tell you which incentive set you’re inviting into the board room. ## **The part you’ll underestimate: saying “yes” is easy; enforcing guardrails is not** Even if you negotiate solid paper, it’s hard to enforce boundaries with observers in real time. While it’s hard to say “no” to the observer right up front, it can be even harder to ask for meaningful guardrails, as they imply you think the observer might misuse the access. That can turn a “standard ask” into a relationship conversation when you’re trying to close a financing. And even if you get good language, using it feels awkward. “We need you to not speak” can sound like escalation and/or a put down, especially when the observer is personable and acting like part of the team. So yes: negotiate the protections. Just don’t confuse “we have the clause” with “this will be frictionless.” ## **How board observers create leverage without a vote** **1) They can shift the room.** Board decisions are social. Add one sharp, talkative observer and the conversation can tilt what feels “responsible,” who gets challenged, what risks get emphasized. **2) They get high-resolution information.** Observers often receive the same deck and sometimes the same between-meeting updates. That’s not just visibility; it’s leverage, especially when you’re fundraising, exploring M&A, or dealing with a metrics wobble. **3) They complicate the most sensitive topics.** Legal advice, employee issues, disputes, investigations, acquisition talks…these are the moments where you either (a) over-share because the observer is sitting there, or (b) start having the “real” board meeting after the board meeting. Neither is great governance. A common version: you’re getting acquisition inbound or considering a sale process. You want a tight circle while you sort signal from noise. An observer—particularly from a strategic—can make that harder, because now you’re managing both process and optics at the same time. ## **What you should actually negotiate** Observer rights are common market in [venture financings](https://startuplawyer.com/startup-law-glossary/venture-capital-financing). The guardrails are where you win or lose. - **Exclusion rights that work in practice.** You want explicit ability to exclude the observer for privilege/legal advice, conflicts, competitive sensitivity, and M&A discussions. - **Control the “who.”** Tie the right to a named person or require replacements be reasonably acceptable and not conflicted (including competitive conflicts). - **Limit scope.** Board meetings only (not committees). Avoid language like “any information provided to the board,” which quietly becomes “everything.” - **Make it end.** Terminate observer rights when ownership drops below a meaningful threshold, and watch affiliate/transfer language. Sometimes it’s ok to avoid negotiating any guardrails and go with the NVCA documents, however. ## **The rap analogy** Treating an observer seat as harmless because it “doesn’t vote” is like assuming a featured verse can’t change the whole record because it isn’t top billing. If you’ve ever heard **Eminem on Jay‑Z’s “Renegade,”** you know how that goes. The title matters, but the verse changes the room. ## If you remember one thing… A [board observer](https://startuplawyer.com/startup-law-glossary/board-observer) is an access-and-information right that can shape decisions even without a vote. It’s often least risky when it’s a VC fund supporting an existing board seat, and most likely to get “active” when it’s a strategic investor using the observer seat as their main lever. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Boards and Observers --- ### [What Is an Incorporator? The Most Important Person for 10 Minutes in Your Startup Formation](https://startuplawyer.com/incorporation/what-is-an-incorporator-the-most-important-person-for-10-minutes-in-your-startup-formation) **Published:** April 6, 2026 **Author:** Ryan Roberts **Content:** If you’re forming a Delaware corporation (or really any U.S. corporation), the incorporator is the person who signs and files the certificate of incorporation. That’s basically the job. The biggest misconception is that the incorporator is some kind of “initial owner” or shadow director. In almost every normal startup formation, the incorporator is a temporary role that exists to get the corporation born, and then vanishes the moment the initial board is appointed. If you’re pre-seed and doing a standard startup formation, here’s what matters: the incorporator is there because a corporation can’t sign its own birth certificate, and someone has to take the first legally recognized action on its behalf. After that, the founders and board take over, and the incorporator becomes irrelevant unless you messed up the paperwork. ## **How the incorporator shows up in real startup and venture deals** You will not think about the incorporator on a random Tuesday in your first year. You will think about the incorporator when you’re raising venture capital, selling the company, or in a founder dispute and someone’s lawyer starts pulling corporate records to see if your company’s early actions were valid. In diligence, investors and acquirers are trying to answer a pretty basic question: was the company properly formed and properly authorized to issue the stock (and options) you say it issued? The incorporator is one of those early steps in the chain of legitimacy. This is also one of those startup law topics where 99% of the time everything is fine, and 1% of the time it’s a weird, annoying cleanup project that you get to pay for at the worst possible moment. ## **The common assumption (and why it’s incomplete)** Here’s the assumption I hear in formation conversations: - “We’re the founders. So we’re the incorporators, right?” - “Does it matter who the incorporator is?” - “If the lawyer is the incorporator, do they control anything?” The incomplete part is that founders are mixing up *roles that exist at formation*: - The incorporator (signs/filings to create the corporation) - The initial director(s) (the first board) - The officers (CEO/President/Secretary, etc.) - The stockholders (the owners) In a startup, those roles can overlap in people, but they are not the same thing. If you keep them conceptually separate, the incorporator makes sense and stops feeling spooky. ## **How the incorporator role actually works** A corporation doesn’t exist until the state accepts the certificate of incorporation. But the state needs a person to submit and sign that document. That person is the incorporator. ## **What the incorporator usually does** In a typical startup formation (Delaware C-Corp being the most common venture setup), the incorporator: 1. Signs the certificate of incorporation (or authorizes its filing). 2. Files it with the state (directly or through a filing service). 3. After the corporation exists, signs an “incorporator action” that: - appoints the initial board of directors, and - resigns as incorporator. That’s it. From that moment on, the corporation is governed by its board and stockholders under the charter, bylaws, and applicable law. The incorporator does not “stick around” as a decision-maker unless you intentionally keep them involved (which would be odd for a startup) or you fail to complete the handoff. ## **Why the incorporator disappears immediately** Because once the corporation exists, it can act through its board and officers. The incorporator is like the person who opens the venue and turns on the lights. They are necessary before the band arrives. Once the band is on stage, the person who unlocked the door is not the one running the show. ## **The incorporator reality check: what people actually negotiate (basically nothing)** Nobody is negotiating the incorporator role in an incorporation. What happens instead is that the incorporator is one of the items that shows up in a diligence checklist, and if you can’t produce the document trail, you get: - delays, - legal clean-up, - investor discomfort, - and occasionally a demand for a formal ratification of early actions. Investors don’t want to spend time on formation hygiene. They want to spend time on valuation, product, traction, and terms. If your paperwork pulls them into corporate archaeology, it’s not a great signal—even if the underlying business is strong. ## **Concrete examples of how this becomes a problem (rare, but real)** **Example 1: The incorporator never resigned, and nobody appointed an initial board** This happens in DIY formations: someone files the certificate, but nobody signs an incorporator action or appoints the initial directors properly. Then the “board consents” you’ve been signing for a year are technically signed by people who may not have been properly appointed as directors. Does that mean everything is automatically invalid? Not necessarily. But it’s a mess you’ll fix later with ratifications—meaning time, money, and distraction. **Example 2: The company can’t find its early corporate records** Even with counsel, startups misplace formation binders, lose signed consents, or never got signatures in the first place. When diligence hits, you need to reconstruct: - the incorporator action, - initial bylaws adoption, - initial stock issuances, - option plan adoption, - and other foundational approvals. Again: solvable, but annoying, and it always costs more under a deadline. **Example 3: Founder dispute where someone challenges early authority** In a founder breakup, people look for leverage. If governance was sloppy early, one side may argue that certain actions (like officer appointments, equity issuances, or repurchases) weren’t properly authorized. Even if the argument is ultimately fixable, it changes negotiating dynamics because uncertainty is a bargaining chip. This is why “boring startup law” exists: not because it’s fun, but because it reduces the surface area for disputes. ## **An incorporator analogy (video games edition)** The incorporator is like the person who clicks “Create New Game” and picks the starting settings. They’re required to start the run. But once the game loads, that person isn’t the party leader unless the game explicitly says so. The real control shifts to the characters and the rules of the world (board, officers, stockholders, charter, bylaws). If you never finish setup and hand off control, you’re basically playing a run with corrupted save data. It might still work, but you don’t want to discover that during a boss fight (venture financing or an acquisition). ## **Theory vs. reality** **Theory:** The incorporator is an important corporate role. **Reality:** It’s a procedural role with almost no ongoing significance in a normal startup. **Theory:** It doesn’t matter if you skip the incorporator action because “we all agree anyway.” **Reality:** It matters when someone outside your friend group needs proof—investors, acquirers, banks, or a court. **Theory:** You can always clean it up later. **Reality:** You can, but you’ll pay more, and you’ll do it when you’re busy. ## **The practical takeaway** If you’re forming a company, treat the incorporator as a checkbox with one real purpose: create a clean handoff to a properly appointed initial board. After that, forget it exists. What you should do differently (especially if you formed DIY): - Make sure you have a signed incorporator action appointing the initial director(s). - Make sure the initial board adopted bylaws and approved the initial stock issuances. - Keep those records somewhere you can actually find them when diligence arrives. This isn’t startup hype. It’s startup law hygiene. And it’s a cheap way to avoid expensive distractions later. ## **Quick FAQ** **Can a founder be the incorporator?** Yes. Totally normal in DIY formations. It doesn’t give the founder special control beyond the initial formation steps. **Can my startup lawyer be the incorporator?** Yes, and that’s common. It’s administrative convenience, not a power grab. **What if we never did an incorporator action?** Talk to counsel and clean it up sooner rather than later. It’s usually fixable with a short set of ratifications, but it’s easier before you’re in a financing or M&A timeline. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [SAFE vs. Convertible Note: Leverage You Didn’t Mean to Give Away](https://startuplawyer.com/seed-funding/safe-vs-convertible-note-leverage-you-didnt-mean-to-give-away) **Published:** April 7, 2026 **Author:** Ryan Roberts **Content:** If you’re raising a pre-seed or seed round and you’re choosing between a SAFE and a convertible note, here’s the short answer: pick a SAFE unless you *want* a maturity date (and the pressure that comes with it). In most venture financings, founders don’t “feel” the discount or valuation cap day-to-day. You feel the clock (maturity), the meter (interest), and who has leverage when the next round doesn’t show up on schedule. The biggest misconception is that “SAFE vs. note” is basically a pricing question. It’s not. It’s a risk-allocation and incentives question, and it sits right in the middle of startup law because it determines what happens when reality shows up: a flat round, a slow fundraise, a down market, or an acquisition offer that arrives before your next venture capital round. I’m going to anchor this to the stage where the choice actually matters: pre-seed and seed. Later on, SAFEs and notes show up more as legacy cleanup than as a deliberate financing strategy. One more framing point before we get tactical: a SAFE is generally more *company-friendly* than a note. That’s not a moral claim. It’s structural. A SAFE is designed to keep you building until you hit the next venture milestone without adding a second, artificial deadline that can hijack your decision-making. And here’s the investor side of that, because good investors aren’t allergic to company-friendly terms: if your company dies because you’re spending month 18 negotiating note extensions instead of shipping, nobody wins. Venture capital returns come from outliers. Investors usually want you focused on becoming an outlier, not becoming a part-time refinancing desk. ## What you actually feel: maturity, interest, and leverage (not the discount) A SAFE (Simple Agreement for Future Equity) is *not* debt (or at least not intended to be debt). There’s typically no interest and no maturity date. It converts into equity in a future priced round (or sometimes gets paid out in an acquisition based on the SAFE’s terms). A convertible note is debt that is designed to turn into equity later. That sounds similar until you remember what debt comes with: interest, a maturity date, and (at least in theory) repayment. ### The clock and the meter: maturity and interest The maturity date is the whole ballgame. A typical note might mature in 12–24 months. If you’re still pre-product-market-fit at month 18, that date isn’t just a calendar reminder. It’s a leverage event. ***Example***: you raise a $750k note with a 20% discount and a $6M cap. You plan to raise a priced seed in 9 months. The market slows, your metrics are good-but-not-rocketship, and you’re still fundraising at month 15. Now you’re negotiating an extension with noteholders while also trying to convince new money that you’re not “in trouble.” That’s not fun startup law. That’s a stress test. Interest is usually the least important economic term (founders over-optimize this all the time). Most startup notes accrue simple interest in the mid-single digits, and the dollars often don’t swing outcomes the way people imagine. But interest still matters in one specific way: it reinforces that a note is debt, and it compounds the “we need to deal with this” feeling as maturity approaches. ### Where leverage shows up in real venture financings Leverage is the practical third rail. In real venture deals, nobody wants to sue a startup over a note. But leverage isn’t only about litigation. It’s about who can say “no” in a moment when you need “yes.” The maturity date gives some investors a credible reason to push for terms you wouldn’t otherwise accept. Think of it like Wu-Tang’s old line: cash rules everything around me. When the clock is ticking, cash (and the people who already wrote it) tends to rule the conversation. ### The modeled economics: caps and discounts Yes, SAFEs and notes can both have valuation caps and discounts. Those matter. But they mostly show up later, on a cap table model, when you’re already doing the next round. Maturity and “is this debt?” show up *now*, in how you run your company and how investors think about your risk profile. If you want a concrete way to think about “felt” vs. “modeled,” it’s this: a 20% discount is real money, but it’s rarely what changes your day-to-day behavior. A maturity date does. A board conversation about “we have 90 days left on our notes” hits differently than “our cap might cause a little extra dilution in the Series Seed.” The trade-off is that a SAFE can feel open-ended to an investor. There’s no contractual moment where they get to revisit the conversation. That’s precisely why SAFEs are company-friendly. It’s also why some investors will push for features that make a SAFE behave a little more like a note (for example, tighter conversion triggers or side-letter protections). Whether you accept that depends on your leverage and how much you care about keeping this instrument “quiet” until your priced round. ## When a convertible note actually makes sense (and when it’s just cosplay) There *are* good reasons to use a convertible note. They’re just narrower than Twitter makes them sound. ### When a note is a reasonable tool Use a note when (1) your lead investor insists on debt because of their fund’s mandate, (2) you’re bridging to a priced round that is genuinely imminent, or (3) you need to send a credible signal to other investors that this is a short-duration instrument, not open-ended “we’ll convert someday.” In those situations, maturity is a feature, not a bug. ### When the note becomes a problem (and you feel it later) But if you’re using a note because you think it’s more “standard” or “investor-friendly,” that’s usually just deal cosplay. Most institutional venture capital investors are perfectly comfortable with SAFEs at pre-seed and often at seed. If someone is pushing a note in that context, ask what problem they’re solving. Sometimes the honest answer is: they want more downside protection than the stage really supports. ***Example***: you think you’re doing a “quick bridge” note to get to a seed priced round. Twelve months later you’re negotiating a second bridge. At that point, the maturity date isn’t creating discipline. It’s creating a stack of hard conversations you now have to have while also asking new investors to price your company. Here’s how that extension conversation often plays out in practice. You ask for a 6-month extension. An investor agrees, but wants a “sweetener”: maybe a lower cap, maybe an extra discount, maybe a warrant (yes, they still appear), or maybe a side-letter right that gives them more control over future financings. None of those terms look huge in isolation. The problem is that you’re negotiating them from a weaker position, and you’re doing it at exactly the time you most need to look stable to new money. ### What investors are optimizing for (and what they’ll ask for) From an investor’s perspective, a note can feel cleaner because it looks like a real obligation with a due date. That’s the point. But remember what you’re trading: you’re taking a product-market-fit problem (hard) and stapling a maturity problem to it (avoidable). In startup law terms, you’re adding a second failure mode. Another investor motivation is signaling. A note with a real maturity date can communicate (to the investor’s IC, to their LPs, or to later investors) that this was intended as a short bridge, not a long-term “maybe someday” instrument. That can matter if the investor is writing a larger check relative to your stage, or if they’re trying to avoid being stuck in a perpetual pre-priced round limbo. Also: some investors like notes because they can ask for downside protection without saying “I want downside protection.” Higher interest, shorter maturity, and tighter default provisions are all ways of loading risk onto the company. In a hot market, those terms don’t survive contact with competition. In a cold market, they sometimes do. Your job is to notice what’s happening and price that trade-off consciously. ## How leverage changes the terms (and why “market” is not a fixed number) At pre-seed and seed, the document label matters less than your leverage. If you have multiple investors chasing the round, you can usually run a SAFE with founder-friendly terms and close fast. If you’re raising because you need the cash and there’s one interested party, you’ll feel “market terms” become very flexible, very quickly. ### Caps and discounts are pricing proxies Caps and discounts are pricing proxies. A valuation cap effectively sets a ceiling on the price at which the instrument converts; a discount gives the investor a percentage off the next round’s price. In practice, most disputes aren’t about whether a cap exists. They’re about whether the cap is a reasonable approximation of your next priced round, or a quiet attempt to buy more of the company than the risk actually justifies. Here’s the part founders usually miss: you can spend weeks fighting about a slightly higher cap and still lose far more dilution if your next priced round is smaller, later, or riskier. The instrument doesn’t create your leverage; your momentum does. ### If you have to do notes, negotiate for a survivable timeline If you do use notes, negotiate like someone who understands what the maturity date will feel like in a bad year. Longer maturity helps. Extension mechanics help. Clear conversion triggers help. And if an investor wants a note because they’re worried you won’t raise a priced round, you should be at least as worried as they are. You’ll also hear about side-letter rights like MFN (most favored nation) clauses and pro rata rights. These can matter, but not in the way people dramatize. MFNs mostly matter when you’re doing multiple closes and you don’t want the early money to get punished for moving quickly. Pro rata rights matter when you have a breakout company and investors want the option to keep buying. Neither solves the core founder problem of “what happens if the next round takes longer than planned?” From the next lead investor’s perspective, this isn’t theoretical. In priced venture financings, leads care about two practical things: (1) can we close on time without internal drama, and (2) will the cap table behave predictably after closing. A pile of notes near maturity creates both timing risk (because someone has to consent to something) and cap table risk (because conversion math and extension sweeteners can get messy fast). A standardized SAFE stack is usually easier to diligence and easier to paper. ### Keeping a SAFE round clean (so your next VC round is easier) If you’re optimizing for company-friendliness (and you usually should), keep the SAFE round simple. One template, one set of economics, minimal side letters. The more you customize early instruments, the more future you has to explain them in the next venture capital round. Your startup lawyer should be thinking about your Series Seed diligence folder while you’re still closing the pre-seed. ### How this changes at Series A and beyond At Series A and later, you’ll almost never choose between a new SAFE and a new note as a primary instrument. You’ll be negotiating a priced preferred stock round. The SAFE vs. note issue shows up as cleanup: how many instruments are outstanding, whether they convert cleanly, and whether anyone has a consent right that can slow the closing. ## Theory vs. reality: nobody enforces the note… until they do The theory is: a convertible note is debt, but everyone knows it’s “friendly debt,” so maturity isn’t a big deal. The reality is: the maturity date changes the negotiation posture, even if nobody ever files a lawsuit. ### What actually happens when maturity hits In real deal rooms, the conversation rarely sounds like “pay us back.” It sounds like “we should convert this now,” or “we need an extension and a little sweetener,” or “new money shouldn’t come in ahead of existing money without some adjustment.” Those are all leverage moves that are easier to justify when the paper says “debt” and the date has arrived. Investors are usually not trying to be villains here. They have their own constraints. They have to mark their portfolio, report to LPs, and make follow-on decisions. A note at or past maturity forces a decision: extend, convert, or restructure. That decision is uncomfortable, so the negotiation gets more formal. That’s not personal. That’s portfolio management colliding with your fundraising timeline. ***Example:*** maturity hits and you’re raising a seed extension. The existing noteholders propose converting at the cap (or a new, lower cap) before the new money comes in. They may be reasonable people. They may even be right economically. But you’re no longer negotiating purely as a founder with optionality. You’re negotiating as a founder with an overdue instrument in your capital structure. With SAFEs, the “clock” pressure is missing, which is exactly why many founders like them. Investors aren’t blind to that. Good investors price that risk with the cap/discount and by picking companies they believe will get to a priced round. They don’t typically try to recreate debt economics by stealth. If they do, you should treat that as information. ### The acquisition edge case you should still think about One more reality check: acquisitions happen at weird times. If you sell the company before a priced round, notes may be payable (principal + interest) before common stock sees a dollar, depending on terms and deal structure. SAFEs often have payout mechanics too, but the negotiation dynamic is different because you’re not starting from “this is debt.” If M&A is a real possibility for you, don’t sleep on this. ***Example***: you get an acquisition offer that’s decent but not life-changing. If you have notes outstanding, the buyer’s counsel will ask whether those notes are payable at closing and whether any noteholders need to consent. If the answer is “yes,” your negotiating posture changes. You may end up doing a three-way negotiation (you, buyer, noteholders) about how much value goes to repay debt versus how much goes to equity. With SAFEs, the conversation is often more straightforward: it’s usually about conversion/payout mechanics, not debt repayment dynamics. ## The practical takeaway (if you remember one thing…) If you remember one thing, remember this: **maturity creates leverage, and leverage creates outcomes.** That’s why the SAFE vs. convertible note choice matters in the real world. ### What actually matters What actually matters: - Whether you can realistically raise a priced round before any note maturity date becomes a problem. - How much optionality you keep if the next round is late, flat, or smaller than planned. - How clean your cap table will look to the next lead venture investor. ### What founders usually over-optimize What usually doesn’t matter as much as you think: - Shaving a point or two off the interest rate on a note. - Arguing about a tiny discount change while ignoring the cap (or vice versa). - Picking “note” because it feels more grown-up than a SAFE. ### What to do differently in your next round What to do differently next time: treat the instrument as a plan for a bad timeline, not a good one. If a SAFE gets you the cash with less structural risk, take the win and get back to building. That’s why SAFEs are usually more company-friendly in early-stage startup law: no debt clock, fewer forced negotiation moments, and less opportunity for leverage to shift against you at the exact wrong time. If a note is unavoidable, negotiate maturity and extension mechanics like they’re real—because they become real on a schedule whether you’re ready or not. A quick checklist before you sign anything: (1) model the conversion math on a realistic next-round valuation, (2) sanity-check what happens if the next round takes 18–24 months instead of 6–9, (3) confirm whether any investor consent is needed for extensions or changes, and (4) ask how this instrument shows up in an acquisition waterfall. ## Quick FAQs founders actually ask **Will a convertible note scare off my next priced round investor?** Not automatically. But a near-term maturity date, a messy pile of different note terms, or investors who feel “in the money” and dug in can complicate a lead’s diligence and your timeline. Clean, simple instruments age better. **Is a SAFE always better for founders?** No. If you genuinely need a short bridge and everyone agrees the priced round is close, a note’s maturity can keep the process honest. The key is that “close” should mean months, not vibes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Sometimes it’s a reasonable way to make sure investors who want the upside also share the pain. Other times it’s a pressure tactic that forces smaller holders to fund a round they can’t afford or accept a punitive conversion. In startup law terms, pay-to-play is less about abstract fairness and more about who has cash, who needs consent, and how quickly you need the deal to close. This comes up most often at the stage where expectations and reality diverge: post-seed to Series B, when you have preferred stock outstanding, a cap table with meaningful non-lead investors, and enough burn that “we’ll just wait for a better market” isn’t actually a strategy. If you’re truly early (pre-seed/seed), you usually don’t have the machinery for pay-to-play. If you’re later-stage with deep-pocketed sponsors, pay-to-play can look more like structured rescue financing. The common founder assumption is that pay-to-play is “just investors fighting among themselves.” That’s incomplete. It changes your cap table dynamics, your governance dynamics, and your future fundraising narrative. And it can quietly decide which investors stay aligned with you and which investors become a problem you have to manage. ## What “pay-to-play” actually means (in plain English) A pay-to-play provision says, roughly: if an existing investor doesn’t participate in a future financing (often a down round or insider-led round), they lose some rights. The “loss” can be mild (losing pro rata rights) or severe (their preferred stock converts into common, sometimes at an unfavorable ratio). That’s the fork in the road you care about. In startup law, pay-to-play can show up as a charter-based feature (baked into the preferred stock terms) or as a term in a specific financing that effectively forces the same outcome. Either way, it’s not self-executing magic. Somebody has to propose it, paper it, and usually get the votes to implement it. There’s a wide spectrum: - *Soft pay-to-play*: if you don’t invest in the next round, you lose your pro rata right (your right to maintain ownership) going forward. - *Medium pay-to-play*: you lose certain protective provisions, information rights, or preferred rights tied to your series. - *Hard pay-to-play*: if you don’t invest, some or all of your preferred converts into common (often called “forced conversion”). Investors like pay-to-play because it deters free-riding. If you want to keep your preferred protections and upside, you have to write checks when the company needs them. Founders end up stuck in the middle because the same tool that keeps a syndicate aligned can also be used to squeeze out smaller holders, clean up the cap table, or concentrate control. ## Why pay-to-play shows up in real venture deals Pay-to-play shows up when the company needs capital and the market (or the company’s metrics) won’t support a clean, competitive round. In that moment, “venture capital” stops being a broad asset class and becomes a handful of specific people deciding whether to fund you again. Common triggers include: - A down round where new money wants the cap table and governance to be cleaner post-closing. - An insider-led bridge where the insiders don’t want non-participating investors to keep preferred protections “for free.” - A recapitalization where the company is effectively being re-priced and somebody has to decide who stays in the preferred stack. From an investor perspective, there’s an incentive problem pay-to-play is trying to solve. Some investors can’t (or won’t) follow on, but they still benefit if the company survives and later exits. A pay-to-play forces a choice: support the company when it’s hard, or step down in the capital stack. From your perspective, it’s destabilizing because it can turn a financing into a referendum on the existing syndicate. It also creates collateral damage: angels feel punished, smaller funds feel cornered, and everyone starts lawyering their own position instead of focusing on runway and growth. ## What pay-to-play does to your cap table (and why it’s not just “investor drama”) The cap table effect depends on the penalty. If the penalty is just losing pro rata, the main impact is future dilution and signaling. If the penalty is forced conversion, the impact is immediate: you’re changing who sits in preferred (with preferences and vetoes) versus who sits in common (usually with fewer protections). This is where startup law gets real. Preferred stock typically comes with a liquidation preference (who gets paid first in an exit), protective provisions (certain veto rights), and sometimes dividends or other economics. Common stock is usually what you and your team hold, and it sits behind preferred in the payout line. So when someone says “convert their preferred to common if they don’t participate,” they’re talking about moving people down the line. ***Example:*** you raised a Series A from a lead VC and a handful of smaller funds. Eighteen months later, you need more runway and the only viable round is insider-led at a lower price. The lead proposes a pay-to-play: participate pro rata (or close to it), or your Series A preferred converts to common. The lead isn’t only protecting their economics. They’re also trying to avoid a post-close board where a non-participating fund keeps veto rights but no longer has real skin in the game. Here’s the founder gotcha: implementing a hard pay-to-play usually requires stockholder approvals that run through the same investors you’re trying to pressure. That means the “penalty” is often negotiated, not dictated. Pay-to-play is less like a light switch and more like a bargaining chip that only works if the right people agree (or if the charter already hardwires it). It also affects your next fundraising. A new lead investor will ask: who is still preferred, who is upset, and is there a lingering voting bloc that can slow down the next venture financing? Separately, senior hires sometimes ask who is backing the company and whether the investors are still aligned. Pay-to-play can answer that question in a way you might not love. ## Where leverage and market conditions change the answer Whether pay-to-play is “fair” depends less on rhetoric and more on context. In a hot market with multiple term sheets, a pay-to-play is mostly unnecessary because the company doesn’t need to coerce participation. In a cold market where insiders are the only viable capital source, pay-to-play becomes a way to allocate the burden of rescue financing. If you have any leverage at all, your goal should be to keep the mechanism from becoming punitive for the wrong people. That usually means negotiating the knobs: - *Participation threshold*: does an investor have to fund full pro rata, or is partial participation enough? - *Who counts as “play”*: can an investor satisfy it through a side vehicle or an affiliate? - *Carve-outs*: do small angels get different treatment than funds with reserves? - *Penalty design*: losing pro rata going forward is very different from forced conversion today. ***Example:*** one of your seed funds is tapped out. They’ve been helpful, they can’t follow on, and they’re not the reason you’re in a down round. A hard pay-to-play would convert them to common and likely create resentment with no real benefit to the company. A softer structure (for example, loss of pro rata going forward) might still solve the free-rider concern without turning your investor updates into passive-aggressive diplomacy. Investors will often frame pay-to-play as “syndicate discipline,” and there’s truth there. Venture funds have reserves for a reason. A pay-to-play reduces the number of “zombie” preferred holders: investors who keep preferred vetoes and preferences but aren’t going to write another check. That situation can paralyze a company. ## Theory vs. reality: pay-to-play is rarely about fairness The theory is simple: everyone should participate to keep their rights, because that’s “fair.” The reality is that different investors have different constraints. Some have reserves. Some don’t. Some have IC processes that move fast. Some can’t touch a follow-on without months of internal debate. Pay-to-play punishes constraints as much as it punishes disloyalty. In the deal room, pay-to-play often gets pitched as the reasonable middle: “We’re putting in money, and we need everyone else to either support the company or get out of the way.” That can be true. It can also be a way to re-trade old economics, consolidate a cap table, and increase control without calling it that. ***Example:*** you find a new lead for a Series B, but they want a simplified preferred stack. They’re fine with insiders taking pain, but they don’t want ten tiny preferred holders with veto rights. An insider-led pay-to-play round, done right before the new money comes in, can “clean” that problem by converting non-participants to common. That may make the company financeable. It may also be deeply unpopular with people who supported you early and are now being asked to choose between wiring cash or losing status. Your job in that moment is not to declare which investor is morally correct. Your job is to keep the company alive and keep the next financing doable. That means understanding (with your startup lawyer) what approvals are required, what constituencies can block the deal, and what messaging keeps you from looking like a company that is eating itself. And yes, M&A is lurking in the background. If your likely outcome is a modest acquisition, pay-to-play can shift who sits in preferred (with preference) versus common (without), which changes who is motivated to support a sale versus hold out for something bigger. That’s not academic. It shows up in board votes and consent solicitations. ## The practical takeaway (if you remember one thing…) If you remember one thing, remember this: pay-to-play is a financing term that reallocates power on your cap table. It’s not automatically “good” or “bad,” but it is always directional. It rewards investors with reserves and punishes investors without them. It can make your company more financeable, and it can also create lasting resentment. Both can be true. *What actually matters:* - Who has the cash to “play,” and whether they’re willing to use it. - What approvals are required to implement the mechanism (and who can block you). - How severe the penalty is (loss of pro rata vs forced conversion). - How the outcome affects your ability to raise the next venture capital round. *What usually doesn’t matter as much as people think:* - Whether the term gets branded as “fairness” versus “discipline.” The economics are the economics. - Perfectly optimizing the penalty math. The bigger driver is whether the round closes and the company gets runway. - Trying to keep everyone happy. You can usually keep the company financeable or keep every investor thrilled, but not both. What you should do differently in your next real deal: when you’re negotiating your earlier rounds, don’t over-optimize for a theoretical “clean” cap table while ignoring follow-on dynamics. Ask who has reserves. Ask what happens in a down market. And if pay-to-play shows up, slow down and map the votes and the incentives with your startup lawyer before you agree to anything. ## Quick FAQs founders actually ask **Can investors force pay-to-play on me?** Sometimes, but not always. If it’s already embedded in your charter for a particular preferred series, it may be automatic once the triggering financing happens. If it’s not baked in, it usually requires approvals from the same investors who are being asked to “play,” which means it’s often negotiated rather than imposed. **Should I support pay-to-play as a founder?** If it’s the only path to a financable round, you may not have a real choice. The founder-friendly move is to push for the least punitive version that still solves the investor alignment problem. Your goal is runway and a workable next venture financing, not making a point. **What’s the one question I should ask before agreeing to it?** Ask what the cap table and voting control look like the day after closing, assuming some investors don’t participate. If you can’t explain that outcome simply, you’re not ready to agree to the mechanism. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Online Cap Tables: Great Tools, Real Limits](https://startuplawyer.com/equity/online-cap-tables-great-tools-real-limits) **Published:** April 8, 2026 **Author:** Ryan Roberts **Content:** If you’re looking at online cap tables like [Carta](https://carta.com/), [Pulley](https://pulley.com/), Morgan Stanley’s [Shareworks](https://www.morganstanley.com/atwork/shareworks), or Fidelity’s [Private Shares](https://www.fidelityprivateshares.com/), 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 are only as good as (1) what you put in and (2) what the software is willing to support. To be clear: this isn’t an article telling you to avoid online cap tables. For most startups, using a reputable platform is the right call. The point is just to be honest about the limitations, the trade-offs, and the ways these tools can create blind spots if you treat the software as the source of truth. That’s why this topic shows up in venture financings and M&A: when money is on the line, everyone wants to know who owns what, under what terms, and whether the mechanics actually match the documents. A clean dashboard helps. A mismatch between the dashboard and your company’s capitalization does not. I’ve been familiar with Carta since the very early days—back when the CEO was personally doing company onboardings—so I’ve watched these online cap tables evolve from “cap table replacement for spreadsheets” into full equity ops systems. One early telling shift: Carta originally pitched itself (at least in spirit) as “replacing your startup lawyer” for cap table matters. They later walked that back and, to their credit, repositioned the product as something that *works with* your startup lawyer…welcoming counsel into the process rather than trying to route around them. Either way, the operational reality is the same: someone at the company has to run point on the platform and keep it current. And the more you rely on Carta, Pulley, Shareworks, Private Shares, etc. *instead of* using your startup lawyer for day-to-day cap table management, the more important it is to have a clear internal owner at your company who is responsible for updates, cleanup, and reconciliation against the actual documents. Being on a platform is like using a bookkeeping system: it’s miles better than chaos, but it doesn’t make your numbers automatically right. ## **What online cap tables are genuinely great at** Most founders end up on an online cap table system for three practical reasons, and those reasons are legitimate: **1) Day-to-day equity administration** If you’ve ever tried to manage vesting schedules, early exercises, repurchases, or terminations in a spreadsheet, you already know why these tools exist. A good platform helps you keep the moving pieces in one place. **2) Option exercises and (related) logistics** Platforms can streamline option exercises: notices, exercise calculations, withholding workflows (where applicable), and keeping the “what happened when” history organized. That’s real value, especially once you have more than a handful of employees. **3) Issuances, certificates, and investor visibility** Many platforms are useful for issuing stock certificates (or at least maintaining certificate numbers/records), circulating statements, and giving investors a portal view instead of emailing PDFs forever. In other words: as an operational system, this stuff is great. ## **The part founders usually miss: online cap tables are a secondary source** In practice, a cap table platform is often a secondary source that summarizes primary sources. The primary sources are the things that actually define the rights and numbers: your charter, option plan, purchase agreements, SAFE/note forms, and the actual financing documents. The platform is the translated version of that reality. Sometimes the translation is perfect. Sometimes it’s “close.” And in venture, “close” is where friction lives. If you’re thinking, “Okay, but isn’t the whole point that the platform standardizes this?”—yes, *to a point*. The catch is that platforms standardize what they can standardize. ## **Where online cap tables break down: customization (or lack of it)** This is the practical downside people don’t talk about enough: *you’re constrained by the software’s model.* Most platforms are built around common venture patterns. That’s a feature. It’s also a limitation. Here are a few ways that shows up: **1)** **Conversion mechanics that aren’t a simple fixed price per share** Some deal terms don’t resolve neatly into “$X.XX per share.” A classic pain point is when a document uses a *formula* for conversion price (or other economics) instead of a fixed number for a class or series of stock. Even if the formula is straightforward, and even used for calculations of SAFEs or convertible notes, the platform may not support it cleanly. Then you end up with one of three outcomes: - you approximate it in the system (and write notes explaining the approximation), - you force the term into the platform’s structure (and risk being wrong), or - you track it off-platform (which defeats part of the point). None of these options are fatal. They just mean: don’t confuse “the platform can’t model it” with “the term doesn’t exist.” **2) Preferred stock terms that are “market,” but not template-market** Venture financings are standardized-ish, not identical. The moment your deal has a bespoke wrinkle like non-standard dividends, unusual conversion protections, special side letters, multiple closings with different economics, you can find yourself wrestling the UI instead of managing your cap table. A platform is opinionated software. It has opinions about what a cap table *should* look like. **3) The “vendor captivity” issue: you’re not just buying software, you’re buying future pricing** Another under-discussed reality: switching cap table platforms later is annoying. Sometimes very annoying. Once your company has: - multiple classes/series of stock, - an active option program with many historical grants, - exercises, cancellations, repurchases, - SAFEs/notes with different terms, - and a history of amendments… …migrating from Carta to Sharepoint or Pulley to Private Shares is no longer “export a CSV and move on.” It becomes a project. And because it’s a project, you’re somewhat held captive to future price increases. This doesn’t mean you shouldn’t use a platform. It means you should treat vendor choice like an infrastructure decision: - What will this cost now, and what might it cost when you’re bigger? - What’s included vs. add-on modules? - How painful will it be to leave if you need to? - Do you have access to your data in a usable format? Founders rarely regret choosing a reputable platform. They sometimes regret not thinking one step ahead about switching costs. ## **A quick “theory vs. reality” check** **Theory:** “The platform will keep everything clean and automated.” **Reality:** The platform will keep everything clean and automated *within the boundaries of its model*. If your company stays inside common venture rails, it’s smooth. If you go slightly off-rail such as custom conversion mechanics, non-standard preferred terms, unusual secondary transactions, the system may still work, but you’ll spend time managing the gap between legal economics and software representation. The best way to think about it: the platform is like an autopilot designed for normal flight paths. It’s excellent… until you’re landing in weather. ## **The practical takeaway on online cap tables** If you remember one thing, remember this: an online cap table is a powerful admin system and a convenient summary, but it’s still a secondary representation of your equity. Use it heavily. Just don’t assume it can model every bespoke term, and don’t ignore the switching-cost reality once you’re deeply onboarded. *What actually matters:* - the platform keeps day-to-day equity operations sane (grants, vesting, exercises, certificates, reporting) - the platform’s model matches the economics you’ve actually agreed to (especially around conversion and preferred terms) - you understand where the software is simplifying or forcing assumptions *What usually doesn’t:* - obsessing over tiny interface differences between vendors early on - assuming “we’re on \[Platform\]” will end diligence questions by itself *What you should do differently next time:* - before you commit, test the platform against the non-standard terms you might realistically have (especially conversion mechanics) - ask blunt questions about data export, migration support, and pricing trajectory - document any “workarounds” you use so your future self (and future finance team) isn’t reverse-engineering the logic under pressure ## **Quick FAQs** **Should I use an online cap table at seed stage?** If you’re issuing options or planning a priced round, it’s usually worth it. If you have two founders and one SAFE, a spreadsheet can still be fine. **Can the online cap table handle every venture financing structure?** It handles common structures very well. It can struggle with bespoke economics (especially formula-based conversion mechanics for stock) or unusual edge cases. **Am I locked in once I pick one?** Not legally, but practically: switching online cap tables later can be time-consuming and expensive. Treat the initial choice as an infrastructure decision, not a casual subscription. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table --- ### [The Difference Between a Diligence Issue and a Deal‑Breaker in Venture Financings](https://startuplawyer.com/venture-capital/the-difference-between-a-diligence-issue-and-a-deal-breaker-in-venture-financings) **Published:** April 9, 2026 **Author:** Ryan Roberts **Content:** If you’re raising a seed or Series A round, here’s the short answer: most diligence issues are fixable, but a small few will make an investor walk, either because they create uncapped downside, uncertainty about ownership, or a cleanup job that will outlast the deal momentum. The hard part isn’t spotting “a problem.” It’s sizing it. This applies to you whether you’re the founder trying to avoid an avoidable faceplant in legal due diligence, or the investor trying to decide what to underwrite versus what to demand gets fixed before signing. The biggest misconception I see is founders treating diligence like a pass/fail test. In real venture financing, diligence is closer to triage: what needs a bandage, what needs surgery, and what’s contagious enough that nobody wants to be in the room. And yes, it matters because your leverage is not constant. When you’re in the middle of a competitive process, you can often live with “we’ll fix it post‑close” language. When you have one interested fund and a shrinking runway, the same issue magically becomes “a deal issue.” That isn’t hypocrisy. It’s incentives and risk allocation doing what they always do. ## A practical mental model: three buckets that investors actually use In a clean-room world, diligence is about learning. In the real world of venture capital, diligence is also about deciding what risk the investor is willing to own, what risk gets pushed back to you, and what risk makes the whole thing not worth the effort. Most issues fall into one of three buckets: - **Clean-up items**: Real problems, but they’re bounded in cost/time and don’t change who owns what or whether the company can operate. Think “missing signed invention assignment from a contractor” or “cap table spreadsheet doesn’t match the charter.” - **Risk‑pricing items**: The issue might be fine, but it changes the economics, the structure, or the protections the investor wants. Think “material customer contract is terminable at will,” “there’s a threatened IP claim,” or “regulatory posture is gray.” - **Deal‑breakers**: The issue creates uncapped downside, existential legal risk, or core uncertainty that can’t be solved fast enough to keep the deal alive. Think “you don’t actually own the IP,” “the charter is invalid,” or “there’s a fraud allegation the investor can’t diligence away.” To decide which bucket you’re in, investors tend to look at a few repeatable severity drivers: - *Is the downside capped?* A known cleanup cost is one thing; an open-ended claim or compliance exposure is another. - *Does it touch ownership?* Anything that clouds the cap table, the charter, or IP ownership gets serious fast. - *Can it be fixed quickly?* “We can fix it” is not the same as “we can fix it before momentum dies.” - *Does it signal a bigger pattern?* One sloppy document is annoying; a culture of sloppiness is a governance risk. - *Who bears the risk after closing?* In venture financing, there’s usually no broad post-close indemnity the way you might see in M&A. If the investor can’t push the risk back to you, they may just avoid it. Here’s what founders often over‑optimize: they treat every diligence question like it’s equally dangerous, and they try to “win” diligence by arguing. In practice, you get much more mileage by (1) quickly classifying the issue, (2) proposing a credible fix or mitigation, and (3) keeping the process moving. ## Three common diligence findings—and when they actually kill a round **Example 1: Missing invention assignments (usually a clean‑up item, sometimes a deal‑breaker).** If you used contractors early on and don’t have signed invention assignment agreements, that’s a classic startup company diligence cleanup. In most venture financings, it’s fixable: you track down the people, get signatures, and paper the file. It turns into a deal‑breaker when you can’t get the signatures (someone disappeared, is hostile, or is demanding a payout), and that person plausibly touched core IP. At that point, the investor isn’t being picky. They’re looking at a company that may not own the thing they’re funding. What you do differently: don’t wait for diligence to discover this. Run a lightweight “IP ownership audit” before you start fundraising: list every person who wrote code or designed product, confirm what paper exists, and fix gaps while you still have time and goodwill…and are not in a time crunch. **Example 2: Cap table and charter inconsistencies (almost always a risk‑pricing item).** The cap table is where startup law becomes math. If your spreadsheet doesn’t match the company’s charter, option plan, and board consents, you’ve created uncertainty about who owns what. In most seed and Series A deals, this doesn’t kill the round. It slows it down. Investor counsel will push for a cleanup as a closing condition: ratifications, corrective filings, updated equity records, sometimes a “bring‑down” certificate that says (politely) you’re not lying. It becomes a deal‑breaker when the fixes require third‑party consents you don’t have, the recordkeeping is so unreliable that nobody can confirm the fully diluted number, or you have equity issuances that look flat-out unauthorized. The practical point: if your ownership story is fuzzy, investors will assume the worst case until you prove otherwise. **Example 3: A key customer contract that can disappear (usually risk‑pricing).** Suppose 40% of your revenue is tied to a customer that can terminate on 30 days’ notice, or has a change‑of‑control clause that spooks them. Founders see this and think, “But the relationship is great.” Investors see concentration risk with a legal lever attached. Most of the time, this is not a deal‑breaker. It’s a negotiation about price, milestones, or structure. You might see the investor ask for (a) tighter disclosure, (b) a plan to diversify revenue, or (c) a condition that you’ve at least discussed the financing with the customer or alternatively, a requirement to amend that customer contract to lengthen the notice required for termination (depending on sensitivity). The investor isn’t demanding perfection. They’re trying to avoid being surprised. This can tip into deal‑breaker territory if the “customer contract” is not actually enforceable, if there’s a live dispute that could crater revenue next quarter, or if diligence uncovers facts that suggest you’ve been recognizing revenue aggressively. Investors can price risk. They struggle to price uncertainty about whether the numbers are real. ## Where leverage and stage change the outcome (and where they don’t) Most of what I’m describing is anchored to seed and early priced rounds, where the deal is moving fast and the goal is to get comfortable enough to wire, not to recreate a public-company disclosure regime. If you have leverage (multiple term sheets, a lead who wants the deal done, a market that rewards speed), investors will usually accept more items in the “clean up post‑close” bucket. You’ll still have to disclose issues, but the fix can be sequenced. If you don’t have leverage (single investor, time pressure, or a skittish market), the exact same issue gets treated more harshly because the investor knows you need the deal more than they do. They’ll ask for pre‑close fixes, stronger closing conditions, or simply more time…often all three. As you get later stage, diligence looks more like M&A: bigger checks, more stakeholders, and more focus on compliance, revenue quality, and repeatability. The bar for “we’ll fix it later” gets higher. But the categories don’t change…clean-up, price, deal‑breaker. The thresholds do. ## Theory vs. reality: what founders think diligence is, versus what it actually drives *Theory:* diligence is where the investor decides whether your company is “good.” *Reality:* diligence is where the investor decides whether they can explain the risk internally (and to their IC), whether they can live with it given ownership and price, and whether the legal work will fit into the deal timeline. In real deal rooms, a surprising amount of the conversation is not “is this bad?” but “is this knowable?” If an issue is knowable and bounded, investors can usually underwrite it—even if it’s annoying. If it’s unknowable, the investor starts to imagine edge cases, and edge cases are where deals go to die. This is why the best founder move is often a good memo (short), not a good argument. When you surface an issue, pair it with: what happened, what’s true today, what the path to “clean” looks like, and what you need from the investor (usually: time, not permission). ## If you remember one thing: make the risk small, knowable, and schedulable If diligence feels like an investor looking for reasons to say no, you’re not crazy. But you can influence the outcome by changing what the risk *looks like*. Investors will tolerate a lot when the downside is capped, the facts are clear, and there’s a credible plan. - Before fundraising, do a fast internal diligence sweep: cap table, charter, option plan, key contracts, IP assignments, and basic compliance. - When an issue pops up, classify it (clean-up vs. price vs. deal‑breaker) and say which facts make you confident. - Offer a fix with a timeline. “We’ll handle it” is noise; “we’ll have signed assignments from X and Y by next Friday” is signal. - Don’t over‑optimize cosmetic diligence items if you have a real ownership or revenue-quality problem underneath. ## Quick FAQs founders actually ask **Should I disclose a problem if I think it’s minor?** Usually, yes. If it’s discoverable in diligence or might pop up post-closing, surprising the investor is worse than the underlying issue. The goal is controlled disclosure with a fix plan. **Should we narrow or rewrite reps & warranties just to avoid listing something on the disclosure schedule?** No. Reps and warranties are meant to allocate risk based on what’s true, not to be engineered around a known issue. Over-revising them to “paper over” a fact can create bigger problems: it may misalign expectations with the investor, invite tougher diligence questions, and undermine credibility if the issue later surfaces. The better approach is straightforward disclosure (with context) and a practical mitigation or cleanup plan, or just disclosing an item, rather than trying to draft your way out of the disclosure schedule. **Can an investor turn a clean-up item into a deal‑breaker?** They can treat it that way if (a) it’s really signaling something bigger, or (b) the deal has lost momentum and they’re looking for an exit ramp. That’s another reason to fix the predictable startup law-related issues before you’re mid‑process. **What’s the fastest way to lower diligence risk before fundraising?** Get your ownership story airtight (cap table + IP). If those are clean, most other issues become negotiable instead of existential. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Information Rights: Reporting Creep and the “CFO-by-Investor” Trap](https://startuplawyer.com/venture-capital/information-rights-reporting-creep-and-the-cfo-by-investor-trap) **Published:** April 10, 2026 **Author:** Ryan Roberts **Content:** If you’re signing a term sheet (or closing a round) and the information rights feel like “just boilerplate,” pause. The short answer: you should agree to a reporting cadence you can reliably hit without turning your CEO (or CFO or finance lead) into an on-demand analyst for a single investor. Most information rights are meant to keep investors informed—not to let them run your internal dashboard day-to-day. This is primarily a seed-to-Series B financing issue, because that’s where you have enough investors to create noise, but not enough finance infrastructure to absorb it. The biggest misconception is that “more transparency is always good.” In real venture deals, over-broad information rights often produce the opposite: churn, distraction, and a subtle shift from building the business to narrating it. ## Why information rights show up in venture financing Information rights are the venture capital compromise between two truths: investors are writing big checks into a company they don’t control, and you’re trying to run a company without a committee. So the deal gives investors a steady stream of updates (typically financial statements, a budget, and occasional “as reasonably requested” access) so they can monitor performance and satisfy their own LP and portfolio management obligations. Done well, it’s like an API: a clean interface that lets a stakeholder get what they need without poking around in your production database. Done badly, it’s screen-scraping: lots of one-off requests, breakage, and a constant feeling that someone is “in” your systems. The [term sheet](https://startuplawyer.com/venture-capital/what-venture-capital-investors-want-in-a-term-sheet) language can support either outcome. (And yes, the investor will usually tell you it’s the first kind.) ## Market norms: the cadence that works for most startups In venture financings, the “normal” package is boring on purpose: quarterly (sometimes monthly) financial statements, an annual budget, and a right for a [major investor](https://startuplawyer.com/startup-law-glossary/major-investor) to ask reasonable questions. The practical goal isn’t perfection. Rather, it’s consistency. If you can produce the same set of numbers the same way each period, you lower the temperature in the room and keep the relationship adult. If you’re at seed: “monthly” sounds standard, but many teams can only do that reliably if they keep it lightweight (cash balance, burn, runway, top-line, and a couple operating metrics). If you’re in a priced Series A/B: investors often expect more structure (GAAP-ish income statement and balance sheet, budget vs. actual). Later stage: you may end up with full reporting packs, board materials, and tighter deadlines because you have the finance muscle—and because the checks are larger. What’s negotiable, even in a normal market, is (1) *who* gets the full package (usually “Major Investors,” not every small holder), (2) *how fast* you have to deliver it (30–45 days after quarter end is common; 10 days is not), and (3) whether the catch-all request right is tethered to reasonableness and confidentiality. Those details are where “investor update” turns into “investor-run finance function.” ## How “CFO-by-investor” happens (three patterns I see all the time) **1) The reporting deadline quietly becomes the close deadline.** You agree to “monthly financials within 20 days.” You don’t have a true monthly close process yet, so the finance lead spends a week triaging accruals and reconciling accounts just to meet the [term sheet](https://startuplawyer.com/venture-capital/what-venture-capital-investors-want-in-a-term-sheet) clock. You end up building accounting process around an investor covenant instead of around what the business actually needs. **2) “As reasonably requested” becomes a custom analytics queue.** One partner wants cohort tables. Another wants pipeline by rep. A third wants a churn segmentation you’ve never tracked. None of these are crazy questions. The problem is the implied priority: the investor request sits above your product roadmap, because it arrives as a contractual entitlement instead of a normal conversation. **3) The “check-in” starts to look like perpetual mini-diligence.** This shows up most when there’s a down quarter or a bridge round. The investor asks for customer lists, pricing details, and granular burn analysis “to help.” Sometimes it’s genuinely helpful. Sometimes it’s risk management for their fund. Either way, you’re now doing financing-grade work every month, while still trying to hit numbers. Founders sometimes over-optimize the exact list of deliverables (“Do we have to provide a balance sheet?”) and under-optimize the operational reality (“Can we reliably deliver a clean set of numbers on a predictable schedule?”). In practice, investors care far more about getting *something credible on time* than getting an encyclopedia. ## Theory vs. reality: information rights are a contract, but the relationship is the lever Theory: the term sheet and investors’ rights agreement give investors a legal right to specific information, and you should comply exactly or you’re “in breach.” Reality: information rights are rarely litigated. They’re enforced socially…through board conversations, future financing leverage, and (in the worst case) a breakdown in trust that makes your next round harder. In real deal rooms, sophisticated VCs don’t want to “manage” your finance function. They want early warning signals and a way to answer their own internal questions: Is burn under control? Is growth real? Is there a financing risk six months out? That’s why the best founders aim for a stable cadence and a standard package, then treat one-off requests as a separate conversation—sometimes a “yes,” sometimes a “not right now,” often a “happy to talk through it at the next board meeting.” Leverage matters. If you’re running a competitive Series A, you can often narrow recipients to Major Investors, extend deadlines, and tighten the “reasonable request” language. If you’re taking capital in a tough market, you may not win every point, but you can still avoid the most dangerous version of the clause: vague rights held by too many people, with short deadlines, and no confidentiality guardrails. ## Practical ways to set cadence Think of this as startup lawyer advice that’s half contract and half operating system. You’re not trying to “hide the ball.” You’re trying to keep reporting from becoming a second job. - **Define the minimum viable reporting pack.** For many seed and early Series A companies, that’s cash, burn, runway, revenue (or bookings), and 2–3 operating metrics that actually drive the business. Make it repeatable. - **Set deadlines you can hit without heroics.** Quarterly within 30–45 days is common. Monthly within 20–30 days can be fine if your books support it. Don’t promise 10 days unless you already operate like a public company (you don’t). - **Limit broad rights to Major Investors.** You can still send high-level investor updates to everyone. But “contractual right to demand documents” should not belong to 25 people who wrote tiny checks. - **Use confidentiality as the price of access.** Ensure the documents are subject to confidentiality obligations, and that sharing within the fund is controlled. This is especially important for customer info, pricing, and security materials. - **Channel one-off requests through the board process.** If you have a board, it’s a natural routing mechanism: “Let’s cover that at the next board meeting,” or “Happy to share a summary deck with the board.” That reduces ad hoc asks without picking a fight. - **Designate one owner for investor requests.** Even if you don’t have a CFO, pick a single point person (often the CEO or finance lead). Otherwise, you’ll answer the same question three times in three different formats. What usually doesn’t matter as much as you think is whether the list says “monthly” or “quarterly” in the abstract. What matters is whether the clause, in combination with your cap table, creates a practical ability for one person to keep pulling you into custom work. If you can’t say “not this month” without feeling like you’re breaching a contract, the clause is too loose. ## If you remember one thing… Information rights should give your investors confidence, not consume your calendar. **Aim for a standard, repeatable reporting pack on a realistic cadence**, and treat bespoke requests as a separate conversation you control. That’s how you stay transparent without becoming a part-time CFO for your venture investors. ## Quick FAQs founders actually ask **Can an investor really enforce information rights if we’re late?** Usually the pressure is practical, not legal. If you’re consistently late, you create financing and trust issues. But a short delay with proactive communication rarely turns into a formal default scenario. **Should we give monthly reporting at seed?** It can be fine if “monthly” means lightweight and you can produce it consistently. If the clause effectively requires a monthly close you don’t have, you’re signing up for a distraction tax right when you can least afford it. **What’s the cleanest way to reduce investor inbox requests?** Create a predictable cadence (monthly update email, quarterly financials, board deck rhythm) and politely route custom asks into that cadence. Most “urgent” questions become less urgent when there’s a known next touchpoint. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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If they’re truly acting like co-founders, make them earn it via vesting/milestones. Otherwise, walk. They are trying to make you [glorified employees](https://startuplawyer.com/seed-rounds/glorified-employees).* If you’re being offered a “venture studio” deal where they take 50% of your company for little to no cash, treat it like what it is: a financing at a punitive valuation *plus* a control overlay that can turn you from “founder” into “operator.” Yes, they’ll promise access. But in practice it’s often the most expensive “finder intro” package you’ll ever buy…and at least real finders only get paid if they actually close. This comes up most often when you have an idea and some early traction but you are not yet funded, and the studio promises money, a team, distribution, or “execution.” The misconception is thinking this is like an [accelerator check or a standard seed](https://startuplawyer.com/accelerators/should-startup-close-seed-round-accelerator-demo-day) investor. It is not. Economically, it is closer to selling half your cap table to a service provider before you know whether you even have product market fit. Let’s break down what a 50% for $0 studio deal is actually buying, why it spooks future venture capital, and what you can negotiate if you still want the studio’s help. ## What a “50% for $0” venture studio deal really is A venture studio is a company that helps create startups by providing some mix of idea generation, operating help, recruiting, product and engineering resources, and sometimes capital. In exchange, the studio takes equity in the startup. That general model is not automatically a scam. The problem is the pricing. When the studio takes 50% at formation and you get little or no cash, you have effectively locked in a massive pre seed “valuation” without the one thing that usually justifies giving up equity early: outside capital that lengthens your runway. Compare that to the old school accelerator deal people still reference, like $25k for 6%. Even if $25k is not much money, it anchors the relationship as an investment, not just a services arrangement with an equity kicker. A 50% grant for $0 does the opposite. It anchors the relationship as the studio owning the company and “letting you” run it. Once you give away half the company at the start, incentives shift. You may be doing founder level work while holding an ownership stake that looks like a senior hire’s upside, especially after the option pool and the first priced round. That is how founders end up feeling like glorified employees, even if nobody says that out loud. If you want a quick analogy, think of a lopsided record deal from the late 90s rap. You get access to the studio, the distribution, and maybe a marketing push, but you signed away the catalog before you knew whether you even had a hit. If the song misses, you still gave up the rights. If the song hits, you spend years trying to buy yourself back. It can be like Puff Daddy speaking all over your record while owning your masters…hopefully without all the baby oil. Different “studio”, same type of result. ## Why VCs often treat a 50% venture studio stake as a financing problem, not a “founder story” In a typical [seed or Series A diligence](https://startuplawyer.com/seed-rounds/seed-round-due-diligence) process, investors are underwriting two things at the same time: whether the business could work, and whether you will still be motivated and empowered to push through the ugly middle when it does not work yet. That is why early stage venture deals tend to assume founders own a meaningful majority of the company right before the first institutional priced round. There is no magic number, but when an unrelated third party already owns half the cap table, it immediately raises the question: who is really in control, and who is really getting paid for taking the risk? Also, dilution is not done after you sign the studio deal. It is just beginning. Add a 10% to 20% option pool, then raise a priced [seed round](https://startuplawyer.com/accelerators/should-startup-close-seed-round-accelerator-demo-day) where investors buy, say, 15% to 25% of the company. If you started at 50%, you can end up below a majority before you have raised meaningful capital, and sometimes before you have hired your first executive team. **Example:** you and a cofounder split 50% total after the studio takes its 50%. You create a 15% option pool by issuing new equity. On a post pool basis, you now effectively own about 43.5% combined. Raise a [seed round selling 20% new preferred](https://startuplawyer.com/startup-law-glossary/seed-preferred) stock and you are down to about 34.8% combined. In other words, you are already minority owners right around the time the real work begins. Then there is governance. Many studio deals are not just “equity.” They come with board seats, consent rights (just by nature of owning 50% or specific named rights), IP assignments, service agreements, and sometimes the ability to replace the CEO. Even if those terms are framed as “standard,” they can collide with what a lead investor wants in a priced round. From the VC’s point of view, a 50% studio stake is [cap table overhang](https://startuplawyer.com/startup-law-glossary/cap-table-overhang). It functions like a permanent tax on upside. The VC is not just buying into your company. They are also buying into a deal you already made, and that deal might have been priced like you had no leverage, because at the time you probably did not. ## The right question is not “Are venture studios good?” It’s “What am I buying, and at what price?” A venture studio sells a bundle: speed, talent, pattern recognition, and sometimes credibility. You might also be buying access, meaning intros to investors and customers. Those are real things. They are just not automatically worth half your company. - What exactly are you delivering in the first 90 days (people, hours, code, designs, customer intros), and what happens if it slips? - Is any cash actually going in, or is “funding” just the studio paying itself through your company? - Who owns the IP that gets created, and is it cleanly assigned to the startup from day one? And what about the principals of the studio who say they are “like” co-founders but aren’t signing up to an inventions assignment? - How many companies is the studio currently “building” at the same time, and who are the actual operators assigned to yours? - Why are you having to work full-time while the studio’s operators are limited part-time with your company (but have the same equity)? - What does the studio own in its prior companies at the time of a priced round, and did it ever step down or restructure to make a financing work? - If this goes sideways, what is my exit ramp? Can I terminate services without giving up the company? Here’s the uncomfortable truth: in a lot of “50% for $0” studio deals, what you’re really buying is **promised access**…introductions to investors, customers, hires, or partners…wrapped in “we’ll help you execute.” Intros can be useful. They’re just not the same thing as taking founder risk, writing checks, or shipping product under pressure. A dead giveaway: they say their principals are “coming in like co-founders,” but the studio’s equity is **issued up front** (or otherwise not subject to real, founder-style vesting and forfeiture). That’s not “co-founding”, that’s getting paid in ownership on day one. If they want co-founder economics, they should **earn in** over time based on sustained contribution. Otherwise you’re handing over permanent equity for a stack of intros that may or may not show up. **Also:** expect the “no negotiation” routine. A lot of studios want one template across a whole cohort, and they don’t want *anyone* getting a different deal because it creates precedent. Translation: “this is our model” often means “we take 50%.” Take that as a signal. If they won’t flex on price or make equity contingent on performance, they’re optimizing for a scalable studio business, not a financeable, founder-aligned startup. It doesn’t matter how many reasonable arguments you can throw their way… One more filter: **don’t pay 50% for vibes**. If a studio wants founder-level economics, they should be able to show founder-level receipts…multiple companies where *they* were the operator/studio and the outcome was real (product shipped, revenue, follow-on rounds on clean terms). Be wary of “adjacent success” like principals’ past jobs, advisor logos, or portfolio name-dropping that doesn’t prove the studio model works end-to-end. **Example:** if a studio provides a fractional CTO and a small dev squad for six months, that is a services relationship. In normal markets, you would pay cash, defer some cash, or offer a modest equity grant that vests over time. Giving away 50% up front is like paying a year of engineering costs by selling your company at a pre seed valuation of almost zero, and doing it in a way that is hard to unwind if the studio’s involvement turns out to be lighter than advertised. ## If you still want the venture studio, here are structures that are closer to market You do not have to choose between “take 50%” and “walk away.” In practice, there are a few deal structures that can align incentives and also look more financeable to future venture capital. - **Smaller equity plus cash:** If the studio is truly investing, ask for real cash into the company and a much smaller founder dilution outcome. - **Vesting equity tied to contribution:** Instead of a giant grant at formation, the studio earns equity over time based on defined deliverables, with a clear termination right. - **SAFE or convertible note:** If the studio wants “upside,” treat it like an investor. Use a SAFE or note with a valuation cap that fits the stage, rather than an immediate 50% ownership transfer. - **Services for equity at a sane rate:** If the studio is primarily a build shop, structure it like advisory equity with vesting and a cap, and pay the rest in cash or deferred fees. - **Milestone based option pool:** Reserve an option pool for studio contributors that only vests if the company hits product or revenue milestones, which ties ownership to value creation. Market norm is not a single number, but here is the sanity check I use. If the venture studio deal leaves you with less than founder economics before you have raised real money, you are likely paying too much for too little certainty. When a studio is truly providing most of the early team plus meaningful cash, the studio can justify meaningful ownership. When it is mostly promises and “support,” 50% is hard to defend. - **Earn-in, not grant:** Push as much equity as possible into vesting or milestone based earn in. - **Clean IP:** Make sure everything built is owned by the startup, with clear assignments from each contributor. - **Exit ramps:** You should be able to terminate services and keep operating without a hostage scenario. - **Control terms:** Be cautious about board control and consent rights at formation. Those terms can make your first priced round harder, not easier. - **Future financing cooperation:** Get the studio to commit to reasonable restructurings if needed to close a priced round. ## Theory vs. reality: why venture studio deals feel great on day one and painful on financing day The theory is simple. You trade equity for speed. You skip the slow parts, you launch faster, you raise sooner, everybody wins. The reality is that startups are not blocked by lack of slide decks. They are blocked by uncertainty. When the studio takes half the company up front, you have paid the “certainty premium” before you have any certainty. Then, when you go to raise a seed or Series A, the investor has to price in the studio relationship, the [cap table overhang](https://startuplawyer.com/startup-law-glossary/cap-table-overhang), and the possibility that key work is being done by people who do not actually work for the startup. This often shows up as a quiet, awkward sentence from the lead investor: “We need to understand the studio’s stake and control rights.” That sentence is usually the start of a re trade. Sometimes the re-trade is reasonable. Sometimes it becomes a multi week negotiation about whether the studio will step down. That is not the kind of excitement you want in your first institutional round. To be clear, plenty of studios are professional and cooperative. But if your entire fundraising plan depends on a third party voluntarily giving back equity later, that plan has a weak core. Hope is not a term sheet provision. This also surfaces in M&A. Acquirers like clean ownership and clean IP. If a studio owns a huge block and has ongoing contractual rights, it can complicate consents, payout allocation, and even IP diligence. A buyer does not want to discover that critical code was built by a contractor chain with unclear assignments. ## The practical takeaway If you remember one thing, it is this: giving up 50% of your startup for $0 to a venture studio is usually not “partnering.” It is pre-pricing your entire future on terms that are hard to finance around. - **What actually matters:** founder incentives, clean IP ownership, the ability to raise a priced round without a cap table rescue, and a clear definition of what the studio is delivering. - **What usually doesn’t:** fancy branding, vague promises of “execution,” and anything that relies on future goodwill instead of contractual obligations. - **What to do differently next time:** price the studio relationship like a real investment or a real services deal, and push equity into earn in, vesting, or capped instruments you can explain to a future lead investor in one minute. ## Quick FAQs founders actually ask **Is 50% ever reasonable for a venture studio?** Rarely. It can be defensible only if the studio is effectively the founding team, is putting meaningful cash into the company, and is assuming real company building risk instead of just providing services. If you are the one sourcing the idea, recruiting, selling, and carrying the CEO risk, 50% is usually mispriced. **Will a venture studio deal stop me from raising venture capital?** Not automatically, but it can make the round slower and more conditional. A lead investor may require the studio to amend control rights, restructure equity, or cap its stake before closing. The earlier you address that, the less painful it is. **What should I ask for if I want the studio’s help but not the 50%?** Ask for a structure you can explain cleanly to a seed investor: a smaller equity stake plus real cash, or an earn in that vests over time based on defined deliverables, or a SAFE with a valuation cap. The theme is the same: align ownership with value actually delivered. **What is the biggest legal red flag in studio deals?** Unclear IP ownership and weak termination rights. If you cannot walk away without losing core assets or if the studio can hold your product hostage through contracts, you are taking a risk that shows up later in financings and acquisitions. **What do founders over optimize in these negotiations?** The headline percentage. The percentage matters a lot, but the [control and exit ramp terms](https://startuplawyer.com/startup-law-glossary/control-terms) can matter even more. A smaller studio stake with aggressive consent rights can still make you unfinanceable. Focus on the full package. **When would a founding team ever take this deal from a venture studio?** Only when it’s the **last shot**. If you’ve exhausted realistic options such as bootstrapping, consulting to fund runway, angels, accelerators, pre-seed funds, co-founder recruiting, grants, and a narrower MVP you can ship with what you have…and the choice is “take the studio” or “shut it down,” then a bad deal can be rational. Just go in eyes-open: you’re paying an extreme price for survival, not choosing an optimal partner. No judgment, though. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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If you’re selling your startup, here’s the part that can feel like a prank: even on a “cash at close” deal, some of the purchase price often does not show up at closing. It gets parked in an escrow (held by a third party) or treated as a holdback (the buyer keeps it) to cover specific post-closing risks. Usually that means breach of reps and warranties, taxes, employee claims, or the contract you were sure was assignable. This mostly matters if you’re a founder or key stockholder in a private-company M&A deal, because the dollars you’re counting on for taxes, lifestyle, and closure may arrive in two (or more) installments. The key misconception is: “We agreed on the price, so I’ll get the price.” In practice, the signed number is the headline. The [escrow or holdback](https://startuplawyer.com/startup-law-glossary/holdback-escrow) is the fine print that decides how much money is actually in your account on Day 1. Let’s cover why this exists, what market norms usually look like, and how to keep it from quietly turning your “closing” into a 12 to 24 month waiting room. ## **What is escrow and holdback (and why buyers like them)** An escrow is a portion of the purchase price held by a neutral third party (an escrow agent, often a bank) and released later if certain conditions are met, or not released if there’s a valid claim. A holdback is similar economically, but structurally simpler. The buyer keeps a portion of the price and agrees to pay it later, subject to the same kinds of adjustments and claims. They’re both forms of risk allocation. The buyer is saying: “I’ll pay you, but I’m not paying all of you until I’m confident I didn’t buy a problem.” Founders sometimes hear this as mistrust. It’s usually not personal. In deal terms, escrow and holdback are closer to a deductible on an insurance policy than an accusation. ## **Why escrow and holdback show up in real startup acquisitions** Most acquisition agreements include a set of representations and warranties (reps), which are statements you’re making about your startup as of signing and closing. Examples include: - The company owns its IP. - Financial statements are not misleading. - There are no undisclosed lawsuits. - Key contracts are valid and enforceable. - Taxes have been properly filed and paid (or properly reserved). - Employees were classified correctly. - There are no hidden liens. If those statements turn out to be wrong, the buyer wants a practical way to recover without chasing dozens (or hundreds) of former stockholders who have moved on with their lives and money. Escrow or holdback is that mechanism. ## **The common founder assumption (and why it’s incomplete)** The founder assumption is usually: “If there’s a problem later, the buyer can sue.” True. It is also inefficient. In real deals, the buyer does not want to litigate to recover $300,000 over a misclassified contractor or an overlooked sales tax nexus issue. They want a clean contractual path: submit a claim, pull from escrow, move on. And the seller group usually does not want to be sued either. Escrow and holdback are a compromise that makes indemnification workable. ## **How escrow and holdback work in practice: the three buckets that matter** Escrows and holdbacks show up in three main places. If you understand these buckets, you understand most of the negotiation. **1) General indemnity escrow (the “reps and warranties” bucket)** This backs the seller’s indemnification obligations for breaches of reps and warranties and covenants. Typical mechanics: - A percentage of purchase price set aside (often single digits to low teens, depending on the deal). - A survival period (often 12 to 18 months for general reps). - A claims process (notice, opportunity to dispute, escrow agent release rules). The buyer is not trying to keep your money forever. They’re trying to ensure there is money available if something goes wrong within a reasonable window. **2) Special escrows (tax, litigation, IP, and “known issues”)** If there’s a known risk area, the buyer may ask for a separate, purpose-built escrow with its own rules. Common examples: - Tax escrow (payroll, sales and use, international, or state nexus issues) - Litigation escrow (existing claim or credible threat) - IP or ownership escrow (assignment gaps, open-source concerns, or contractor IP issues) - Working capital true-up holdback (more on this below) These can feel annoying, but they are often more negotiable than the general escrow because they have a tighter scope. If you can narrow the risk, you can often narrow the escrow. **3) Purchase price [adjustments (working capital,](https://startuplawyer.com/startup-law-glossary/working-capital-adjustment) net debt, cash)** This one sounds like accounting, but it is purchase price. Many deals are structured with a working capital adjustment. In plain English: the buyer expects the company to have a normal amount of cash, receivables, and payables on the closing date. If it has less than the agreed “target,” the price drops. If it has more, the price increases. Because the final numbers are not always known at closing, the buyer often holds back funds pending the post-closing calculation and dispute window. Founders experience this as: “Wait, we closed. Why are we still negotiating money?” Because the math is not final until after closing. ## **Market norms (and what you can realistically push)** There is no universal “standard” escrow. But there are patterns. In a typical private-company startup M&A deal: - A general indemnity escrow or holdback is common. - The duration is often tied to rep survival (commonly about a year for general reps, longer for certain fundamentals). - The size tracks perceived risk, diligence quality, buyer leverage, and how fragmented the seller base is. Here is the practical point: you can negotiate escrow economics, but you usually negotiate at the margins unless you have leverage. Leverage looks like: - Multiple bidders. - A strategic buyer who cares more about speed than perfect risk allocation. - A startup that is unusually diligence-ready (clean IP chain, clean cap table, clean employee classification, clean taxes). - A buyer that is already familiar with your space and sees fewer unknowns. If you do not have leverage, the best use of your time is often not fighting the existence of escrow. It is tightening the terms: what claims can be made, how quickly they must be made, and when money gets released. ## **The emotional part of escrow and holdback (why this feels worse than it “should”)** Escrow and holdback hit founders differently than most legal terms because they collide with a psychological milestone. Closing is supposed to be the finish line. Then the contract says: - Some of your money will arrive later. - The buyer can claim it. - You might have to argue about it. Even if the escrow is small, it can feel like the buyer is keeping you on a leash. That reaction is normal. It is also a signal: treat escrow as a post-closing relationship management issue, not just a line item. Two practical implications: 1. Your job is not over at closing. You may have 12 to 18 months of responding to claims, providing documentation, and resolving disputes. 2. The founder who stays organized post-close usually protects more value than the founder who treats escrow as “future me’s problem.” ## **A tech analogy that actually maps to the deal** Think of escrow and holdback like a staged rollout with a rollback plan. When you deploy a major system change, you push most traffic, but you keep guardrails. You use feature flags, canaries, monitoring, and a rollback path because you cannot perfectly simulate production. A buyer is doing the same thing with your startup. Closing is the deployment. Escrow is the rollback budget if production behaves differently than the diligence environment. You can argue that your code is great. The buyer will still want monitoring. ## **Concrete examples (the kinds you’ll actually see)** **Example 1: The contractor IP gap** Your startup used contractors early. Most signed [invention assignments](https://startuplawyer.com/startup-law-glossary/inventions-assignment). One did not. Six months after closing, the buyer discovers it during internal compliance cleanup. Buyer claim: cost to fix plus risk premium, sometimes a settlement. Escrow becomes the easy source of funds. What matters in negotiation: can you cap this exposure, narrow it to actual documented remediation costs, and include a cure process before money is pulled? **Example 2: Sales tax nexus surprise** Your startup sold into multiple states. You assumed SaaS meant “no sales tax.” Some states disagree. Post-close, buyer finance runs a nexus analysis and identifies exposure. They file voluntary disclosure agreements, pay back taxes and penalties, then claim indemnity. This is why tax escrows exist and why buyers push for longer survival on tax reps. **Example 3: Working capital holdback turns into a mini-fight** At closing, your startup has been operating lean and delayed paying a few vendors to preserve runway. Normal startup behavior. The buyer’s post-close working capital calc says payables were unusually high at close, so working capital was below target, so purchase price should be reduced. Founder reaction: “That’s not a liability. That’s just how startups operate.” Buyer reaction: “It is a liability, and I’m paying it.” This is where holdbacks become less about fraud protection and more about landing the economics where the buyer expected. ## **Where theory and reality diverge** **Theory:** Escrow is only for true surprises and real breaches. **Reality:** Escrow can become the default pot of money for anything arguable. This is not always bad faith. It is incentives: - The buyer has a process, internal auditors, and sometimes an earnout mentality even when there is no earnout. - The seller group is fragmented, tired, and motivated to move on. - The escrow agent will not adjudicate merits. They follow the contract. So the “real” battle is not whether escrow exists. It is whether the agreement prevents escrow from becoming an all-purpose coupon code. Terms that actually change outcomes: - A clear definition of a valid claim. - Materiality qualifiers, and whether they are “scraped” for indemnity purposes. - Baskets or deductibles (does the buyer eat the first $X of losses?). - Caps (how much can be recovered in total?). - Procedural protections (notice detail, timing, dispute rules). - Release mechanics (automatic release unless a claim is pending, versus funds just sitting). - No double-dipping (no recovery via adjustment and indemnity for the same issue). If you are going to spend negotiating capital, spend it there. **What you might be over-optimizing** Founders often over-optimize the escrow percentage to the second decimal place. It is understandable because it is the number you can point to. But in many deals, the escrow terms matter more than the escrow size. A slightly larger escrow with a tight survival period, a clear cap, a real basket, and an automatic release schedule can be better than a smaller escrow that is easy to claim against and slow to release. A practical question to ask while staring at a draft: “Does this escrow behave like a reasonable risk backstop, or like a buyer-controlled slush fund?” ## **Practical negotiation points that are often achievable** 1. Shorten the survival period for general reps, and keep longer survival only for truly fundamental items. 2. Stage the release (for example, some released at 6 months, the rest at 12 to 18). 3. Tighten claim notice requirements so “we might have a claim” does not freeze funds indefinitely. 4. Clarify a cure process. If something can be fixed, give the seller side a chance to fix it before money is pulled. 5. Define “losses” carefully. Do they include internal overhead, consequential damages, or business multiples? 6. Push for a real basket or deductible, especially where the buyer is likely to find small issues. 7. Avoid double-dipping where the buyer recovers twice for the same underlying problem. Some of these are market. Some require leverage. But these are the levers that change how much money you keep. ## **If you remember one thing** Escrows and holdbacks are not a moral judgment on your company. They are a tool buyers use to make indemnity real. The smartest approach is to assume some delayed money is normal, then negotiate the rules so claims are limited to real issues, the timeline is finite, and the release is predictable. If you are about to sign, look for three things: - When does the money actually get released, and is it automatic? - What is the easiest path for the buyer to make a claim? - What stops small, arguable issues from turning into escrow gravity? ## **FAQs founders actually ask** **Do I always have to agree to an escrow or holdback in an acquisition?** In most private-company acquisitions, some form of escrow or holdback is common. If you have real leverage (multiple bidders, unusually clean diligence, strategic urgency), you can sometimes reduce it or replace it with other structures. **What is the difference between an escrow and a holdback?** An escrow is held by a third party and released under an agreed process. A holdback is retained by the buyer and paid later. Economically they can be similar, but escrow can feel more neutral. **Can the buyer just keep the escrow by making a claim?** Not automatically. The agreement usually requires notice and gives the seller side a chance to dispute. But vague claim rights and slow dispute mechanics can delay release, so drafting details matter. **Should you get reps and warranties insurance (RWI) instead of an escrow?** Sometimes, but don’t assume it eliminates the escrow, or even makes sense for your deal. RWI is a policy that can cover certain losses from breaches of reps and warranties, which can reduce the seller’s post-closing exposure and sometimes reduce the size of the escrow. In many startup-sized deals, though, RWI may not be available (or practical) below certain deal sizes, and even when it is available, the premium, underwriting fees, and time burden can fail a basic cost-benefit analysis. Also, RWI has meaningful exclusions, so it typically won’t cover known issues, things disclosed in diligence, and certain categories of risk (tax and forward-looking statements are common pressure points), which is why buyers often still require a smaller [escrow or holdback](https://startuplawyer.com/startup-law-glossary/holdback-escrow) as a retention or deductible. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Once you give up voting control at the board level, you may not be able to “earn it back” later without someone else’s consent. This is mostly a founder problem (and a founder opportunity) in institutional venture financings where you’re adding investor directors and independents, not in a friends-and-family [SAFE](https://startuplawyer.com/startup-law-glossary/safe) where nobody is asking for a seat. The common misconception is that “I still own most of the company, so I’m still in control.” Ownership is economic power. A board seat is governance power. They overlap, but they’re not the same thing. Board composition just means who gets the seats and, therefore, who gets the votes. And board votes aren’t theoretical. Boards approve (or block) things like budgets, executive hires, option grants, acquisitions, raising more money, and sometimes whether you keep your job. If you’re negotiating a term sheet, board composition is where “control” becomes a number you can count. ## What the board actually controls (and what it doesn’t) In a Delaware C‑corp (the default for venture-backed startups), the board manages the business and affairs of the company. That sounds like a law school sentence because it is, but the practical version is simple: *the board is the only group that can legally make many of the company’s biggest decisions*, even if the stockholders “want” something else. Yes, some actions also need stockholder approval (a merger, a charter amendment to create a new preferred series, an increase to the option pool, etc.). But in real deals the board is the first gate, and often the only gate that matters day to day: budgets, exec comp, option grants, entering into debt, signing acquisition LOIs, and approving the next financing typically start (and sometimes end) with a board vote. Investor directors have fiduciary duties to the company and all stockholders, not just to the fund that appointed them. That doesn’t mean incentives disappear. It means the conversation is usually more subtle than “the VC is out to get you.” Most of the time, the tension shows up as differences in risk tolerance, timelines, and what each side considers a “good outcome.” - Hiring or firing the CEO (including “it’s time to bring in an adult,” said politely). - Setting the option pool size and approving major equity grants (which affects dilution and retention). - Approving a new financing, including whether you can do a bridge round and on what terms. - Approving a sale of the company, or deciding to keep going when you’d rather take chips off the table. - Approving debt, liens, and other commitments that can box you in later. That’s why board composition shows up so early in priced round term sheets. At seed, you might not even have a functioning board beyond the founders. At Series A, the board becomes the operating system for governance, and investors start caring a lot about who can say “yes” when the company hits a wall. ## Board composition norms: the board math that quietly decides who’s in charge In most Series A rounds, the “normal” board composition is small (3–5 seats) and built out of three categories: founder seats, investor seats, and an independent seat. The independent is supposed to be neutral. In practice, the independent is “neutral” the way a Supreme Court justice is neutral: the identity matters a lot. Here are common patterns and what they usually mean for control. I’m going to be blunt: the numbers matter more than the vibes. - **3‑person board (seed-ish):** Often 2 founders + 1 investor. You have formal control as a founder, but you’ve added an outside voice who can slow you down (sometimes in a good way). - **5‑person board (classic Series A):** Often 2 founders + 2 investors + 1 independent. This is the “balanced” structure everyone claims to like because nobody has a majority *on paper*. - **Founder‑majority 5‑person board:** 3 founders + 1 investor + 1 independent is less common in an institutional Series A unless you have real leverage (hot deal, oversubscribed round, or investors who are unusually founder-control tolerant). - **Investor‑leaning 5‑person board:** 1 founder + 2 investors + 2 independents (or 2 investors + 1 founder + 2 independents where the independents are effectively investor-selected). This can happen when you’re doing a rescue round or the company has already stumbled. The independent seat is where control shifts hide. A term sheet that says “one independent director mutually agreed” is very different from “one independent director approved by the investors” (or “mutually agreed” where you’re under time pressure and the [lead investor](https://startuplawyer.com/startup-law-glossary/lead-investor) has a short list). If the board is 2–2–1, the swing vote is the independent. So the real question isn’t “do we have an independent?” It’s “who effectively picks the independent?” Example: you have a 5‑person board (2 founders, 2 investors, 1 independent). You want to extend runway by cutting burn; one investor director thinks you should swing for growth and raise again; the other wants to explore a sale. If the independent aligns with the investors, you can find yourself taking a path you didn’t choose even though you’re still the CEO and you might still own a lot of common stock. If you want a sports analogy: think about a soccer match where possession stats look great, but the other team controls the midfield. You can “own” the ball for long stretches and still not control the game. In venture governance, the independent seat is often the midfield. ## How founders accidentally give up control (and why it’s hard to get back) Board [control is sticky because governance terms](https://startuplawyer.com/startup-law-glossary/control-terms) compound. Once you create a structure where investors (or investor-aligned independents) can outvote founders, future rounds tend to build on that structure, not reset it. Investors don’t like reopening governance without a reason. And “I didn’t realize what I signed” is not the kind of reason that gets traction in a term sheet negotiation. In practice, founders lose board control through a few repeatable mechanics: - *Board expansion that sounds harmless.* “Let’s go from 3 to 5 seats.” Okay, but who appoints the two new seats, and do you get one of them? - *Vacancy and replacement rules.* If an investor director resigns, does the investor get to name the replacement automatically? If an independent resigns, is it still “mutual consent,” or can one side install someone quickly? - *Director removal rules.* Removing a director is often controlled by the class or group that elected that director (e.g., the preferred elects the preferred director). If you don’t elect them, you usually can’t remove them. - *“Independent” directors who aren’t actually independent in negotiation dynamics.* Even when the documents say “independent,” selection dynamics and personal incentives can tilt the seat. One thing founders often over-optimize is whether an investor gets a *board observer* instead of a voting seat. Observers can change the room dynamics, but they don’t vote. If you’re trading a voting seat for an observer seat, that can be meaningful. If you’re fighting about an observer seat while giving away the swing independent selection, you’re focusing on the decoy. Let’s make it concrete with a few common scenarios I see in venture deals. **Example 1: The “helpful” exec hire becomes a CEO conversation.** You miss a quarter, or the market shifts, and the board wants to hire a CRO or COO. You’re open to it. Then the conversation drifts to whether you’re the right person to run a larger organization. If investors and the independent have three votes, you don’t get to “win” that debate by persuasion alone. The documents don’t say “fire the founder,” but the voting math can make it possible. **Example 2: Bridge round vs. priced round, who gets to choose the pain?** You need money. Option A is a quick bridge note/SAFE from insiders. Option B is a priced [round with a lower valuation and heavier terms](https://startuplawyer.com/seed-rounds/worst-seed-round-terms-startups). Many founders assume this is mainly an economics question. It’s also a governance question, because the board typically has to approve the financing path, and preferred [stockholders often have separate consent](https://startuplawyer.com/startup-law-glossary/stockholders-consent) rights. If your board is investor-leaning, you may find the company pushed toward the option that better protects the fund’s downside, even if it’s rougher on common. **Example 3: A real acquisition offer shows up, and you don’t control the answer.** An acquirer offers a price that feels life-changing to you but doesn’t hit a fund’s return model. If investors and the independent can block the deal at the board level (or through class votes), the company can keep going even if you’d rather sell. And in diligence, acquirers look at the governance stack because they want to know who must approve the deal, how clean the process is, and whether any director conflicts need special handling. ## How board composition changes by stage (and when you actually have leverage) Board composition becomes “real” at Series A because that’s when you typically add your first true institutional lead, start building a board cadence, and begin making decisions that can’t be reversed cheaply. In a healthy Series A, the market norm is some version of a balanced board (often 2 founders, 2 investors, 1 independent) with the independent selected by mutual consent. At seed, it’s common to keep a 3‑person board, sometimes with only founders initially and an investor seat added later when a lead appears. If you’re raising on SAFEs and you don’t have a priced round lead, pressure for formal governance is usually lower. That’s why a lot of early founders don’t build the “board composition muscle” until the Series A term sheet hits their inbox. Later-stage rounds can add complexity: more investor seats, more independents, and sometimes committees (audit/comp) that matter more than founders expect. Also, if the company is wobbling, governance terms tend to move “investor-protective” fast. In a down round or rescue financing, founders are often negotiating from a hole, and the board terms reflect that. If you have leverage, here’s what is often achievable (and what’s usually not): - *Market norm:* Balanced 5‑person board with a mutually agreed independent. - *With real leverage:* Delay adding the second investor seat until a later round, or keep the board at 3 seats for the first priced round (1 founder, 1 investor, 1 independent) with truly mutual selection of the independent. - *Also achievable with leverage:* Tighten the definition of “independent” and the process for replacing an independent so the seat can’t quietly drift to one side. - *Harder than founders think:* Investor takes no seat at all in a lead institutional priced round. It happens, but it’s not the default, and you’ll need a strong reason plus a very competitive process. ## Theory vs. reality: “independent” doesn’t mean “harmless” The theory is that a balanced board plus an independent director creates good governance. Sometimes it does. The reality is that independents are people, chosen through a process, with their own incentives and relationships. If your [term sheet gives the lead investor practical control](https://startuplawyer.com/startup-law-glossary/control-terms) over the independent seat, you haven’t created balance. You’ve created a majority that can call itself “neutral.” In real deal rooms, board composition negotiations are usually less about whether founders “deserve” control and more about two practical questions: (1) who needs comfort that the company won’t do something reckless with investor money, and (2) who needs comfort that the company won’t get sold (or forced to keep going) at the wrong time. The board is the mechanism for both. There’s also a persistent fundraising narrative that “control terms are for amateurs; real founders optimize valuation.” That’s catchy. It’s also how you end up with a great headline valuation and a board that can outvote you on the decisions that determine whether that valuation ever means anything. If you’re staring at a term sheet, here’s a practical checklist for the board/control pieces that actually drive outcomes: - **How many seats are there, and who elects each seat?** Write it out as a sentence: “Founders elect \_\_, Preferred elects \_\_, independent is selected by \_\_.” - **Who picks the independent, and what happens if you can’t agree?** “Mutual consent” is only meaningful if there’s no unilateral fallback. - **What happens when a director resigns?** Replacement rights can quietly hand a seat to one side forever. - **Can the board be expanded without your approval?** Look for mechanics that allow adding seats by a board vote you might not control. - **Do investor consent rights stack on top of board control?** Protective provisions can create a second veto layer even if the board looks balanced. - **Is there a board observer, and is confidentiality addressed?** This is usually manageable, but it affects how candid meetings can be. - **Do committees matter yet?** Not always at Series A, but comp and audit committees can become real control points later. ## If you remember one thing: treat board composition like a one-way door **Board composition is a one-way door more often than founders expect.** Economics can be renegotiated in later rounds. Governance rarely resets unless something breaks. - *What actually matters:* who has the votes when you need to choose between bad options (financing path, sale vs. keep going, leadership changes) and who effectively controls the independent seat. - *What usually doesn’t:* whether a board meeting feels friendly, whether an observer “promises” to stay quiet, or whether you still own a big common position on the cap table. - *What to do differently next time:* when you review a term sheet, write the board math on a sticky note and ask one blunt question: “In a disagreement, how do I win a vote?” If the answer is “you don’t,” make sure you’re getting something in return that’s worth that trade. ## Quick FAQs founders actually ask **Can investors force me out as CEO?** Usually not directly by “stock vote,” but a board that can outvote you can replace the CEO or condition financing on leadership changes. If you’re negotiating a Series A, assume governance (not just performance) determines how exposed you are. **Is a 2 founders / 2 investors / 1 independent board “balanced”?** It can be, but only if the independent is truly selected by mutual consent and the replacement mechanics don’t let one side capture the seat later. The swing vote is the whole point. **Should I fight hard to keep a founder-majority board composition?** If you have leverage, it’s worth pushing for founder influence—especially over the independent seat and any board expansion. But if the deal is not competitive, the smarter move is often to accept a market structure and focus on the clauses that prevent quiet control drift (independent selection, replacement, and expansion rules). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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It’s typically healthy when it’s modest, the round is otherwise strong, and it reduces personal financial pressure so you can stay focused; it’s usually dangerous when it’s large, early, or a major negotiation point, because investors read that as a loss of belief. As a market norm, seed rounds often allow little or no founder liquidity, while Series A and later can support a small, structured founder secondary if there’s clear momentum and a lead investor willing to bless the optics.* Liquidity is never “just money” in a venture round, because the minute you ask for it, everyone starts pricing your motivation. Founder Secondaries are one of those topics that sound purely financial until you watch how it lands in a term sheet. The cash matters, but the subtext matters more. When you sell stock in connection with a venture financing, you’re not just moving dollars around. You’re telling your investors, your team, and future acquirers what you believe the next few years will look like, and what you need to stay all in. In plain English, a founder [secondary](https://startuplawyer.com/startup-law-glossary/secondary-sale) is when you sell some of your existing shares to someone else for cash, typically at the same time the company is raising money. That’s different from the company issuing new shares (primary financing proceeds go to the company), and different from a broad employee tender offer (which is usually a later-stage retention tool). In venture deals, “founder secondary” usually means a small, negotiated slice of founder liquidity bundled into a priced round. ## Why a founder secondary shows up (and the trap) You don’t ask about a secondary because you’re greedy. You ask because you’re human. If most of your net worth is tied up in illiquid common stock, your risk tolerance isn’t just a personality trait. It’s a math problem that follows you home. One legitimate driver is simple compensation reality. If you have paid yourself an extremely low salary for a few years, some founder liquidity may be the cleanest way to correct that without permanently increasing burn. In practice, it can function as a substitute for a one-time cash bonus, or it can be paired with a modest bonus, especially when the board and lead investor agree the goal is retention and focus rather than a partial cash-out. Investors also like a founder secondary in the right deal context. A little founder liquidity can reduce weird incentives: you’re less tempted to take the first acquisition offer that lets you buy a house, and more able to swing for a larger outcome. But here’s the trap: the same transaction that can de-risk you can also read as a loss of belief. In a venture financing, “I’d like some cash off the table” can sound uncomfortably close to “I’d like to start taking chips off the table.” A simple way to think about it: if you’re raising a round because the company is working, a modest secondary can be framed as retention insurance. If you’re raising a round because you need oxygen, a secondary is usually a nonstarter. In the second scenario, the optics are brutal because investors are underwriting survival, not wealth planning. ## How a founder secondary works in a term sheet Most founder secondary deals in venture financings are boring by design. The buyer is usually one or more new investors in the round (sometimes a prior investor increasing their position). The price per share is typically the same as the new money price in a priced round. The sale closes at the same time as the financing, and it’s conditioned on the financing closing. Nobody wants a standalone founder liquidity transaction floating around. The term sheet usually addresses a founder secondary with a simple line item: something like “Up to $X of founder shares may be sold as secondary” or “Up to Y% of the round may be allocated to founder liquidity.” That cap is the entire point. If you do a founder secondary, you want the deal to signal that the company raised a real round and you sold a *limited* amount incidentally, not that the round was a liquidity program with a side of primary capital. Two practical mechanics founders often miss: - ***Primary vs. secondary is a governance and optics issue****.* Primary dollars strengthen the balance sheet. Secondary dollars don’t. So investors will often insist the company raise a minimum primary amount before anyone gets liquidity. - ***It’s not just “sign a stock transfer form.”*** Your company’s charter, investor rights agreement, ROFR/co-sale, and securities law compliance all show up. The company and its counsel usually manage the process so the cap table and closing deliveries stay clean. *Example*: you and the lead investor agree on a small founder secondary, but the term sheet says it only happens if the company raises at least $8M of primary at closing. If the round closes at $7M primary because one check slips, the secondary is automatically cut to $0. Nobody is being punitive. They are just making sure the company is funded before anyone gets liquidity. *Example 2*: a new investor agrees to buy founder shares, but your existing investors have a right of first refusal and co-sale rights. That means notices have to go out, deadlines have to run, and sometimes an existing investor can step in and buy the shares instead. This is why founder secondary discussions that start “it’s simple, we can paper it later” tend to become last-minute closing stress. If you want an analogy from the current AI space: think of a secondary like changing the model’s inference budget, not retraining the model. You can improve performance (focus, stamina, decision quality) without changing the underlying weights (your long-term incentives). But if you crank the budget too high too early, everyone starts asking why the model needs that much compute just to answer basic questions. ## Founder secondary market norms: when liquidity is “normal” vs “a problem” Most of the real action starts to happen around [Series A](https://startuplawyer.com/startup-law-glossary/series-a-round). That’s the moment where (a) the company is usually graduating from “promise” to “proof,” and (b) the founder workload and personal risk are both ramping hard. In many Series A negotiations I see, a *modest* founder secondary is within the realm of “market,” as long as the round is healthy and the lead investor is comfortable explaining it to their partnership. Modest usually means: small relative to your ownership, small relative to the primary dollars coming in, and small enough that nobody believes you could mentally check out if the company hits a rough patch. If the secondary proceeds would change your lifestyle but not your identity, you’re in the right neighborhood. If the secondary proceeds look like “I’m set either way,” expect resistance. Of course, if a founder has leverage, then the size of the secondary can increase. At seed, the norm is tighter. Many seed rounds have no founder secondary at all, especially in [SAFE](https://startuplawyer.com/startup-law-glossary/safe)-heavy structures where there isn’t a clean priced share sale to tuck it into. Even when a priced seed round is happening, investors often want every dollar going into the company because the company is still buying time and proving the model. Later stage is a different world. Growth rounds and pre-IPO companies often run structured tender offers for broader employee liquidity, and founder liquidity can be part of that ecosystem. By then, the question isn’t “Will the founder stay motivated?” as much as “Are we managing retention, taxes, and fairness across the cap table?” And if you’re thinking about M&A, a founder secondary generally will not prohibit or kill a deal by itself. Buyers still care a lot about incentives and retention post-acquisition, so prior founder liquidity can become part of the “are the founders motivated to stay and build after close?” analysis, even when it is otherwise unobjectionable. ## Founder Secondary Scenarios Founder secondary sales show up in several different forms depending on the stage of the company, the structure of the round, and who is providing the liquidity. The examples below are intentionally concrete, because this topic becomes easy to misunderstand when people discuss it only at a conceptual level. 1. ***The “retention slice” in a strong Series A****.* The company raises a meaningful primary round led by a clear lead investor, and you sell a small amount of common stock as a founder secondary at the same price. Example shape: $12M Series A, $11M primary and $1M secondary. The term sheet caps it and makes it explicitly contingent on the full primary close, so it reads like a footnote, not the point of the round. 2. ***The low-salary catch-up that functions like a bonus****.* You have been on a very low salary for multiple years and the board does not want to permanently increase burn. A small founder secondary, sometimes paired with a modest cash bonus, can be framed as a one-time correction so you can keep operating without personal financial stress. The key is keeping the amount modest and documenting it as capped secondary allocation tied to the financing, not as a founder-only liquidity program. 3. ***The “minimum primary” condition that quietly blocks liquidity****.* You ask for $500k of secondary, and the lead says yes in principle, but only if the company raises at least $X of primary. If the round ends up smaller than expected, the secondary automatically shrinks or disappears. This is common when the company’s cash runway is the real negotiation. 4. ***The seed round where the secondary becomes the headline****.* You are raising a priced seed or seed-extension because you need oxygen, and you ask for founder liquidity while the round is still being stitched together. Even investors who like you will worry that you are trying to solve a personal problem with deal proceeds. In practice, the fastest path to closing is usually dropping the secondary and focusing on getting enough primary capital to survive. 5. ***The insider-led round where the buyer wants your shares, not the company’s****.* Sometimes an existing investor wants to increase their ownership but does not want to put much new money into the company. They propose buying founder shares directly. That can be dangerous for signaling, because it can look like a partial recap. If you do it, you typically need very clear board alignment and a story that explains why the company is still adequately funded. 6. ***The “new investor buys founder, old investor buys primary” split****.* In a competitive round, a new investor may offer to take the secondary allocation as a relationship-building move, while existing investors focus on primary to fund the company. This can be clean, but only if everyone agrees on the cap table impact and the documents handle transfer restrictions, ROFR, and closing deliverables without drama. 7. ***The later-stage tender with guardrails and fairness optics****.* Once the company is later stage, liquidity is often handled through a structured tender offer that includes employees, sometimes with eligibility rules and caps per person. If founders participate, it tends to feel more defensible because the board can frame it as retention and tax planning rather than founder-only extraction. ## Theory vs. reality: what investors say they want vs. what they underwrite *Theory*: investors want founders to have “skin in the game,” so founder secondaries are bad because they reduce alignment. *Reality*: investors underwrite whether you’ll do the work required to make their investment worth something. Alignment is part ownership, part governance, part psychology, and part whether the company can recruit and retain a team. A small secondary rarely breaks alignment by itself. A large secondary can, because it changes the incentives and the story. The thing founders tend to over-optimize is the mere existence of a secondary. They’ll spend weeks trying to “win” $250k of liquidity while ignoring the terms that will matter for the next 5 years: valuation, option pool sizing, board composition, protective provisions, and whether the company is actually funded for the plan. In practice, if a secondary is going to happen, the hard part is not the paperwork. The hard part is getting the deal to a place where the lead investor can treat it as a footnote instead of a headline. But at the end of the day, you can’t blame a founder for trying to obtain liquidity. If you’re wondering whether you have leverage for a founder secondary, look at three drivers: (1) how competitive the round is, (2) how much primary capital the company needs to hit the next value inflection, and (3) how credible the “retention rationale” is. When those line up, a small secondary can be negotiated. When they don’t, asking for one usually just adds friction to a round that already has enough moving parts. ## How to think about money, morale, and signaling The finance piece is straightforward: you want enough liquidity that you’re not making short-term decisions out of personal anxiety. The morale and signaling pieces are the landmines. Your team will eventually hear some version of what happened, and the market will often infer it even if you never announce it. So you plan the transaction like you’d plan a product launch: what’s the message, and will it still sound good when repeated by someone who doesn’t like you? - **Keep it boring.** Small, capped, and tied to a strong primary raise is easier for everyone to accept. - **Let the lead investor socialize it**. If the lead isn’t comfortable, you shouldn’t be either. - **Anchor on retention and focus, not “fairness” or “I deserve it.”** Deals aren’t compensation reviews. - **Don’t negotiate it like it’s the core economics of the round**. If it starts to feel like the main event, it’s already backfiring. - **Be thoughtful about internal communication**. You may not need to broadcast numbers, but you should avoid creating a secrecy vibe that damages trust. On the legal side, the most common problems are operational, not exotic: making sure transfer restrictions are followed, consents are obtained, and the cap table stays accurate. In later-stage companies, you also need to respect company trading windows and information controls. Even private-company secondaries can create ugly issues if someone trades while sitting on material nonpublic information. ## If you remember one thing… A founder secondary isn’t “good” or “bad.” It’s a tool. **Use it to buy focus, not to cash out belief.** If the amount is modest, the company is well-funded, and the lead investor can defend the story, it can make you a better long-term operator. If it becomes the headline of the round, it usually means you’re trying to solve a personal problem with deal structure, and the market will notice…especially if there are early angels who don’t have a chance for liquidity. ## Founder secondary FAQs **Can I sell shares in my seed round?** Sometimes, but often the practical answer is no. Seed investors usually want cash going into the company, and many seed financings are SAFEs where a clean, priced secondary doesn’t fit naturally. **How much founder secondary is too much?** There isn’t a universal number. It’s “too much” when a reasonable investor would worry you’re financially set regardless of outcome, or when the secondary starts competing with the company’s need for primary capital. As probably obvious, the larger the round, the potentially larger the founder secondary. **Will a founder secondary hurt my valuation or terms?** It can. If investors feel they’re funding founder liquidity, they’ll often push back somewhere else, such as valuation, option pool, or governance. The cleanest outcomes happen when the round is strong enough that the secondary feels incidental. Usually this isn’t a direct discussion or negotiation. **What will my team think if I take liquidity?** First, they, or at least some of the team may never find out based on the deal. But, they’ll map it to one question: are you still all in. If you handle it transparently and modestly, it can be a non-event. If it looks like a founder-only cash-out while employees are locked up, it can quietly damage morale for a long time. **Does a founder secondary affect an acquisition later?** It can show up in diligence and negotiations, but a founder secondary usually will not kill an M&A deal by itself. What it can do is shift the conversation to post-close incentives: buyers and boards will look closely at whether founders have reason to stay, perform, and remain aligned after the acquisition. But that’s an issue whether or not a founder has done a secondary sale. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Prevention Always Makes Cents](https://startuplawyer.com/startup-lawyer/prevention-always-makes-cents) **Published:** January 19, 2007 **Author:** Ryan Roberts **Content:** [A recent Wall Street Journal article ](http://www.startupjournal.com/columnists/smalltalk/20070117-smalltalk.html)detailed the steps you should take to avoid collection problems when expanding your business across state lines. The article suggested prevention was by far the best defense. I believe that’s right, but I’ll make a much broader statement: Prevention is the best defense for any potential business problem. As a former and current entrepreneur, I realize that choosing your logo bug, typeface, and [web 2.0 colors](http://www.modernlifeisrubbish.co.uk/article/web-2.0-colour-palette) are much more exciting than ensuring your office space lease and other contracts reflect the terms and protections you desire. But shouldn’t you spend just as much time, if not more, on your legal rights than fiddling with a pantone color book? ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [How to Make Sure Your Startup Company Will Fail](https://startuplawyer.com/incorporation/how-to-make-sure-your-startup-company-will-fail) **Published:** September 20, 2007 **Author:** Ryan Roberts **Content:** **1. Don’t form an LLC or incorporate.** Make sure you and your partner have all the personal liability legally possible. **2. Don’t have any difficult conversations with your partner.** Leave important global issues with your partner unaddressed so that you can fight over them later when you have less time and more stress. **3. Agree to decide everything 50/50.** Ensure that basic disagreements will lead to virtual deadlocks and increased animosity between you and your partner. **4. Don’t write out your partner agreement.** Leave your respective understandings of how the company is to be operated and managed to selective recollection and incomplete facts. **5. Don’t protect your intellectual property.** Help ensure that another company can take your ideas and implement them successfully. **6. Don’t create formal employment contracts.** Increase the chances your employee will despise you and your company when he or she disputes your vacation policy. Also helpful if you want to incur the transaction costs of hiring and training another employee. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Getting Subpoenaed Does Not Make You a Target--Just Be Sure to Tell the Truth](https://startuplawyer.com/venture-capital/getting-subpoenaed-does-not-make-you-a-target-just-be-sure-to-tell-the-truth) **Published:** September 21, 2007 **Author:** Ryan Roberts **Content:** As a former Securities and Exchange Commission legal clerk and a current Apple fanatic, the following story is of high interest: > **Steve Jobs subpoenaed in backdating case** > > September 20 2007: 5:27 PM EDT > > SAN JOSE, Calif. (AP) — Apple CEO Steve Jobs has been subpoenaed by the Securities and Exchange Commission to give a deposition in a stock-options backdating case against Apple’s former general counsel, a person familiar with the case told The Associated Press Thursday. > > Jobs was subpoenaed as part of the discovery process in the SEC’s civil case against Nancy Heinen, according to the person, who spoke on the condition of anonymity because the case is ongoing. > > Heinen is accused of fraudulent backdating and of altering company records to conceal the fraud. > > The case, filed in April in the U.S. District Court of Northern California in San Jose, centers on two large options grants to Apple executives in 2001, including one to Jobs. > > Jobs has not been charged by the SEC, and people familiar with the matter say the subpoenas do not indicate he is being targeted. He is being ordered to testify. > > Heinen is fighting the SEC’s allegations that she modified documents to backdate the grant to Jobs to reflect that it had been approved during an October 2001 meeting that never occurred. > > During the SEC investigation that led to the case against Heinen, Jobs was interviewed. Apple, which conducted a separate probe on the matter, cleared Jobs of any misconduct. > > An Apple representative did not immediately return a call to comment. > > The subpoena to Jobs was first reported by Bloomberg on Thursday. > > Court records indicate the SEC issued a total of three subpoenas last month, and stated that one of them went to Heinen. The identity of the third recipient is unclear. > > Marc Fagel, an assistant regional director of the SEC in San Francisco, confirmed that subpoenas were issued in the case but said he could not comment on who received them or why. > > Additional subpoenas are expected, according to court records, but the two parties are still arguing over how many depositions should be allowed in the case. > > In addition to Heinen, the SEC charged former Apple Chief Financial Officer Fred Anderson in connection with Apple’s backdating troubles. Anderson, however, immediately settled the case. Without acknowledging wrongdoing, he agreed to pay about $3.5 million in fines and penalties. > > No trial date has been set. The SEC has proposed a trial date in September 2008. The defense proposes March 2009. > > Shares of Apple (Charts, Fortune 500) closed down 0.3 percent in Thursday trade. > > Link to Original Story Here Even though Steve Jobs isn’t an official target, he must still comply with the subpoena and more importantly, tell the truth. I’m certain he is smart enough to figure that out and I’m even more sure his team of lawyers will get the message across. But unfortunately, some entrepreneurs view deception as a business asset rather than a liability. Whether distorting or omitting facts when raising money from outside investors or lying to their own employees, these entrepreneurs only harm their startup companies in the long run. And not to mention risk their own personal freedom. During my brief time at the SEC, I witnessed several depositions. Most went smoothly (i.e., the subpoenaed person told the truth) but I vividly remember one person that lied throughout his entire deposition. Even after being confronted with damning emails he sent to investors, he continued to tell more lies which also conflicted with documents we had yet to reveal. His lying only made the air thicker and his punishment greater. Don’t be that guy. Even if you look great in orange. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Generate Goodwill Instead of Burning a Bridge](https://startuplawyer.com/contracts/generate-goodwill-instead-of-burning-a-bridge) **Published:** April 14, 2008 **Author:** Ryan Roberts **Content:** A frequent issue entrepreneurs, myself included, deal with is having to handle negative situations with due care and class so as to not erode startup company goodwill, not to mention other business tangibles and intangibles. You can create goodwill for your startup company many ways. And most are fairly obvious. But truly great entrepreneurs have the knack for turning potentially bridge-burning situations into positive ones for their startup company. Click on the following link to read a Craigslist ad that showcases how one startup entrepreneur likely changed a usually negative situation–laying off employees–into a positive one, both for his startup company and the developers he had to lay off: Three Amazing PHP/MySQL/Perl Developers Now Available – Story (I must credit the Hacker News at [YCombinator](http://ycombinator.com) for this find…) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Commercial Contracts --- ### [The Entrepreneur Also Rises](https://startuplawyer.com/hiring/the-entrepreneur-also-rises) **Published:** August 18, 2008 **Author:** Ryan Roberts **Content:** I had some free time this weekend and watched “[Empire of the Sun](http://www.imdb.com/title/tt0092965/)” 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) at the start of World War II after the Japanese invade China. The child is forced to live on the street and is eventually interned in a Japanese POW camp. I’m glad I did not see Empire of the Sun when it first came out, because I would not have fully-understood the characters’ emotions. In fact, I would have likely grouped the movie with other “where are the parents?” movies like [The Goonies](http://www.imdb.com/title/tt0089218/) or [Adventures in Babysitting](http://www.imdb.com/title/tt0092513/) in the late 1980s. While I was a child in 1987, I have 2 children in 2008. My experience as a parent helped me understand the anguish of losing a child. However, there will be situations where you (and I) will lack experience and be at a disadvantage in understanding another person’s emotions and subsequent decisions. In these situations, you must do your best to put yourself in the other person’s shoes. How would you feel and react if put in the exact same situation? Answering that question before every negotiation or interaction will yield positive results for your startup. As an entrepreneur, it may feel as though the world consists solely of you and your idea. And for a period of time, that may be true. But eventually, and in order for you to implement your idea, you will have to interact with and rely upon many individuals and groups. And they will all come with their own sets of emotions, decisions, and priorities. For example, when hiring an employee, you should understand that no matter how many stock options you throw at an employee, those stock options will not feed his or her child for some time (if ever). Thus, an employee’s hesitance to accept stock options in lieu of other compensation may not have anything to do with his or her view of your startup’s future. He or she may just have a child to feed today. In the startup world, reducing egocentrism and increasing empathy will have positive effects for your startup when dealing with employees, vendors, co-founders, or venture capital firms. By better understanding others and their motivations, you will increase the potential for agreements. Focus on the reason and not the answer. You may be able to find a way to make it work. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring **Tags:** entrepreneur, startup --- ### [Why Every Entrepreneur Should Listen to 2Pac](https://startuplawyer.com/venture-capital/why-every-entrepreneur-should-listen-to-2pac) **Published:** July 12, 2007 **Author:** Ryan Roberts **Content:** Tupac Amaru Shakur is an uncomfortable case study for founders not because his life ended badly, but because his career looks like a high‑velocity organization operating inside adversarial systems: rapid brand expansion, constant scrutiny, hostile counterparties, and almost no slack. He built one of the most powerful personal brands of the 1990s while navigating legal pressure, media hostility, and capital structures that rewarded speed, presence, and escalation over patience. If you advise founders (or are one) you already recognize this pattern. The surface details differ. The dynamics do not. Startups don’t fail because founders lack ideals. They fail because ideals are deployed without a strategy for power, incentives, and enforcement. Vision without positioning collapses. Values without leverage get interpreted by others. That tension between intent and outcome is where 2Pac lived. And that’s why he remains relevant. I first encountered this work not as theory, but as a participant. I bought *Me Against the World* as a high school junior, *All Eyez on Me* as a high school senior, and *The Don Killuminati: The 7 Day Theory* as a college freshman (at the Tower Records on Sunset Boulevard, at a midnight release, surrounded by hundreds of other people who showed up). Whatever you think of 2Pac, people recognized then that he was documenting something real, urgent, and unfinished. That sense of urgency—not nostalgia—is what still makes the material instructive. What makes 2Pac useful here is not his morality or his message, but his unusually clear view of how power, incentives, and enforcement actually operate under pressure. This is not an argument that he should be admired. It is an argument that he should be studied and listened to. ## **2Pac Began with Power Literacy** Most founders begin with vision and acquire power literacy later—often too late. 2Pac started with power. From *2Pacalypse Now* forward, his work treats institutions (policing, courts, media, money) not as abstractions but as operating systems. Songs like *“Trapped”* and *“Words of Wisdom”* are not emotional outbursts; they’re analyses of constrained choice. Behavior follows incentives. Outcomes are rarely accidental. Founders eventually encounter the same reality. Regulators, investors, counterparties, and platforms do not function as neutral referees. They are configurable systems with embedded preferences. A “standard” term sheet, like a “neutral” institution, encodes assumptions about who wins when pressure is applied. 2Pac understood early what many founders learn only after scale: systems don’t reward virtue. They reward leverage, positioning, and narrative control. This is not cynicism. It’s situational awareness. ## **Escalation Was Strategic, Not Accidental** Any serious treatment of 2Pac has to acknowledge volatility and escalation. His legal issues, public feuds, and increasingly dangerous alignments were real. But treating them as mere personal failure misses the strategic context. Listen to the arc from *Me Against the World* to *All Eyez on Me*. The former is introspective, cautious, and defensive: produced while facing incarceration. Tracks like *“So Many Tears”* reveal someone acutely aware of downside risk, isolation, and surveillance. *All Eyez on Me* is something else entirely. It is expansive, aggressive, and overcapitalized. *“Ambitionz Az a Ridah”* is not recklessness; it’s the sound of leverage being exercised. More capital. More attention. More optionality on the upside at the cost of narrowing exits. Founders recognize this pattern immediately. Growth outpaces governance. Identity fuses with brand. Optionality compresses. The system rewards behavior that increases exposure. The escalation wasn’t irrational. De‑escalation, given the surrounding incentives, would have been. ## **Expression as Positioning** Founders are routinely encouraged to be “authentic” on podcasts, on Twitter, in investor updates, etc., without anyone modeling how expression functions once it scales. 2Pac treated expression as positioning. He spoke in unfinished thoughts. He contradicted himself publicly. He refused to sanitize positions before they were resolved. This wasn’t carelessness; it was speed. He understood that narrative velocity mattered, and that silence would be filled by others. The strategic risk wasn’t honesty. It was amplification without containment. Founders face the same tradeoff. Personal narrative accelerates trust early. Later, it becomes infrastructure. Statements harden. Identity becomes non‑negotiable. What once created momentum reduces maneuverability. The lesson is not to retreat into blandness. It’s to decide deliberately which parts of yourself can survive scale, scrutiny, and reinterpretation, and which parts should remain private until the system changes. ## **Strategy Without Illusions** 2Pac’s critique of institutions was blunt, sometimes crude, but not naïve. He consistently distinguished between legality and legitimacy, rules and enforcement. This matters for founders and their advisors. Advice that is technically correct but power‑blind fails in practice. Outcomes are shaped less by doctrine than by discretion, narrative framing, and asymmetric resources. 2Pac understood that once a system assigns you a role, intent matters less than how your actions are interpreted and used by others. That insight appears again and again in his work, not as paranoia, but as planning. Even in lesser‑cited tracks like *“Outlaw,”* the message is unambiguous: once a system assigns you a role, intent matters far less than how your actions are interpreted and enforced. ## **Velocity, Compression, and Cost** One of the least remembered aspects of 2Pac’s career, thirty years after his death, is his output density. Music, film, poetry, interviews, all often produced in compressed bursts. Tracks like “Pain” and “Nothing to Lose” reflect a creator operating as if time were scarce. Founders romanticize urgency. 2pac embodied it. While a founder can take a couple weeks to vibe code an app to its MVP version, 2Pac wrote, recorded, mixed, and produced The Don Killuminati: The 7 Day Theory in seven days. He was engaging in “hustle culture” that pre-dated the late 90’s tech boom which originated the phrase. However, *Me Against the World* also documents the cost: isolation, paranoia, cognitive overload. Velocity without recovery converts pressure into error. Strategic compression creates results—but it also accumulates debt. That tension is familiar to anyone who has built something fast inside a hostile environment. ## **Why This Still Matters** 2Pac matters because he refused abstraction. He talked about incentives, not slogans. Power, not platitudes. Consequences, not intentions. He also failed, publicly and irreversibly, and that failure is part of the lesson. Startup culture is saturated with survivorship bias. His biography isn’t. What remains useful is the clarity: systems reward what they incentivize; leverage matters more than virtue; and environments rarely save people from dynamics they promote. Founders don’t need to admire him to learn from him. They just need to recognize the map he was drawing—and how familiar it looks. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Keep Your Startup Co-Founder Closer](https://startuplawyer.com/equity/keep-your-startup-co-founder-closer) **Published:** October 21, 2007 **Author:** Ryan Roberts **Excerpt:** Why Your Co-Founder May Be Your Biggest Liability **Content:** Sun Tzu is generally credited for coming up with the phrase, “Keep your friends close, and your enemies closer.” He obviously never launched a startup and got shafted by a co-founder. Entrepreneurs often believe their startup company faces legal threats from only external sources. And that’s a big mistake. Instead of worrying solely about some 3rd-party stealing your business idea or a “slip and fall,” your startup company’s top legal priority should be the reduction of its *internal* legal threats: co-founder disputes. You can start by examining every aspect of the co-founder relationship. Your startup company could be ultimately doomed by a co-founder dispute, as even small disagreements can systematically erode the core of your company. Therefore, at the earliest time possible, sit down with your co-founder(s) and talk about issues like: (1) the goals each of you have for the startup; (2) the goals each of you have for yourself; (3) duties, job descriptions, and hour commitments; (4) who pays for what; (5) who gets paid first and why; (6) what happens if one of you wants out; (7) what happens if one of you wants to sell the company, raise capital, or end it; (8) what happens if one of you gets disabled or dies; (9) what happens if things take longer than expected; and (10) whether launching other startups, i.e. “moonlighting,” is ok. This is not an exhaustive list of topics and by no means whatsoever will such discussions be easy. If it is easy and everything sails through without a hitch, someone’s holding back and you’ve all wasted your time. **And for the love of high-speed internet and all things Web 2.0, do not think being friends or relatives reduces the need for these difficult and/or awkward conversations.** In fact, if your co-founder is a friend or relative, that should trigger even more issues and discussions. Because now you have more to lose than just a company and your (or someone else’s) money. After you have discussed everything that needs to be discussed, DOCUMENT-DOCUMENT-DOCUMENT. Make sure your startup company documents reflect all of your discussions. Don’t leave anything out just because you and your co-founders already talked about it. Take nothing for granted because memories will inevitably differ. Once you have discussed and properly documented your co-founder relationships and thereby protected your startup company’s core, then you can focus on external legal threats. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table **Tags:** co-founders, startup --- ### [Funding Your Buy-Sell Agreement For All Scenarios](https://startuplawyer.com/equity/funding-your-buy-sell-agreement-for-all-scenarios) **Published:** October 3, 2007 **Author:** Ryan Roberts **Content:** Before you execute a [buy-sell agreement](https://startuplawyer.com/startup-issues/why-every-business-with-2-or-more-owners-needs-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 I find is a buy-sell agreement that can be triggered upon disability, but the company or shareholder (depending on whether the buy-sell agreement is a [stock redemption](https://startuplawyer.com/startup-issues/buy-sell-agreements-the-stock-redemption-plan) or [cross-purchase](https://startuplawyer.com/startup-issues/buy-sell-agreements-the-cross-purchase) plan) relies solely on life insurance to fund the agreement. A permanent life insurance policy’s cash value takes time to build. And if a shareholder becomes disabled before the cash value builds up, such a company may be forced to fund the buy-sell agreement in non-optimal ways. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table --- ### [Prevention Always Makes Cents, Part II](https://startuplawyer.com/startup-lawyer/prevention-always-makes-cents-part-ii) **Published:** January 22, 2007 **Author:** Ryan Roberts **Content:** I wanted to follow-up with you concerning the importance of taking preventative legal steps when starting your business. Googling this weekend, I found a blog entry from Rhonda Abrams, author of *The Passionate Entrepreneur* on Yahoo! Finance. Here’s an excerpt: “Taking care of your company’s legal health is like taking care of your personal health: An ounce of prevention is a lot more pleasant than a pound of cure. I often see entrepreneurs end up in legal battles costing thousands of dollars that could have been avoided with a $200 trip to an attorney.” Reading the excerpt sparked two immediate thoughts: 1\. She’s spot on, and 2\. $200?! (Just kidding.) Abrams finishes the article with some tips on how to select a lawyer and what types of issues you should discuss with your legal counsel. The point you, the entrepreneur, should take home is that seeking legal advice early can save you plenty down the road in terms of money and headache. The legal advice will likely cost you more than $200, but it will be worth every penny. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [Friends Can Be Bad Business Partners](https://startuplawyer.com/equity/friends-can-be-bad-business-partners) **Published:** January 5, 2007 **Author:** Ryan Roberts **Content:** Launching a startup business with a friend can be an exciting and rewarding experience. However, I suggest you take a moment and really think about what the potential consequences might be. Starting a business is tough and having a friend involved will only make it more difficult if things go sour. Most importantly, your friendship should not be a substitute for a proper set of bylaws and other corporate documents. You and your friend will appreciate these documents because, if properly drafted, they will provide you both with clarity regarding what will happen if certain events occur. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table --- ### [Choosing a Name for Your Business: Stick with It](https://startuplawyer.com/incorporation/choosing-a-name-for-your-business-stick-with-it) **Published:** December 22, 2006 **Author:** Ryan Roberts **Content:** When choosing a name for a new startup, you should make sure the name is one the public will remember and associate with your business. It can be catchy or dull, short or long, but this name should be permanent, as a large portion of your company’s goodwill will be the name itself. Some lawyers might enjoy handling the legal work and billing you for your monthly name changes, but I’d bet they would rather your company remain a stable enterprise. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Leasing Office Space](https://startuplawyer.com/contracts/leasing-office-space) **Published:** January 25, 2007 **Author:** Ryan Roberts **Content:** Once you’ve outgrown your garage, your home office or your executive suite, you will probably consider leasing commercial office space. The best advice I can give you, the entrepreneur, is to treat the office space lease process the same way you might the car buying process. If you don’t, you could end up legally responsible for a ridiculous amount of money. Do your homework on the market. It’s much harder to find click-of-the-button information on commercial real estate compared to automobiles. So that means get out there, test drive the office space by taking some tours of different buildings. Gather as much information you can because you will use it when it’s time to negotiate the lease. Which leads to…Negotiate those boilerplate terms they throw at you. Think back to all the times you purchased or leased an automobile. Did you ever take the first offer? Of course not. Use the information you gathered to get yourself better terms. Caveat: It’s even more important to examine and negotiate a commercial lease, because some landlords like to throw in ridiculous tenant liability clauses. (How do you feel about being responsible for replacing the HVAC units if they break down?) Just like purchasing a new car, you are entitled to a “warranty.” Don’t let the landlord take that away from you…and don’t feel as though you have to give anything up to get it back. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Franchises provide the entrepreneur with name-recognition, training and operational support from day one in exchange for an initial franchise fee and continuing franchise royalty payments. While the initial franchise fee is a one-time lump sum payment, the amount of a franchise royalty payment is usually paid monthly or quarterly and can be determined a few different ways. **Percentage of Revenue or Profits**. This is the standard way to calculate a royalty. Multiply total revenue by a royalty percentage (typically 2%-10%) every period. Under this method, the royalty fee fluctuates and allows the franchisee to reduce his or her royalty fee expense when sales are slow. Alternatively, this allows the franchisor to collect a larger fee when a franchisee’s sales are great. Sometimes profits are used to determine the royalty fee, but trying to determine “profit” makes using profits unappealing. **Fixed Sum**. Increasingly, franchisors are moving towards fixed royalty fee amounts. The benefit of the fixed royalty fee is that both franchisor and franchisee know exactly what the royalty fee will be, allowing both parties to develop more accurate financial forecasts. An additional benefit is that the fixed fee eliminates the need to audit a franchisee’s reported sales. The fixed fee tends to hurt the franchisee when times are bad, as the franchisee will still be responsible for the $X royalty fee when sales are $0. But when times are great, the franchisee will benefit as the royalty fee is essentially capped. **Fixed Sum Based on Square Footage** This is a variation of the fixed sum royalty payment and it is determined by the square footage of the franchisee’s store. Basing the royalty fee on square footage provides the franchisee with incentive to take a smaller space, which can be good if the franchisor wants to maintain a boutique-like atmosphere. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Commercial Contracts --- ### [Buy-Sell Agreements: The Stock Redemption Plan](https://startuplawyer.com/equity/buy-sell-agreements-the-stock-redemption-plan) **Published:** August 6, 2007 **Author:** Ryan Roberts **Content:** In a couple of previous posts, I discussed the [value of buy-sell agreements for businesses with 2 or more owners](https://startuplawyer.com/startup-issues/why-every-business-with-2-or-more-owners-needs-a-buy-sell-agreement) and also one of the two major types of buy-sell agreements, [the cross-purchase plan](https://startuplawyer.com/startup-issues/buy-sell-agreements-the-cross-purchase). This post is dedicated to the other main variation of the buy-sell agreement, the stock redemption plan. Under a stock redemption plan, the corporation redeems the shares of the withdrawing stockholder. Retirement, death and disability tend to be the three most common withdrawal events found in buy-sell agreements, but corporations are not limited to those three and are free to mix and match as they see fit. To fund the redemption (pay the withdrawing shareholder), the corporation typically uses the proceeds or funds it owns ![Get covered with a Buy-Sell Agreement](http://www.thestartuplawyer.com/wp-content/uploads/2007/08/umbrella.jpg "Get covered with a Buy-Sell agreement")as both owner and beneficiary of a life policy insuring each stockholder. Thus, the corporation purchases one policy for each shareholder under a stock redemption plan, instead of each shareholder purchasing an insurance policy on each other (the cross-purchase plan). Thus, stock redemption plans are easier to administer than cross-purchase plans because stock redemption plans require only one policy type per shareholder. Furthermore, the potential for unequal insurance costs due to individual health and age are evenly asorbed by the company. All things equal, I have a slight preference to the stock redemption plan rather than the cross-purchase merely based on the ease of company administration. But as you probably already know, your company’s situation is never “all things equal” and you need to balance many factors to come up with the optimal solution. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table --- ### [Buy-Sell Agreements: The Cross-Purchase](https://startuplawyer.com/equity/buy-sell-agreements-the-cross-purchase) **Published:** August 1, 2007 **Author:** Ryan Roberts **Content:** If you’re choosing between a **cross-purchase** and an **entity redemption** buy-sell, here’s the short answer: **a cross-purchase works best when you have a small number of owners, relatively stable ownership, and you actually want the surviving owners (not the company) to end up owning more of the business.** If you have lots of owners, you plan to raise venture capital, or you want something that scales cleanly over time, a straight cross-purchase often becomes more operationally annoying than founders expect. The biggest misconception is thinking “cross-purchase” just means “the other founders buy the departing founder’s shares.” That’s the headline, but the real work is in the plumbing: funding, taxes, who signs what, and how you keep the plan from collapsing the first time someone leaves under less-than-ideal circumstances. This shows up in real startup law not because it’s fancy, but because it’s one of the few documents that’s supposed to function when everything else is going sideways. ## Why this comes up in real startup situations (not just closely held businesses) Most early-stage startups don’t have a traditional buy-sell agreement on day one. They have founder stock purchase agreements, vesting, maybe a right of first refusal (ROFR), maybe a co-sale agreement, and they call it a day. Then something changes. A founder wants out. Someone gets divorced. Someone has a medical issue. The company is doing well enough that the equity is worth arguing about. Or a future investor (venture or strategic) starts asking, “What happens if one of you disappears?” A buy-sell agreement is basically your attempt to answer that question without improvising under time pressure. Cross-purchase buy-sells are one of the classic solutions. They also have a classic failure mode: they look simple until you try to operate them. ## The common founder assumption (and why it’s incomplete) The common assumption is: “If a founder leaves, the other founders should be able to buy their shares so the cap table stays clean.” That’s a reasonable instinct. It also skips over two things that drive outcomes in real deals: 1. **Do the remaining owners actually have the cash (or insurance) to buy the shares when the trigger event happens?** 2. **Do you really want the remaining owners to buy directly, or do you want the company to buy and retire the shares?** The cross-purchase model hard-codes a particular answer: the other owners buy. Sometimes that’s exactly right. Sometimes it creates friction you didn’t plan for, especially as you add investors, employees, and different classes of stock. ## How a cross-purchase buy-sell works (plain English) In a cross-purchase buy-sell, the owners agree that if certain events happen (death, disability, termination, retirement, deadlock, etc.), the remaining owners will buy the departing owner’s equity (or have the right/obligation to do so) directly. Key features: - **Buyer:** the other owners (not the company) - **Result:** the remaining owners increase their ownership percentage - **Funding:** often personal funds, installment payments, or life/disability insurance - **Documentation:** the company is usually still involved administratively, but it’s not the purchaser Contrast that with an **entity redemption** (also called a “stock redemption” in a corporation context), where the company buys back the shares and retires them (or holds them as treasury stock, depending on structure). The cross-purchase structure tends to be more “owner-to-owner.” It can be cleaner on certain tax outcomes, and it can align with a “this is our company” mindset. But it shifts the burden onto individuals. ### The three decisions you’re really making Most cross-purchase negotiations are secretly about three questions: 1. **Triggers:** when does the buy-sell turn on? 2. **Price:** what is the purchase price, and how is it determined? 3. **Funding and timing:** who pays, when, and with what money? If you don’t solve #3, the rest is theater. ## Where cross-purchase tends to work well ### 1) Small number of owners (usually 2–5) Cross-purchase scales badly. With two founders, it’s straightforward: A buys B, or B buys A. With three or four, you can still do it with proportional purchases. With 15 shareholders, it’s a signature and logistics nightmare, and you’ll eventually redesign it. So if you’re early, tightly held, and expect to stay that way for a while, cross-purchase can be a good fit. ### 2) You care who ends up owning more (economics and control) In a cross-purchase, the owners who remain directly increase their percentage. That matters if: - Voting control is sensitive - You want ownership to stay within a founder group - You don’t want the company’s balance sheet involved If you’re trying to avoid a scenario where the company redeems shares and an outside investor’s percentage increases “by math,” cross-purchase gives you a different lever. ### 3) Life insurance funding actually makes sense Cross-purchase is commonly paired with life insurance: each owner (or the group) insures the others, and the proceeds fund the purchase if someone dies. This is one of the few times where the “just buy insurance” advice isn’t naive—if the ownership group is small and the economics are stable enough to underwrite. It’s also one of the few times where a buy-sell can actually work the way it reads on paper. ## Where founders over-optimize (and what matters more) Founders love to over-optimize the pricing mechanism. They’ll debate for hours whether the agreement should use a formula, a third-party appraisal, a board-set price, or last-round valuation. In practice, the pricing clause is not what breaks most buy-sells. What breaks them is: - nobody can afford to fund the purchase when it triggers, or - the trigger event is messy (termination for cause, deadlock, “constructive resignation,” etc.), or - the agreement requires too many people to sign too many documents too quickly. If you’re going to spend your energy somewhere, spend it on funding and operational mechanics. ## The hard part: “cross-purchase” sounds simple until you add real-world complications Here are three concrete scenarios that come up in deal rooms. ### Example 1: The “we raised venture” problem You started with two or three founders. A cross-purchase felt clean. Then you raised venture financing, issued preferred stock, created an option pool, and now you have institutional investors who care about: - transfer restrictions, - consent rights, - protective provisions, - and not accidentally triggering weird tax or securities issues. A classic cross-purchase can collide with later venture documents if it’s not drafted to coexist with them. The practical point: **venture investors don’t love bespoke owner-to-owner purchase obligations floating around** unless they’re clearly subordinated to the financing documents and don’t create surprise liquidity rights. If you’re venture-bound, you can still have founder buy-sell concepts, but they’re often handled through a mix of vesting, repurchase rights, and ROFR/co-sale structures rather than a full traditional cross-purchase. ### Example 2: The “too many owners” paperwork blow-up Suppose you have 8 shareholders (founders + early employees who exercised options). One shareholder leaves and the buy-sell triggers. In a cross-purchase, every remaining owner may need to: - agree on price, - sign purchase docs, - wire funds (or sign notes), - update cap table records, - coordinate tax forms and basis tracking. If even one person is slow, the whole process drags. Entity redemption is often operationally easier because there’s a single buyer: the company. ### Example 3: The “I can’t pay you, but I’m supposed to buy you out” moment This is the most common real failure mode: the agreement says a buyout must happen, but nobody has liquid cash. So you end up renegotiating the deal at the exact moment the agreement was supposed to prevent renegotiation. Cross-purchase makes this more likely because the funding burden sits with individuals, not the business. If the company is profitable and can fund a redemption over time, redemption may be more realistic. If the company is not profitable, neither structure solves the core issue—there’s no money—but cross-purchase doesn’t magically create it. ## Theory vs. reality: cross-purchase “protects the company” … until it doesn’t The theoretical selling point is: “Cross-purchase keeps the company out of it. The company doesn’t spend cash buying shares. The owners handle it.” In reality, the company is often involved anyway because: - the company’s equity records and approvals are required, - the company may need to consent to transfers under its charter/investor documents, - and the company will often be the one coordinating the process (because founders are busy and nobody wants a side project called ‘cap table surgery’). Also, cross-purchase doesn’t avoid business disruption if the reason for the buy-sell is contentious. A deadlock-triggered buy-sell is never just a clean transaction. It’s a controlled demolition, and the documents determine how controlled it actually is. So yes, cross-purchase can reduce direct company cash use. But it can increase operational and relational complexity, especially if you’re not tightly held. ## The sports analogy (negotiating leverage and incentives) A cross-purchase buy-sell is like calling a play that requires perfect timing between multiple players. If you’ve got a small, disciplined roster, it can be beautiful. If you’ve got a roster that changes every season and you’re trying to run it under pressure, it turns into missed assignments. Entity redemption is more like a play designed around one ball-handler: fewer moving parts, easier execution. Not always better economics, but often better reliability. That reliability point matters because buy-sells are triggered at the worst moments, not the best ones. ## Practical drafting points that matter more than founders expect If you’re using a cross-purchase structure, these are the deal terms that usually drive outcomes: ### 1) Make the trigger events realistic and well-defined “Death” is clear. “Disability” is not, unless you define it (often by reference to an insurance definition or a time-based inability to perform services). “Termination for cause” sounds clear until you’re litigating what “cause” means. If you include fault-based triggers, expect friction. ### 2) Decide whether it’s a right, an obligation, or a waterfall Some agreements make cross-purchase **mandatory**. Others make it **optional** (a right of first refusal concept). A common approach is a waterfall: 1. remaining owners have the right to buy (pro rata or as they agree), then 2. the company has the right to redeem the remainder, then 3. if neither happens, transfers are restricted and you fall back to a default (installment note, holdback, etc.) That kind of structure acknowledges reality: sometimes individuals can buy, sometimes only the company can, and sometimes nobody can. ### 3) Funding mechanics: insurance, notes, and time If you don’t have insurance, you probably need installment payments. If you use installment payments, you need to define: - down payment (if any), - term, - interest rate, - security (if any), - and what happens on default. And you should be honest: if the purchase price is meaningful, you’re building a mini lending arrangement among founders. That’s not inherently bad, but it is what it is. ### 4) Coordinate with your other startup law documents If you’re a corporation with venture financing documents, you need to ensure the buy-sell doesn’t conflict with: - ROFR/co-sale provisions, - investor consent rights, - transfer restrictions in the charter, - and any employment/vesting repurchase rights. This is where a startup lawyer earns their fee: not by describing cross-purchase generally, but by making sure your particular stack of agreements doesn’t fight itself. ## Where leverage and stage change the answer ### Pre-seed / seed (founder-controlled) If you and your co-founders control the company and the cap table is simple, cross-purchase can be a reasonable solution—especially for death/disability scenarios. But if you’re trying to solve “what if a founder quits,” vesting and repurchase rights often do more work with less complexity than a full cross-purchase. ### Priced venture rounds and beyond (investor-influenced) Once you have institutional venture investors, your room to install bespoke mechanisms shrinks. Not because investors are mean, but because they’re optimizing for predictability and consistency across portfolio companies. At that stage, buy-sell concepts that materially move equity often need to be integrated with the charter and investor rights, and many companies lean away from classic cross-purchase obligations because of administration and consent issues. ### M&A context (acquirers care about “can you actually deliver the cap table you say you have?”) In acquisitions, a buy-sell can matter in two ways: 1. It can reassure an acquirer that ownership transitions won’t create surprise third-party owners. 2. It can create diligence issues if the buy-sell has been triggered in the past but not followed (or followed inconsistently). Acquirers love clean records. Buy-sells sometimes create messy ones if they’re not executed properly. ## The practical takeaway If you remember one thing, remember this: **a cross-purchase buy-sell is only “simple” when the ownership group is small and the funding plan is real.** If you can’t point to where the money comes from, you don’t have a buy-sell—you have a document that will be ignored at the worst possible time. If you’re early-stage and founder-owned, you can use cross-purchase thoughtfully (often focused on death/disability) and rely on vesting/repurchase/ROFR mechanics for the more common “founder leaves” scenario. If you’re scaling, adding lots of shareholders, or heading into venture financing, you should assume you’ll either (a) heavily customize the approach or (b) move toward a structure that the company can actually administer without herding cats. ## FAQ (the ones you’ll actually ask a startup lawyer) **Is cross-purchase better than entity redemption?** Neither is universally “better.” Cross-purchase is often better when you want the remaining owners to directly increase their ownership and you can fund it. Redemption is often better when you want a single buyer (the company) for operational simplicity. **Can a cross-purchase work in a venture-backed startup?** Sometimes, but it usually needs to be coordinated carefully with your charter and investor rights, and many companies prefer simpler transfer restrictions plus vesting and repurchase rights instead of a classic buy-sell. **What’s the number one mistake with buy-sell agreements?** Writing a clean mechanism for price and triggers while ignoring funding and execution. The agreement doesn’t “solve” the problem if nobody can afford to follow it. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table --- ### [How to Avoid Being Ripped Off When You Lease Office Space, Part III](https://startuplawyer.com/contracts/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-iii) **Published:** November 11, 2007 **Author:** Ryan Roberts **Excerpt:** Critical information about various commercial office leasing terms, tricks, and traps. **Content:** You can begin with [Part I](https://startuplawyer.com/startup-issues/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-i) or skip to [Part II](https://startuplawyer.com/startup-issues/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-ii). In Part III, we’ll continue discussing the provisions that your startup company needs to consider before leasing office space. Your startup company may not have to negotiate each provision, but you should obtain a working knowledge of them. They will likely affect your lease sooner or later. **Repair and Maintenance.** Don’t let this portion of your lease be vague–it will likely go against you in the event of a dispute. Thus, make sure the lease sets out your repair and maintenance obligations in a very specific manner. Ideally, you should have few repair and maintenance obligations, such as your own personal property and other property damage caused by your negligence or misconduct. Don’t sign a lease if the landlord insists you repair and maintain the HVAC system, foundation, walls, plumbing, or common areas. You should be able to get out of those repair and maintenance obligations pretty easily (i.e., don’t think that the landlord is “giving in” and that you have to give somewhere else). **Damage or Destruction of the Premises.** Most of the time this provision gets overlooked, but it could have terrible consequences in the event the building is razed. For example, the provision may require you to reconstruct the building in the event of its damage or destruction. If you are going to sign a lease with this clause, you **must** make sure that your obligation is limited to both the extent of your insurance proceeds and the causes of loss that are insurable. **Assignment and Subleasing.** It is preferable that your right to assign or sublease your office space is unlimited as possible. Be sure to add language that unconditionally allows you to assign or sublease to a company that is owned by–or owns–at least a majority of your company signing the lease.The landlord does have an interest in a non-related subleasee. Thus, it is prudent the landlord maintains the right to reasonably withhold consent on your assignment or sublease. It may help to remember that other tenants in the building are (hopefully) signed up to a similar clause and therefore weirdo companies won’t show up next door. Also, keep in mind that you will be responsible for rent in the event your landlord-approved subleasee bails on you. **Implied Warranties.** Unlike residential real estate transactions, parties to commercial real estate transactions can usually agree to waive implied warranties designed to protect the leasee (or buyer). It depends on your state, but the main implied warranty landlords like to waive is the warranty of suitability. The best advice I can give you is to not waive any warranties. **Property Taxes.** You’re already paying off the landlord’s mortgage, so some landlords get greedy and have you pay the building’s property taxes as well. Be sure that property taxes aren’t a part of the CAM or other charges you have to pay. **Landlord’s Rules and Regulations.** Sometimes landlords issue building rules and regulations as an addendum to the lease. They are probably not a major concern for most leases, as they are intended to benefit all tenants. The main problem usually arises when another tenant does not adhere to the rules and regulations without any recourse by the landlord. **Dispute Resolution.** Your lease should have some type of non-courtroom dispute resolution process, whether it be arbitration, mediation, or coin-flipping. Leases that provide for the courtroom and that the loser pays all costs (court fees, attorneys’ fees, etc.) are used by the landlord to preclude its tenants from suing. The landlord is banking that you won’t risk having to foot their law firm’s bill in addition to your own. **Lease Audit.** If your monthly lease calculation is complex, your startup should consider having a lease audit clause. This clause should allow you to employ a “lease consultant” to physically measure the premises and assure that other costs are being properly calculated. **Let’s just say I’ve never found a landlord to underestimate square footage or underbill costs**. Along with the lease consultant, the clause should grant you access to the landlord’s records pertaining to your rent calculations. This wraps up the [series on how to lease office space](https://startuplawyer.com/startup-issues/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-i). Good luck. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Commercial Contracts --- ### [How Much to Pay Your Startup Lawyer](https://startuplawyer.com/startup-lawyer/how-much-to-pay-your-startup-lawyer) **Published:** April 15, 2008 **Author:** Ryan Roberts **Content:** Think back to the last time you wrote a business plan for a startup. Do you recall your estimated expense for legal fees? $1,000? $10,000? $0? How much to spend on legal fees is a common issue for startup companies with more than one correct answer. However, there are a few factors that suggest your startup should loosen up the purse strings. Back in my college days (post-Prodigy, pre-Google), I wrote a business plan for a Web 0.01 startup company and allocated a meager $500. I had no idea what I’d be getting for that $500, but I figured my business plan software included the “legal fees” entry for a good reason and I did not want to leave it blank. Fast forward to today. Going to law school, running my own startup company, and now representing dozens of other startup companies hasn’t led me to the exactly-how-much-to-pay-your-startup-lawyer magic number. Instead, I’ve learned to spot the issues that suggest a startup company should be spending more rather than less on legal fees: (1) **Number of Founders**: If your startup is going to have more than one founder, this would indicate you’ll need to add to your legal fees total. Establishing and documenting the co-founder relationship is one of the most important aspects of a having a successful startup company. I wrote a previous blog article regarding $4,824.13 in legal fees when he started [Truemors](http://truemors.com/). And his legal fees included the following: > -Trademarking Truemors > -Drafting a Terms of Use > -Discussion of copyright, liability, infringement, IP, and insurance issues > -Organizational resolutions and bylaws > -Stock purchase agreements Guy’s post also has some wise advice about how much to spend on startup legal fees: > You could do less legal work and do it cheaper, but if you ever want to raise venture capital much less go public or get acquired for more than scrap value, this is not the place to save a few thousand bucks. While Guy paid $4,824.13, I do not recommend using his number as a benchmark for your legal fees. There are too many variables to consider which are both internal and external to your startup company. Thus, I am hesitant to even provide a range of estimated startup fees. But if you consider the three issues (number of co-founders, raising capital, and public company), you will know whether paying your startup lawyer a larger amount is warranted. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) **Tags:** startup legal fees --- ### [Keep the Bridge Burning to a Minimum](https://startuplawyer.com/startup-lawyer/keep-the-bridge-burning-to-a-minimum) **Published:** August 7, 2008 **Author:** Ryan Roberts **Content:** A few months ago, I was on a conference call with opposing counsel to negotiate a client’s deal. Things got a little heated (the only time I’ve ever experienced a hostile communication with another attorney) and eventually I got hung up on. I was about to call the attorney back and show him what I learned from 15 years of listening to gangsta rap, but thankfully I didn’t. Was I upset? Sure. What it have felt great to go 2pac on the other attorney? Very Sure. Would I have regretted it 2 minutes later? Extremely Sure. Instead, I waited a day and called the attorney back. We ironed out the terms of the deal and got it done. Everybody was happy. *But here’s an even better example of why you don’t burn bridges unnecessarily*: Three weeks later, another client of mine asks me to handle an acquisition. He gives me the contact information for the other company’s lawyer. You guessed it…the same lawyer. If I had burned the bridge with that lawyer, it could have negatively affected my client’s current deal. Or, it could have gotten me removed from the transaction. Luckily, both were avoided. As an entrepreneur, there will undoubtedly be frustrating moments where you will reach a boiling point and be tempted to let it rain fire on a co-founder, employee, vendor, or other 3rd party. In these situations, don’t throw your MacBook against the wall or burn bridges with other people. Burning bridges is a short-term (emotional) solution with long-term implications. Of course, there will be situations where a relationship can not be salvaged, but those situations are rarities. And your startup will be better off the rarer they are. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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But in order to do that, your tech startup needs to ensure that (a) the intellectual property is owned by the startup, and (b) the co-founders who own the startup have proper incentives and rules to handle inevitable contingencies. Thus, your tech startup should have the following 7 legal documents: **Charter** File a charter with the secretary of state and get your startup incorporated. There’s nothing sexy about this document (for now), except that you [authorize the amount of your corporation’s shares](https://startuplawyer.com/incorporation/how-many-shares-authorized-stock-should-startup-company-incorporation) and set [par value](https://startuplawyer.com/incorporation/par-value-for-a-startup-companys-stock). Yet the charter is important because it creates the entity that will hold the IP your team is developing. Additionally, it’s difficult to make big-boy corporate maneuvers like issuing stock options and raising capital without incorporating. **Bylaws** *Who gets to vote? How are board resolutions passed? How are officers elected?* The bylaws determine the corporate governance of your startup, as they are the rules and regulations for the corporation’s internal administration and management. Startups often fail to draft bylaws, as [bylaws aren’t submitted to the secretary of state](https://startuplawyer.com/incorporation/why-bylaws-are-important-for-your-new-company). Don’t be one of these startups, unless you are 100% certain that your startup will never have any corporate governance issues. (I’m 100% certain that no one should be 100% certain of that.) **Shareholders Agreement** The shareholders agreement governs the relationship between the shareholders of the company and touches upon issues like a shareholder’s right to transfer his or her shares, rights of first refusal, redemptions upon death or disability, etc. This is another often overlooked startup document which can be invaluable in the event a co-founder leaves your startup. **Stock Purchase Agreement** A stock purchase agreement is made between each shareholder and the corporation, which regulates the transfer and sale of the corporation’s stock to the shareholder. It determines how much stock will be purchased, the price of the stock, and how the payment will be made (cash, IP, or another form or combination of consideration). A shareholder will typically make investment representations in this document, such as that he or she is acquiring the shares for investment purposes only and not for distribution. Stock purchase agreements come in two forms: Non-restricted and Restricted. Non-restricted stock purchase are the normal stock purchase agreements: You pay for your shares, they are yours. Restricted stock purchase agreements are used when a co-founder’s shares will vest over time. I wrote a blog post about [why your startup should consider vesting its stock](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time). **Technology Assignment Agreement** The technology assignment agreement is made between the shareholder and the corporation, where the shareholder assigns (sells, transfers, conveys, etc.) intellectual property to the corporation. A typical technology assignment agreement will list the IP to be assigned to the corporation on an exhibit to the agreement, with the shareholder representing he or she is the sole owner of the IP. Additionally, the shareholder will agree to execute all necessary documents to effectuate the IP transfer (e.g. documents with the [USPTO](http://www.uspto.gov)). The technology assignment agreement is usually referred to in the stock purchase agreement, as an IP transfer to the corporation can be consideration (full or partial) for the stock purchased by the shareholder. Keep in mind that technology assignment agreements deal with IP that was created by the IP owner **before** the owner became a shareholder of the corporation (such as IP created by founders pre-incorporation). **Invention Assignment Agreement** While the technology transfer agreement takes care of pre-incorporation IP, the invention assignment agreement works to assign IP created by founders post-incorporation over to the corporation. The shareholder acknowledges in this agreement that all IP developed solely or jointly with the other co-founders is the property of the corporation–not the property of the individual shareholder. This document can also be used to list all “prior inventions” that relate to the startup’s business in which the shareholder wishes to retain ownership. Other sections or clauses typically found with the invention assignment agreement are: confidential information clauses, at-will employment clauses, and arbitration agreements. **Employment Letter** An employment letter is made between the shareholder and corporation. Many startups overlook this document, but it can be useful to put the terms of each co-founder’s employment in writing. It can help set the tone and manage expectations of each co-founder. *Conclusion* These 7 legal documents, together or individually, won’t make your tech startup valuable. Your team creates the value. But these 7 legal documents will help ensure your tech startup retains its value and that your team’s hard work doesn’t go to waste. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** IP, startup, startup documents --- ### [Please Do Not Hire Google, Esq.](https://startuplawyer.com/startup-lawyer/you-dont-have-to-hire-me-but-please-dont-hire-google-esq-2) **Published:** August 7, 2007 **Author:** Ryan Roberts **Content:** You have many choices when selecting a lawyer to assist your startup company…us lawyers aren’t exactly an endangered species. But one decision you should never make is to draft legal documents yourself. These documents are just too critical to be drafted and–more importantly–issue spotted without legal education and experience.Because entrepreneurs are resourceful and capital tends to be scarce, they have a natural tendency to do their own legal work (Hello Google!). Entrepreneur, resist this urge.I realize forms and sample contracts can be found on the Internet or at your local bookstore. At best, these legal documents were drafted for different companies with different situations and usually in different jurisdictions. At worst, they are a basic template without many provisions and clauses your company needs.![Performing your own legal work is like performing your own surgery](http://www.thestartuplawyer.com/wp-content/uploads/2007/08/xray.jpg "Performing your own legal work is like performing your own surgery")If you conduct your own medical surgery and make a mistake, you may have time to call 9-1-1 and get patched up. But if you do your own legal work and execute documents, it’s too late.I know capital must be conserved, but keep in mind that spending $0 can end up being a terrible financial decision. When you hire a lawyer, you are paying for more than just a piece of paper. You are paying for the lawyer’s issue spotting, strategy, advice and execution.If the old adage goes “A lawyer who represents himself has a fool for a client.” What does that say about a ***non-lawyer*** who represents himself? ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [Fixed Fees: A Must Have When You Hire a Law Firm](https://startuplawyer.com/startup-lawyer/fixed-fees-a-must-have-when-you-hire-a-law-firm) **Published:** October 10, 2007 **Author:** Ryan Roberts **Content:** Lawyers and their law firms are increasingly making fixed fee or “project pricing” available to their clients. This is especially true for startup company clients, as they typically have well-defined legal issues and needs. There are 3 main reasons why your startup company should have a fixed fee arrangement with your law firm instead of being charged by the hour: **1. Ability to Predict (and Budget) Your Legal Expenses with Greater Accuracy.** There are a lot of unknowns when launching a startup and fixed fee pricing eliminates the uncertainty of how much your startup legal expenses will be. No surprise bills mean a more accurate cash flow forecast. **2. Paying for Product Rather than Time.** One of the main shortfalls of the “billable hour” is that it makes clients feel like they are paying for a lawyer’s time instead of a lawyer’s work product. Also, the billable hour makes clients very suspicious about their lawyer “padding” the bill.I like fixed free pricing because it allows me to represent a client without having to worry about or defend my actions, as the client focuses on the product rather than the clock. For example, when I call a client under a fixed fee arrangement, they know I am calling for a pretty good reason since I am not getting paid any extra for it.A recent real-world example is that a company with 2 partners hired me to draft a joint venture agreement. When I showed them the draft, one partner accused me of padding the legal bill because I included a bunch of “excess language” in the agreement. This partner did not remember our fixed fee arrangement. (Theoretically, any “excess language” I’m drafting for them hurts my bottom line.) I reminded this particular partner of our billing arrangement and we moved forward. **3. You won’t stop short.** When the meter starts to run high, clients tend to stop using their lawyer. Of course, the client needs to manage cash flow. But sometimes a client can disadvantage their company by not going all the way with their legal representation. (I am, of course, assuming the lawyer is not padding the bill.)Imagine you are building a bridge but stop the process after 75% completion. Well, you theoretically spent 75% of the costs to get you across the body of water. Now you are out those costs, but still can’t get across.Thus, there are situations when you will not receive a dollar for dollar benefit unless you complete your project. Legal representation is one of those situations, but it may not be as obvious as if you were building a bridge. A fixed fee arrangement ensures that you don’t fall into that trap. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [How to Avoid Being Ripped Off When You Lease Office Space, Part II](https://startuplawyer.com/contracts/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-ii) **Published:** October 15, 2007 **Author:** Ryan Roberts **Content:** This article is part II in a series [about leasing office space](https://startuplawyer.com/startup-issues/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-i). In part I, we discussed [how a tenant’s representative can help–and hurt–your office space search](https://startuplawyer.com/startup-issues/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-i). In part II, we’ll discuss some provisions to consider negotiating before your startup company signs a commercial office space lease. The following list is in no particular order and you don’t have to negotiate every item. **Rent.** Of course you’ll want to negotiate rent. Your tenant representative is better equipped than your lawyer to provide you with information about the market value of your commercial office space. Just remember that your tenant representative gets paid MORE if you pay MORE over the course of the lease (see “Term” below). Sometimes it’s better to negotiate harder on non-rent items because they can really limit your downside…which can be more beneficial than trying to squeeze out extra savings on rent. (See “Personal guarantee” below) **Term.** Commercial landlords hope (and pray) you will sign a 5-year lease. It’s like going to a car dealership for a used sedan and coming out with a brand new H2. It’s just too much and you will be on the hook for more than you need, or worse, more than you can afford. Try negotiating that initial term down from 5 years to 3 years with a couple of 1-year options at your sole discretion. (Note: Your tenant representative will not be happy with this because his or her commission will likely be reduced if you sign up for a shorter guaranteed term.) ***Entrepreneurs often make the mistake of viewing their lease as a monthly rent obligation instead of a total rent obligation.*** For example, a $2,500 per month lease is really a $150,000 contract if your term is 5 years. The same monthly lease yields a $90,000 total obligation with a 3-year term. Go for the shorter term. It will provide your company flexibility and reduce its future lease obligations. A reduced initial term can also solve a huge problem caused by having to personally guarantee the lease. **Personal guarantee.** When landlords pay for a large amount of tenant improvements, personal guarantees of the lease are commonly requested…and usually required. And sometimes landlords will require personal guarantees even if they provide minimal tenant improvements. But a landlord may be willing to let the personal guarantee burn off after a certain period (before the initial term ends).Unfortunately, most startup companies get suckered into the “standard” 5-year commercial lease and a 5-year personal guarantee. And since most startup companies do not make it past the 3-year mark, you can see why the personal guarantee is potentially a huge liability and thus a huge issue. For that reason, I recommend that your startup company NOT sign any lease where your personal guarantee extends beyond 2 or 3 years. **Renewal Options.** The option to renew should be yours and yours alone….or else you really don’t have an option and your company will be forced to re-negotiate with your landlord. Remember that the landlord would rather have you continue to lease the office space instead of searching for a new tenant. Even so, landlords will often try to jack up the rent after the initial term. They hope that your company would rather pay much higher rent than move. Thus, set out the option period’s rent ahead of time, and at a reasonable figure, so your company can make plans to either vacate or remain at the premises when your initial term ends. **Early Termination/Buyout.** Your business skyrockets. Your business tanks. In either event, your company now needs to get out of the office space lease. The quickest, cleanest, and best way to accomplish this is through the use of an early termination provision. Basically, your startup company would pay a predetermined lump sum to the landlord to walk away from the office space lease. If the lump sum isn’t completely astronomical, it can be a valuable provision for you…or at least limit your downside. **Late Charges.** Just make sure you have a grace period for paying your rent late, as you’ll be busy and inevitably forget to pay the rent by the 1st of the month. Anything over 3 days is great and 5 days is optimal. Also make sure that the late fee isn’t so large that it ends up feeling like a penalty. Late charges should promote on-time rent payments rather than being a windfall for your landlord. **Holding Over.** If you remain in the office space after your initial term without executing a new lease or option term, you are a “holdover tenant.” A typical holdover provision might call for “consequential damages” to be paid from the tenant to the landlord. Try to eliminate these damages or at least set a cap on them. (Even better, don’t be a holdover tenant.) **Security Deposit.** A landlord has a legitimate interest in getting a security deposit since most startup companies have zero net worth. Often, startup companies are expected to pay large security deposits. A landlord may be willing to forego a security deposit (or at least reduce the amoutn of the security deposit) if the office space is in low demand. Try and negotiate that the security deposit will earn interest which belongs to your startup company or that the amount of the security deposit declines over the life of the lease. Otherwise, you are giving the landlord an interest-free loan. **Option for additional space.** If your statup company needs more space and you want to stay in the building (or go to another property of the landlord), your landlord will likely be willing to let you out of your current lease without penalty. But just to be safe, consider inserting this provision into your office space lease. You want to avoid giving your landlord any leverage over your startup company, even in situations where the landlord will benefit from such a move. So get it in writing. **Relocation.** Sometimes I’ll find a lease where the landlord wants the right to require the tenant to relocate to another office in the landlord’s building. Obviously, this has negative consequences for the tenant. If you are willing to keep this provision in the lease, make sure that you will be fully compensated for the economic damages you will suffer from the relocation (moving, advertising, printing, tenant-improvements, loss of business, etc.). **Common Area Maintenance (CAM)**. Typically found in retail leases but sometimes found in office space leases, CAM charges are paid by the tenant for the shared areas of the building or development. Your tenant representative should be able to give you a good idea if the quoted CAM charges are too high. I recommend getting these charges capped so that you aren’t surprised at a later date. Additionally, be sure that the landlord spells out exactly what expenses they are including in CAM charges. Sometimes landlords can be sneaky. **Permitted Uses.** Avoid any language that restricts the permitted use of your commercial office space. Such a clause may restrict your future business activities in addition to limiting the amount of prospective assignees and subleasees. **Tenant Improvement Allowance.** A tenant improvement allowance is a common concession by the landlord. Basically, the landlord will give the tenant a credit for $X, usually based on the office space’s square footage, to prepare the office space for the tenant’s use. Sometimes all the office space needs is new carpet and paint (which, by the way, you shouldn’t have to negotiate for). Be sure that your tenant improvement allowance will be enough to cover your expected buildout costs. Other issues that you should address are: (a) whether or not the Americans with Disabilities Act of 1990 (ADA) will impose construction requirements that you’ll have to fund, (b) whether you are entitled to a cash rebate for any buildout that falls short of the allowance, and (c) if the landlord will handle the build-out for you, that the landlord will use competitive bidding. **Insurance.** Most leases require the tenant to maintain liabiity and casualty insurance. And I strongly recommend all tenants meet with a commercial insurance agent and discuss their insurance needs, whether or not the lease calls for insurance. Lease obligations cocnerning liability and casualty insurance should probably not be the subject of significant negotations. Just make sure, via your attorney and insurance agent, that the insurance and amounts are customary in such a setting and that any use of your insurance proceeds are contingent on the landlord’s use of his or her insurance proceeds to restore the building. ————– This list will continue in [part III](https://startuplawyer.com/startup-issues/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-iii) of How to Avoid Being Ripped Off When You Lease Office Space. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Commercial Contracts --- ### [How to Avoid Being Ripped Off When You Lease Office Space, Part I](https://startuplawyer.com/contracts/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-i) **Published:** August 17, 2007 **Author:** Ryan Roberts **Content:** A commercial office space lease is a complicated legal document and is usually your startup company’s first big contract. A real estate broker is a great resource to find available office space and determine the market rents. However, your lease’s location and rent provisions account for about only 10% of the language in a commercial office space lease. The other 90% is not boilerplate language you can simply shrug off. Most of it will undoubtedly contain provisions that can will have financial ramifications for your company. Why would your real estate broker avoid this other 90%? You have to understand how the commercial real estate game works. The owner of the building hires a real estate broker (“landlord’s rep”) to lease out the office space. When a space is rented, the landlord’s rep receives a fee equal to 6% of the total rent due under the lease. However, if the tenant hired his or her own real estate broker (“tenant’s rep”) this 6% fee is split between them both. Four main points should stick out: **1. The landlord’s rep does not want you to be represented by a real estate broker.** If you call the landlord’s rep directly, not only does he or she believe they can take you for more under the lease–he or she will get paid DOUBLE for doing so. **2. The building owner is paying a 6% commission no matter what**. You aren’t saving the landlord any money if you don’t hire a tenant rep, so don’t think going solo provides more room to negotiate. **3. Your tenant rep gets paid by the landlord, not you.** The great part about tenant rep’s is that they don’t charge you. Thus, you should hire a tenant rep because you will get knowledge about the commercial real estate market without getting a bill. **4. Both the landlord’s rep and your tenant rep get paid only when you sign the lease.** This last point is the main reason why real estate broker’s (tenant reps) are so reluctant to negotiate the other 90% of the commercial office space lease. The more you push back on the landlord, the more likely a deal will not be made. They do not want to spend an extra week or two with you to find new space. Your commercial rep would rather you not hire an attorney for the other 90% and just blindly accept it. Tenant reps do not like working with attorneys and typically refer to us as “deal killers” (although they really mean “commission killers”). Whenever I work with a client on a deal, whether a real estate lease or company acquisition, my only concern is to get it done on favorable terms that protect my client. If I advise my client not to sign an agreement because of a particular provision, I’m not trying to kill the deal. It’s just simply a deal that my client should not enter into. Thus, if you want the best office space deal possible and avoid being ripped off when you lease office space, you have to hire BOTH a tenant rep and an attorney. That is Step 1.[](http://www.thestartuplawyer.com/office-space/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-ii) [Part II](https://startuplawyer.com/startup-issues/how-to-avoid-being-ripped-off-when-you-lease-office-space-part-ii) of this series will focus on the commercial office space provisions that make up the other 90%, why it matters, and what to consider when you negotiate. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Commercial Contracts --- ### [How to Know You Have Found a Great Startup Lawyer](https://startuplawyer.com/startup-lawyer/how-to-know-you-have-found-a-great-startup-lawyer) **Published:** August 21, 2007 **Author:** Ryan Roberts **Content:** A reader emailed me asking: How do I know I have found a great startup lawyer? And judging by this blog’s most frequent search keywords, you may be asking yourself that question, too. Evaluating your startup lawyer (or any lawyer for that matter) can be a difficult task because a lawyer’s work product tends to be intangible. That is, if you hired someone to build you a bookcase you could test its craftmanship in a matter of seconds. Not the case for the startup lawyer that typically deals in Word and PDF. Therefore, it’s good idea to evaluate your startup lawyer in the following ways to determine if you have found a keeper. **Go Small.** Lawyers from small law firms, particularly in the 1-5 lawyer range, tend to make the best startup lawyers. In addition to usually being more cost-effective, small firms tend to understand the mind of the entrepreneur since they are not that far removed from being a startup themselves. Most large firms will of course disagree and attempt to appeal to entrepreneurs by looking 21st century. Typical dog and pony show. Seek an attorney that will truly understand what you are going through as a startup. It’s tough to do that if your office is on the 25th floor and a car service takes you home from work. **Referrals to Other Professionals.** A great startup lawyer will suggest you seek the advice of other professionals. Whether the referral is for an accountant, financial planner, banker or even a lawyer in a different specialty, a great lawyer will recognize your non-legal needs in addition your legal needs. Your lawyer should want to help you assemble a professional team as it increases the chances your startup company will succeed. A short-sighted lawyer will try to keep all of your capital earmarked for professional fees with him or her. But the lawyer with a long-term vision for your company would rather you spread your initial professional fees around (even if it means billing less initially) with the thought that your company will then be more likely to succeed. **Prioritizing Your Legal Needs.** Finally, a great startup lawyer needs to prioritize your startup company’s legal needs, lay them all out on the table and say something like “these issues HAVE to be addressed now, these issues can wait for now but must be taken care of eventually.” Your startup company will have a number of legal needs and since startup funding tends to be scarce, handling all of them will likely not be feasible initially. A great startup lawyer will rank your legal needs, get the most important issues handled and the navigate you through the rest of the list as your capital allows. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [You're Nobody Till Somebody Steals Your Startup Idea](https://startuplawyer.com/intellectual-property/youre-nobody-till-somebody-steals-your-startup-idea) **Published:** March 21, 2008 **Author:** Ryan Roberts **Content:** Many entrepreneurs worry that someone, whether a potential partner, a VC, or a boogeyman will steal their startup idea. If you are worried about having your startup idea “jacked,” I recommend you take a deep breath and relax a bit–your startup idea isn’t worth that much. [ Paul Graham](http://www.paulgraham.com/bio.html), in an [essay derived from a talk at Startup School 2005](http://www.paulgraham.com/ideas.html) had this to say about the value of your initial startup idea: > I think people believe that coming up with ideas for startups is very hard– that it must be very hard– and so they don’t try do to it. They assume ideas are like miracles: they either pop into your head or they don’t. > > I also have a theory about why people think this. They overvalue ideas. They think creating a startup is just a matter of implementing some fabulous initial idea. And since a successful startup is worth millions of dollars, a good idea is therefore a million dollar idea. > > If coming up with an idea for a startup equals coming up with a million dollar idea, then of course it’s going to seem hard. Too hard to bother trying. Our instincts tell us something so valuable would not be just lying around for anyone to discover. > > Actually, startup ideas are not million dollar ideas, and here’s an experiment you can try to prove it: just try to sell one. Nothing evolves faster than markets. The fact that there’s no market for startup ideas suggests there’s no demand. Which means, in the narrow sense of the word, that startup ideas are worthless. You should still take precautionary steps to protect your idea even though Paul Graham (and I) don’t assign a lot of value to your startup idea. The best way to protect your startup idea is to keep it secret. Help prevent your startup idea from being stolen by being selective with both the amount of information you reveal and to whom you reveal such information. A nondisclosure agreement will help, but any piece of paper drafted by a lawyer like myself is only a reactionary document–it only benefits you after your idea has been stolen. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Intellectual Property **Tags:** IP, NDA, startup --- ### [Stock for Fees](https://startuplawyer.com/startup-lawyer/stock-for-fees) **Published:** April 28, 2009 **Author:** Ryan Roberts **Content:** Recently I’ve written about potential conflicts of interest between you and your startup lawyer. Now for the main event: Stock for Fees. This situation arises when a startup company offers stock to a lawyer in exchange for legal services. I’ve derived the following 2 postulates to explain why startups and lawyers agree to this setup: > 1\. Startups are broke. > 2\. Lawyers are expensive. For the same reasons that your [startup lawyer should not be on your board directors](https://startuplawyer.com/boards-advisors/should-your-startup-lawyer-also-be-a-director), stock for fees may affect your startup lawyer’s ability to give unbiased legal advice. Furthermore, Rule 1-8(a) of the ABA Model Rules of Professional Conduct provides that a lawyer may not enter into a transaction with a client unless: (1) The transaction and terms on which the lawyer acquires the interest are fair and reasonable to the client and are fully disclosed and transmitted in writing to the client in a manner which can be reasonably understood by the client; (2) The client is given a reasonable opportunity to seek the advice of independent counsel in the transaction; and (3) The client consents in writing thereto. Thus, if your startup agrees to a stock for fees representation, you will likely sign a conflict of interest waiver from the firm stating that you were advised and had the opportunity to seek another lawyer about the stock for fees deal (along with other stock for fees conflict language boilerplate). The most common stock for fees legal work is (a) incorporation & other related “getting launched” issues, and (b) financings. Incorporation stock for fees deals are usually set up as an agreed to amount of legal work (e.g. “$10,000 of legal fees billed at $400 hourly”) in exchange for an equity percentage of the startup. Startups that are about to go after funding or maybe even have a term sheet in front of them may offer a small percentage of stock in exchange for the law firm deferring legal fees until the financing closes. In my practice, I have yet to do a stock for fees deal. The main reason I haven’t thus far is that I don’t want to add “GP of Early-Stage Fund” to my job description. That is, before agreeing to a stock for fees deal I would have to conduct a due diligence evaluation just like a VC would. (Of course, having a couple term sheets from VCs might preclude such a due diligence investigation.) I may not be contributing cold hard cash to the startup, but my time is worth something. Instead of working for equity, I could be working on another paying client’s deal, blogging, or riding [Tony Hawk’s Big Spin](http://en.wikipedia.org/wiki/Tony_Hawk's_Big_Spin) with my son. Plus, malpractice liability doesn’t go away if I don’t receive cash consideration for legal services. In any event, both startup and lawyer should be prudent before agreeing to a stock for fees deal. And a startup should never take it personal if a lawyer or firm won’t do a stock for fees deal. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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I can guarantee – with 100% certainty – that this model will be wrong. As an investor, I don’t really care about this; rather I want to see how you are thinking about getting to “the next stage” of your business. You get to define the next stage, what it’ll cost you to get there, and what things will look like when you get there. I think this is critical advice every entrepreneur needs to follow. And the post reminded me of some of the things potential clients send me. About once a month, a startup founder will send me a “5-year business plan” with a cap table that anticipates 4+ rounds of funding. Typically, the future cap table will estimate what each founder’s future ownership will be down to the 1/100th of a percent. I suspect that the majority of these 5-year business plans come from entrepreneurs with corporate/consulting/finance backgrounds. These new entrepreneurs are quite skilled at producing such documents and are eager to use these skills at their startup. While such skills are an asset, their importance is minimal in the early stages of a startup. As an attorney, I really don’t need to see multiple excel worksheets of projections. And an entrepreneur, regardless of their background, does not need to be creating a projected cap table with four rounds of funding. If you do this, you are spending time working on something that will be incorrect. As Brad mentions in his article, work on the implementation of your idea. How is your startup going to reach the next stage? How are you going to sell, etc.? Don’t oversmart your business startup’s plan. Figure out the answers to these shorter-term questions and the long-term numbers and cap tables will work themselves out. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** business plan, cap table, entrepreneur, startup company --- ### [How to Handle Startup Idea Theft](https://startuplawyer.com/intellectual-property/how-to-handle-startup-idea-theft) **Published:** December 8, 2009 **Author:** Ryan Roberts **Content:** Have you ever been jacked? The only time I recall being a victim of theft was during undergrad at [USC](http://www.usc.edu). Someone broke into my car while it was parked in the garage of my downtown L.A. apartment complex and the bandit(s) made off with my CD collection. While I was relatively unscathed by the theft (hey, there were some pretty great CDs in that collection), I still felt immense anger from the incident. Thus, I can only imagine the amount of rage a founder might experience when their startup idea is stolen from them. On the topic of startup ideas and theft, the frequent mantra is: “Team + Implementation > Idea” or “Ideas are worthless.” And while helpful, these mantras only offer solace to the startup idea theft victim, rather than provide guidance going forward. So how should founders act post startup idea theft? How does a founder properly channel the rage? I came across an article on this very topic while checking my rss feeds this morning: Someone Stole My Startup Idea. In the article, serial entrepreneur [Steve Blank](http://venturebeat.com/author/steve-blank/) provides a candid look at how he dealt with having his startup idea stolen (slides and all) and ultimately left his startup idea thief “in the dust.” Steve offers this piece of advice in his “Never Get Even, Get Ahead” approach: > Successful companies are about the learning, discovery, iteration on your initial ideas. If someone can do a better job iterating hypotheses and executing than you can, you deserve to fail. Steve understood that his startup idea theft didn’t mean the end of his startup. And that thinking allowed his startup to persevere. Check Steve’s full story here. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Intellectual Property **Tags:** startup, startup idea --- ### [5 Common Founder Mistakes](https://startuplawyer.com/equity/5-common-founder-mistakes) **Published:** October 23, 2009 **Author:** Ryan Roberts **Content:** This is a re-post of an article that I wrote about common founder mistakes for StartupLucky.com and [Killerstartups.com](http://www.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 and then obtaining signatures on a NDA, a founder should use that time to implement the unique idea. It’s highly likely the idea isn’t unique, and a founder could turn off some good investors/partners/mentors by [asking for a NDA signature](https://startuplawyer.com/venture-capital/why-a-vc-will-take-a-lighter-to-your-nda). 2\. **Not Vesting Founders’ Shares**. It’s easy to believe that [vesting your own founder shares](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time) doesn’t help you, but take a look around the founder table. Now think how you’ll feel if your co-founder decides to try out for American Idol and take his 33% of his vested ownership with him to Hollywood while you and the rest of the founders pound keyboards all day and night. 3\. **Forgetting to Make the 83(b) Election**. If you decide to vest your founder shares, don’t forget to make an 83(b) election with the IRS. You have 30 days to do so after purchasing your founder shares, but there’s not reason to wait more than 1 day post-purchase. 4\. **Issuing Preferred Stock to Minor Seed Investors Like Your Uncle Bob**. Sure, [Y Combinator](http://ycombinator.com/) and [TechStars](http://www.techstars.org/) get preferred stock for their $18,000 seed investment, but your Uncle Bob (probably) is not Paul Graham or David Cohen, Uncle Bob is not running a startup mentorship program for your team, nor does Uncle Bob have a massive amount of relevant startup industry connections. 5\. **Concentrating Only On Valuation When Raising Capital**. There’s a reason why term sheets are several pages long. Keep reading after you get halfway down the first page to “[pre-money valuation](https://startuplawyer.com/venture-capital/pre-money-and-post-money-valuation)”—there are many important terms on subsequent pages. Also, consider whether the investor or investor group is a good fit for your startup. Don’t choose an investor group solely by the highest pre-money number, if you are lucky enough to have a few term sheets in front of you. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table **Tags:** 83(b), founders, NDA, pre-money, startup, vesting --- ### [White-Label is the New Black for Startups](https://startuplawyer.com/contracts/white-label-is-the-new-black-for-startups) **Published:** December 15, 2009 **Author:** Ryan Roberts **Content:** I’ve been seeing a lot of white-label deals for startup clients in the past couple months. A white-label product or service is a product or service produced by one company (the startup) that another company rebrands for their own use or distribution. The company desiring to rebrand the startup’s product or service may just want to overlay their custom skin on the startup’s app. More frequently, the company will also request the development of new features for the white-label app. Here’s my completely unsupported thesis of why large companies are approaching startups to do white-label deals: 2007 – Large company learns about social media and smartphones. 2008 – Large company learns about social media apps and smartphone apps. 2009 – Large company determines it would be nice to have large company-branded social media and smartphone apps & that it would be easier to strike a deal with a startup rather than start from scratch. White-label deals can be great for startups because it allows the startup to obtain cash, recognition, and/or a strategic partner. The startup can expand their network and extend their runway without giving up equity. And if the startup is hoping to attract venture capital or other investment, the client and revenue is a bonus. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Commercial Contracts **Tags:** private label, runway, startups, white label --- ### [Up Up Down Down Left Right Left Right B A Start](https://startuplawyer.com/equity/up-up-down-down-left-right-left-right-b-a-start) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** 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](http://en.wikipedia.org/wiki/Contra_(video_game)). The [Contra secret code](http://en.wikipedia.org/wiki/Konami_Code) let the video game player begin Contra with 30 lives. 30 lives on Contra was virtual invincibility. Enter the secret code, you will beat the game. (Presuming of course, you have an ounce of video game skills.) Unfortunately, there is no 30 lives cheat code that can be woven into your startup legal documents. Whether you got your documents on the cheap from LegalZoom or you paid top dollar for a large law firm to draft them, your legal docs are not a shield of invincibility. Your startup can have the prettiest set of legal documents ever drafted and your startup still may not beat the game. ***Instead, startup legal documents are a safety net.*** What if a co-founder decides to bolt? Good startup legal documents make sure your startup doesn’t free fall to the ground (i.e., [vesting schedule and company repurchase option](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time)). What if your startup’s rockstar developer claims ownership of the startup’s IP? Good startup legal documents make sure your startup doesn’t go down in flames (i.e., [inventions assignment agreement](https://startuplawyer.com/startup-law-glossary/inventions-assignment)). Legal documents assist your startup along its path, but they don’t guarantee your startup will be successful. I’m a startup lawyer and earn my living drafting documents for startups. But I never have–and never will–draft a legal document containing anything equivalent to the Contra 30 lives secret code. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Founder Equity, Vesting & Cap Table **Tags:** startup documents, startup law --- ### [White-Label Mobile App Users: Who Owns Them?](https://startuplawyer.com/contracts/white-label-mobile-app-users-who-owns-them) **Published:** February 3, 2010 **Author:** Ryan Roberts **Content:** As mobile applications continue to gain popularity, more [white-label](https://startuplawyer.com/startup-law-glossary/white-label) mobile app deals are [popping up](https://startuplawyer.com/startup-issues/white-label-is-the-new-black-for-startups). And while both the startup and the large company will certainly contract with respect to intellectual property asset ownership, an asset that may be overlooked is the ownership of the white-label mobile app’s users. Worst-case scenario, ownership of the white-label mobile app users can be insurance against the large company bailing out of the white-label deal. **Nothing New** The importance and value of a mobile app’s users isn’t novel. I’m pretty sure Alamofire, maker of Gowalla ([ex-Southlake represent](http://www.istockanalyst.com/article/viewiStockNews/articleid/3217900)), recognizes this importance and values each user they acquire. And I’m also pretty confident Alamofire owns its Gowalla users. But Gowalla isn’t a white-label app. Different issues and incentives apply. **The White-Label User Ownership Wrinkle** At first glance, large company ownership of the white-label app’s users seems like common sense: the white-label app is branded as the large company’s app, so ownership of its users should flow to the large company. But depending on the terms of the white-label deal, the mobile app startup should consider staking at least a joint-ownership claim of the white-label app’s users. In most white-label deals, the large company doesn’t want to bet their white-label app’s success on an unproven startup. Additionally, the large company has their own brand reputation at stake and most likely just isn’t used to working with small startups. Thus, the large company will push for various provisions in the white-label agreement that will allow them to terminate the agreement early (of course, the large company will not want to extend these same early-termination provisions to the startup). Furthermore, the large company is typically not willing to throw a bunch of immediate cash the startup’s way. **Early-Termination Issues** The large company will likely push for a short initial term and attempt to include various events that would each trigger an early-termination right for the large company. The startup will be held to various performance obligations and representations & warranties. Additionally, other early-termination provisions may exist in a service level agreement. A trigger of any such early-termination provision and the startup could be given the boot…regardless of how successful the white-label deal is for the large company. Based on the white-label agreement, the large company could find it in their best interests to exercise early-termination and replace the startup with another company or in-house developers. If a startup gets paid via a revenue share arrangement, the potential exists for the large company to exercise their early-termination rights and get their white-label app’s users free-of-charge (or worse, the IP). But even if the white-label agreement vests the startup with all IP ownership, including both the startup’s mobile app and the white-label app, the large company could still receive the free benefit of the jointly-grown user base. **The Distribution Channel** A requirement that the large company remove the white-label app from the various mobile app distribution channels will not prevent the large company from getting a free mobile-app user base. The large company could simply replace the white-label mobile app with a new mobile app via an “update” to all the existing white-label app users. Therefore, a large company should not be able to replace the white-label app, unless the startup commits some pretty serious performance-related offenses or rep & warranty breaches under the white-label agreement. **Conclusion** Heard of the term “[starter wife](http://answers.yahoo.com/question/index?qid=20080821143433AADS6XI)?” Well, a startup could be the “starter developer” for a large company if too many large company-favorable provisions exist in the white-label mobile app agreement. As a general practice, white-label mobile application agreements should include provisions concerning ownership of the white-label mobile application’s users. Additionally, ownership (sole or joint) of the white-label mobile app’s users can be a hedge against the large company terminating your white-label agreement in good times and bad. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Commercial Contracts **Tags:** IP, mobile applications, white label --- ### [It Is Not Your Baby Anymore](https://startuplawyer.com/incorporation/it-is-not-your-baby-anymore) **Published:** March 8, 2010 **Author:** Ryan Roberts **Content:** Many entrepreneurs treat their startup like their baby. And rightfully so. The entrepreneur has likely shed blood, sweat, tears, and some cash on the startup, therefore the entrepreneur wants to keep the startup in its grasp and control at all times. But once you issue equity in exchange for services or investment, your startup isn’t your own anymore. You now have joint-custody. Sure, you can (and should) still care for and nurture your startup as if it were only yours. But face it, you are slowly selling off your baby when you issue equity. Most entrepreneurs get that, but there are still some that view any other equity holders (key employees, consultants, investors) as “[The Others](http://en.wikipedia.org/wiki/Others_(Lost))” and remain in a constant state of fear that all the other equity holders are going to steal their startup from them. Being vigilant about keeping control of your startup is fine. You should always be prudent about any equity issuance. But being paranoid about it is only going to paralyze you from either (a) teaming up with people that can assist in the development of your startup, or (b) bringing in the necessary capital to take your startup to the next level. In order to make your startup work, you are going to have to work with many different types of people, including employees, contractors, consultants, and maybe even investors. Be vigilant about issuing equity to these people, not paranoid. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** equity, startup --- ### [If I Launched a Startup](https://startuplawyer.com/incorporation/if-i-launched-a-startup) **Published:** March 17, 2010 **Author:** Ryan Roberts **Content:** Here’s what I’d do in the beginning if i launched a startup: ## Startup Incorporation (1) Entity Choice: [Corporation](https://startuplawyer.com/incorporation/the-5-second-guide-to-choosing-your-startups-legal-entity) or [Corporation](https://startuplawyer.com/venture-capital/why-startups-are-corporation-for-venture-capital) (2) State of Incorporation: [Delaware](https://startuplawyer.com/incorporation/top-5-reasons-to-incorporate-in-delaware) (3) Authorized Shares in Charter: [10,000,000 Shares](https://startuplawyer.com/incorporation/how-many-shares-authorized-stock-should-startup-company-incorporation) (4) Type of Shares: [Common Stock](https://startuplawyer.com/startup-law-glossary/common-stock) (5) Par Value of Common: [$0.0001](https://startuplawyer.com/incorporation/par-value-for-a-startup-companys-stock) (6) Initial Founders Issuance: [8,000,000 Shares](https://startuplawyer.com/incorporation/par-value-for-a-startup-companys-stock) (7) Founders Equity Split: [Depends on the Team, But Quickly](https://startuplawyer.com/incorporation/how-to-split-the-startup-founder-equity-pie) and [After the Awkward & Difficult Conversations](https://startuplawyer.com/startup-issues/keep-your-startup-co-founder-closer) (8) Vest Founders Shares?: [Hell Yes](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time) (9) Vesting Schedule for Founders Shares: [4 years with a One Year Cliff](https://startuplawyer.com/incorporation/what-is-four-years-with-a-one-year-cliff) (10) Consideration for Founders Shares: [Cash & IP](https://startuplawyer.com/incorporation/you-cant-spell-corporation-without-ip) (11) Handling of “Lost Founders”: [Lock Down the IP (then Wish Them Well)](https://startuplawyer.com/incorporation/lockdown-lost-founder-ip) ## Raising Capital for your Startup (1) Length of NDA: [0 pages](https://startuplawyer.com/venture-capital/why-a-vc-will-take-a-lighter-to-your-nda) (2) Fees Paid to Pitch my Startup: [$0](https://startuplawyer.com/startup-issues/never-ever-ever-ever-pay-to-pitch) (3) Investors: [Accredited Investors](https://startuplawyer.com/seed-rounds/life-is-too-short-to-deal-with-non-accredited-investors) (4) Structure of First Capital Raise up to MM: [Convertible Notes](https://startuplawyer.com/seed-rounds/how-convertible-debt-works) ## If you remember one thing… Most startup law “gotchas” aren’t mysteries, they’re just incentives and trade-offs hiding in plain English. The move is to stop optimizing for the term you can brag about and start optimizing for the term that actually changes your outcome: who controls the next decision, who takes the downside, and what has to happen for you to get paid (or to keep building). - Circle the one or two provisions that create real leverage (and ignore the rest until those are settled). - Ask, “What does this let the other side say ‘no’ to?” If the answer is “a financing, a sale, or your ability to hire/fire,” it’s material. - Treat ‘market’ as a starting point, not an argument. Your leverage comes from timing, alternatives, and how badly the other side wants *this* deal. - Before you sign, translate the key terms into one sentence each you’d be comfortable explaining to a future cofounder, board member, or acquirer. If you’re about to sign something and you can’t tell quickly who has the veto and who eats the downside, pause. That’s the moment to get clarity, not after the document becomes your new “business partner.” ## Conclusion If you’re looking for a theme across all of this, it’s that the early legal and financing moves aren’t about being fancy. They’re about buying yourself room to iterate without stepping on landmines that are expensive to undo later. Delaware C-Corp, clean founder vesting, lightweight mentor/advisor arrangements, and simple seed financing documents are all just different ways of saying the same thing: keep the cap table and governance straightforward until you’ve earned the complexity. The practical takeaway: optimize for momentum and clarity, not for headline terms. Get incorporated when you’re truly committing, paper the founder relationships like grown-ups, choose mentors for signal and time (not just brand), and raise from people who can actually fund you without making your life weird. Then go build. Everything else is commentary. - Keep your documents and ownership clean. - Avoid premature complexity (especially in seed financings). - Pick advisors and programs that increase execution speed, not meetings. - Spend your early energy on product and customers, not legal theater. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** Incorporation, raising capital, startup --- ### [November Rain](https://startuplawyer.com/incorporation/november-rain) **Published:** November 1, 2010 **Author:** Ryan Roberts **Content:** [Axl Rose](https://en.wikipedia.org/wiki/Axl_Rose) started working on “[November Rain](https://www.youtube.com/watch?v=8SbUC-UaAxE)” in 1983, about eight years before [Guns N’ Roses](https://gunsnroses.com/) released it. Early on, he had a piano-only version. By 1991, the final track was a full-scale power ballad that fit the moment and the band’s sound. What worked as a concept in 1983 still worked in 1991, but only because it was refined and reworked for the reality of 1991. The core idea stayed intact, while the execution evolved. ## Why long stealth periods are risky Occasionally, I hear from an entrepreneur who has been working on a startup idea for five or more years, mostly solo, and is now “almost ready” to launch. The longer you keep a startup in stealth mode before a public launch, the harder it becomes to stay relevant to the market you are trying to serve. Markets move. Customer expectations shift. Competitors learn, ship, and reposition. Even the problem you set out to solve can change shape as new tools and behaviors emerge. Without real feedback, it is easy to keep building for a version of the world that no longer exists. - **Product risk:** you optimize for assumptions instead of validated needs. - **Timing risk:** you miss the adoption window or a platform shift. - **Go-to-market risk:** you delay learning who buys, why they buy, and what makes them switch. - **Motivation risk:** multi-year solo builds are hard to sustain without external proof points. “November Rain” is the exception, not the rule. Most projects do not get better simply because they take longer. They get better because they are shaped by reality and iterated toward what people actually want. ## How to stay relevant while building You can build quietly without building blindly. The goal is to reduce downside while still learning fast. - **Define the shortest path to real feedback:** ship a narrow version, a demo, or even a landing page that tests messaging. - **Talk to customers weekly:** collect objections, language, and what people already do instead. - **Time-box stealth:** set a date to publish something, even if it is imperfect. - **Measure relevance:** track waitlists, conversions, usage, and retention, not just lines of code. - **Keep the idea flexible:** treat early plans as hypotheses, and update them when the world changes. **Bottom line:** long development cycles are not automatically a sign of quality. If you are going to take your time, make sure you are also collecting real-world signal along the way, so your launch matches the market you are launching into. Sure, there’s a chance your long development cycle turns into something as epic as November Rain, but more likely than not, a long stealth mode turns your startup into a time capsule. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** november rain, startup --- ### [The $10,000 Sentence](https://startuplawyer.com/startup-lawyer/the-10000-sentence) **Published:** December 13, 2010 **Author:** Ryan Roberts **Content:** You’re building a startup, and everything is scarce, especially capital. So when a legal issue pops up (like incorporation), it’s normal to do a cost-benefit analysis before hiring a startup lawyer. I understand the instinct to make sure you’re getting value for a small budget. I did the same thing when I hired a large firm for my own startup. As a startup lawyer, I’ve also fielded requests for a “per page” breakdown of legal fees. ## What you’re really paying a startup lawyer for A per-page metric is one way to measure output, but it ignores the main reason to hire legal counsel in the first place: judgment and advice. Great legal work often looks like small edits, a single risk callout, or a quick “do not do this” message that saves you from a cap table mess, a broken deal, or months of distraction. That leverage is hard to see on an invoice, but it is usually the entire point. ## Examples of “$10,000 sentences” I’ve drafted and reviewed plenty of financing documents over the years, but some of the most valuable work product I’ve delivered to founders is just a sentence or two, said at exactly the right moment, such as: - *“That option grant is fine, provided we vest the shares.”* - *“Burn the [term sheet](https://startuplawyer.com/startup-law-glossary/term-sheet) unless they delete that provision.”* - *“That’s completely out of [market](https://startuplawyer.com/startup-law-glossary/market-standard) for your situation.”* Those sentences are worth much more than the theoretical 0.1 hours billed on an invoice. On a strict value basis, a three-second sentence like that could be worth $10,000 (or more), while the rest of the document work might feel like $50. Before I get the hate emails, I am not saying I should be paid $10,000 for a sentence. I’m pointing out what founders are actually buying when they hire a good startup lawyer. A single piece of advice can prevent you from granting equity that never vests, signing a term sheet with hidden economics, misclassifying workers, or creating an IP ownership hole that later shows up in diligence. Each one of those issues can cost far more than the legal fee it took to avoid it. Sometimes a “$10,000 sentence” is the difference between a client failing in month three and closing a Series A a year later. ## How to get more value from your startup lawyer If you want more “$10,000 sentences” and fewer billable hours, focus your lawyer’s time on decisions and risks, not on hunting for facts you already have. A few practical ways to do that: - **Send context up front:** a one-paragraph summary of the deal, the goal, and what you want to be true when it is over. - **Ask the right questions:** “What is the biggest risk here?”, “What would you push back on?”, and “What is market?” - **Use clean inputs:** keep your cap table, equity docs, and key contracts organized so diligence is fast. - **Prioritize:** tell counsel what matters most to you (speed, control, economics, or relationship dynamics). - **Request plain-English:** ask for a short summary of red flags and recommended edits. The “,000 sentence” is why, no matter how many “free” legal documents are out there from Google, any online kit, or an [AI tool](https://chatgpt.com) that can generate templates on demand, good legal counsel is hard to replace. Documents are inputs. Advice is the multiplier that tells you when a document is fine, when it is missing something important, and when it is dangerous. ## Bottom line Long live the $10,000 sentence, and the founders who know to optimize for judgment instead of page count. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) **Tags:** Startup Lawyer --- ### [Accelerator Mentors over Money (and Office Space)](https://startuplawyer.com/seed-funding/accelerator-mentors-money-office-space) **Published:** October 9, 2010 **Author:** Ryan Roberts **Content:** With the success of [Y Combinator](http://ycombinator.com/) and [TechStars](http://www.techstars.org/), several accelerators have popped up everywhere. Some have done quite well. Here in Dallas,[Tech Wildcatters](http://techwildcatters.com/) had a strong class recently and is poised to be around for awhile. They key for each is good programming and good accelerator mentors. But this morning I read a Dallas Business Journal article that I found amusing: A new accelerator is planning to invest $200,000 and provide up to 45,000 square feet of office space to about 10 mobile app startups in exchange for 15-20% equity in each startup. ***That’s almost a negative pre-money!*** That’s $20,000 per startup for a 15%-20% equity stake. Pretty expensive seed capital. Good luck trying to convince even the most nascent of startups to take your investment at around a $100k [post-money valuation](https://startuplawyer.com/startup-law-glossary/post-money-valuation). Furthermore, the $20k is more like a living stipend than something the mobile startup deploys for development, etc. ***Office space is great but not a deal maker alone*** Office space is a nice kicker, but no entrepreneur is going to give up equity in their mobile app startup company for office space. Let me put this another way: No entrepreneur worth investing $20,000 in is going to take up an office space-for-equity offer. How much office space does a 2-3 person mobile app startup really need? Not much and they’ll likely office at a coffee shop, their own residence(s), or a local coworking facility. And more than likely all 3 places. The article mentions: > The accelerator’s space-for-equity approach is similar to the tactics some North Texas building owners used during the tech/telecom boom and bust of the late 1990s and early 2000s. Partying like it’s 1999 is one thing — running a 2010 accelerator like it’s 1999 is probably not a great idea. ***Accelerator Mentors are Huge*** Accelerator Mentors are so important. And it is missing, at least for now, from the model. One of the 2 partners plans to provide personal mentorship. Regardless of how well the partner can provide mentorship, it falls way short of the roster of mentors provided by typical accelerators. Whenever a client discusses with me whether they should join an accelerator, the decision *always* comes down to the quality of the accelerator mentors. Startups don’t evaluate their participation in an accelerator by asking “Is the $20k worth the equity given up to the accelerator?” Rather, startups ask “is the access to the accelerator mentors worth the equity given up to the accelerator?” In the case of the planned accelerator, mobile app startups will be deciding “Is the mentorship from this one person worth 15%-20% of my startup?” That’s a tall order for the accelerator. I wish the accelerator the best of luck — I just doubt they understand what technology startups desire and value from an accelerator. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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But before your startup signs up and cashes that $\[25,000\] check, your startup’s co-founders should sit down and evaluate the accelerator offer. The following are some issues to consider and actions to take before accepting an the accelerator offer: ***(1) Calculate Valuation and Determine Value.*** Pre-money valuations startups receive from accelerators are typically low…really low. If an accelerator offer is ,000 in exchange for 6% equity, the [pre-money valuation](https://startuplawyer.com/venture-capital/pre-money-and-post-money-valuation) is a whopping 1,667. As you can see, I don’t think any startup has joined an accelerator based solely on the pre-money valuation. Thus your startup needs to determine the intangible value offered by the accelerator (and yes, a [$150,000 convertible note with no cap and no conversion discount](http://techcrunch.com/2011/01/28/yuri-milner-sv-angel-offer-every-new-y-combinator-startup-150k/) qualifies as an intangible). Rather than assign a monetary value to the intangibles, a startup should instead assign an equity percentage value to intangibles like mentorship. As equity in the company tends to be the currency of early stage startups, the startup should have a good foundation for assigning value in terms of equity. This advice holds true for even if the accelerator’s program provides tangible items free and such items have an assigned monetary value. For example, if your startup get $2,000 worth of massages during the program, don’t add the $2,000 in free services to the $25,000 investment amount. Determine how much of your startup’s equity you’d actually give up for those services if they weren’t provided free — it may be worth $2,000 retail but it can also be worth 0% of your startup. Thus, if your startup is willing to give a couple points to a few [advisory board](https://startuplawyer.com/startup-law-glossary/advisory-board) members, determine how much the incubator’s mentorship (and introductions) equates to an advisory board and assign a percentage. Now subtract that amount (and any additional equity amounts you have assigned to other intangibles at the incubator) from the total equity the incubator is requesting. Using the previous example, if your startup believes the mentorship is worth 2%, then re-calculate the incubator’s offer of $25,000 for 6% to $25,000 for 4%. The “revised for the cash investment only” pre-money valuation is $600,000. ***(2) Scrutinize the Investment Structure.*** Accelerators aren’t non-profits, therefore in addition to asking for a low pre-money valuation, they may structure their investment in a way that helps to ensure a higher return across their portfolio. Most accelerators take [common stock](https://startuplawyer.com/startup-law-glossary/common-stock) and sit “side-by-side” with the founders, but some may want some (weak) [preferred stock](https://startuplawyer.com/startup-law-glossary/preferred-stock) and/or dilution protection. Other accelerators may want to set up an [option pool](https://startuplawyer.com/startup-law-glossary/option-pool). If so, the startup’s founders need to know [this option pool lowers your pre-money valuation](http://venturehacks.com/articles/option-pool-shuffle). Using the previous example, if an incubator wants your startup to set up a 15% option pool as part of the $25,000 for 6% of the company, the pre-money valuation gets effectively reduced to $329,167. Like any issuance of stock or investment, one of the main things a startup should be concerned with is: *Is this going to fuck up a future financing*? (Technically, your startup should be asking this question for any contemplated transaction.) If the terms won’t hinder a future financing, then your startup is good to go. If the terms will, then the question becomes: *is the incubator going to waive these terms when a VC makes the request — without asking for anything in return for the waiver?* ***(3) Research the Mentors**.* I wrote in a previous post, [startups value mentorship over money](https://startuplawyer.com/accelerators/accelerator-mentors-money-office-space) when it comes to incubators. Research the mentors so you can accurately assign the amount of intangible value (in equity percentage terms as discussed in point 1 above) and justify the shitty pre-money valuation. Analyze the mentors not just in what those mentors currently do or did when you were in middle school — but also how they fit with your team and your startup’s product. Do they know your space? Will you get to select your mentor or mentor group? How often will mentors drop in or otherwise be available? ***(4) Inspect the Office Space**.* Some accelerators offer free office space. If so, check out the lay of the land to determine if your startup can be productive in the office space. Does your startup get a private office or will it share space coworking-style? How is the conference room and how hard is it to schedule time in the conference room? Can you break away for a confidential call from your girlfriend or potential VC investor? Do the chairs make your butt hurt after sitting in them for more than one hour? How is the technology? ***(5) Figure Out Your Accelerator’s Class End Date.*** When does the mentorship and other benefits end? Can you continue to work out of the accelerator’s office after your class ends? While most incubators’ class end dates fall around the respective incubator’s demo day, what type of support will you receive post-demo day from the incubator and/or the mentors? The best accelerators are going to have no true “end date” and will be a forever-resource with respect to mentorship…although the incubator can likely only offer office space until the next class of companies move in. This is a nice benefit of an accelerator offer. ***(6) Search For the Accelerator’s PR and Marketing Efforts.*** If the accelerator doesn’t take its class “stealth,” take a look at what the incubator does to market itself and its incubated startups. This is an often overlooked value add of an accelerator offer. Take a look at pictures and videos from previous demo days, if any, and see if they’ll help get your startup’s name out there. It’s not really a demo day if only friends and family show up. Of course, joining some incubators give startups an instant “I’m Awesome, Fund Me Now” virtual-badge. Nonetheless, if an incubator can’t promote itself, how is it going to help promote your startup or the crucial demo day event? ***(7) Reach Out To Prior Accelerated Companies.*** If you contact a startup that was part of an accelerator’s past class know that you are accepted to and contemplating the same incubator, you should not have a difficult time getting a few minutes from one or more of that startup’s co-founders. Ask them about points 1-6 above but go further — ask them which mentors they perceived as being the most helpful or even which office to snag if you move in to the incubator’s office space. If a startup doesn’t get back to you, then that *may* tell you something, but don’t automatically assume that startup had a bad experience and that the accelerator offer is a bad one. ***(8) Determine the Opportunity Costs if you take the accelerator offer**.* A startup that is accepted by an accelerator may have an alternative funding offer from an [angel investor](https://startuplawyer.com/startup-law-glossary/angel-investor). This can add complexity to a startup’s decision, because maybe the angel doesn’t want your startup to join the incubator. If the angel investor is offering an investment amount (greater than the incubator) that would “guarantee” your startup will reach a certain goal, it may difficult to accept the incubator’s offer. Regardless if your startup has an angel investor lined up, your startup will need to have a tangible goal in accepting the incubator’s offer that can be realized by completion of the program (or shortly thereafter). If not, the incubator is just a bridge financing to potentially nowhere for your startup. ***Conclusion*** Getting into an accelerator is an exciting experience for any startup, but before signing up take a look at the accelerator offer and how (much) it will help your startup. With the explosion of startup accelerators, I hope the list above is helpful in determining whether your startup should accept such an offer. The more intangible value you can assign to the accelerator, the more appealing the accelerator’s offer will appear. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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It’s not worth the effort to close during this time period, especially if the seed round is for a very small amount. While seed round angel investors (those close to the accelerator) usually let startups set the terms (convertible note, priced round, etc.), this choose-your-own-adventure works against your startup prior to in the lead up to pitch day. ***Spending time with your lawyer is cool — but not right before demo day*** Rather than focusing on matters related to the accelerator program, shipping code or closing on customers immediately prior to the pitch of your life, you end up spending time with your lawyer discussing things like the pro’s and con’s of a convertible debt round versus a priced round, series seed versus series aa, price caps and liquidation preferences. Then more time with the potential seed round investor. Then time with your lawyer. Rinse and Repeat. While I love talking about the mechanics of price caps and liquidation preferences, I’m not thrilled about discussing them with you two weeks before demo day…especially if the angel investor is investing a small amount (e.g. $20k or less). ***Could Lead to Increased Transaction Costs*** Sure, your startup can set up the convertible debt round for “Up to $500k” and close on the small amount of financing with the angel investor prior to demo day. But what happens when a new investor wants to invest $125k, with some changes to the terms of the offering? At best, your startup will have to amend your current transaction documents which just adds to total transaction costs. ***A positive signal could be interpreted as a negative signal*** Some startups find value in closing a small piece so they can have a slide at demo day that says “We’ve closed on $X,000 of funding of our $Y,000 round”. While this type of slide may seem to signal momentum, be careful as it may also signal that your startup is having difficulty closing the round. Especially if your round is less than 50% closed. ***At worst, get a verbal commitment to close fast after demo day*** Prior to demo day, if a seed round angel investor is bringing a small amount of financing, obtain no more than get a verbal commitment to invest. It can be painful to hold off on getting some capital to extend your runway a couple more months, but if you lose a potential angel investor over the course of 2 weeks, then that angel investor probably wasn’t going to invest to begin with…or not until someone invests a significant amount. Of course, I’m not averse to a client raising money. But if you must raise a small amount prior to demo day, make sure it is very quick and easy. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Accelerator Demo Days and General Solicitation](https://startuplawyer.com/seed-funding/accelerator-demo-days-general-solicitation) **Published:** August 7, 2015 **Author:** Ryan Roberts **Content:** If you have been to [accelerator](https://startuplawyer.com/startup-law-glossary/accelerator) demo days, you have probably seen a pitch that mentions a financing round in progress, or the details of a proposed round. In the last several years, some accelerators have worried that demo day presentations could be viewed as a general solicitation for purposes of Rule 502(c) of Regulation D under the [Securities Act](https://startuplawyer.com/startup-law-glossary/securities-act-of-1933). ## Background: why general solicitation matters for demo days In simple terms, if a startup conducts a “general solicitation” of its securities, it must comply with additional requirements to qualify for an exemption from registration with the SEC for that offering. Those requirements are not always onerous, but they can add cost, time, and process risk. Historically, general solicitation was prohibited in certain offerings under Regulation D. Rule 506(c) now permits general solicitation, but only if the issuer takes reasonable steps to verify accredited investor status and limits sales to accredited investors. ## What the SEC said originally about demo days (August 6, 2015 guidance) and what updated guidance it gave in 2025 On August 6, 2015, the SEC staff published interpretive guidance addressing whether accelerator demo days and venture fairs are automatically treated as general solicitations. The short answer was “no,” but the SEC emphasized that the analysis is facts and circumstances. Here is the relevant [Q&A from the SEC website](https://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm) in its entirety: **Question:** Does a demo day or venture fair necessarily constitute a general solicitation for purposes of Rule 502(c)? **Answer:** No. Whether a demo day or venture fair constitutes a general solicitation for purposes of Rule 502(c) is a facts and circumstances determination. Of course, if a presentation by the issuer does not involve an offer of a security, then the requirements of the Securities Act are not implicated. Where a presentation by the issuer involves an offer of a security, the presentation at a demo day or venture fair may not constitute a general solicitation if, for example, attendance at the demo day or venture fair is limited to persons with whom the issuer or the organizer of the event has a pre-existing, substantive relationship or have been contacted through an informal, personal network as described in Question 256.27. If potential investors are invited to the presentation by the issuer or a person acting on its behalf by means of a general solicitation and the presentation involves the offer of a security, Rule 506(c) may be available if the issuer takes reasonable steps to verify that any purchaser is an accredited investor and the purchasers in the offering are limited to accredited investors. \[August 6, 2015\] **Update (March 12, 2025):** The SEC staff later added more guidance that explicitly references Rule 148 (demo day communications) and also discusses investor introductions through informal angel networks. The excerpt below is from the SEC’s Compliance and Disclosure Interpretations. **Question 256.27** **Question:** Are there circumstances under which an issuer, or a person acting on the issuer’s behalf, can communicate information about an offering to persons with whom it does not have a pre-existing, substantive relationship without having that information deemed a general solicitation? **Answer:** Yes. Under Rule 148, issuers may participate in “demo days” or similar events, pursuant to which such communications that meet the requirements of Rule 148 are not deemed to constitute general solicitation or general advertising. See also Question 256.33. In addition, the staff is aware of long-standing practices where issuers and persons acting on their behalf are introduced to prospective investors who are members of an informal, personal network of individuals with experience investing in private offerings. For example, we acknowledge that groups of experienced, sophisticated investors, such as “angel investors,” share information about offerings through their network and members who have a relationship with a particular issuer may introduce that issuer to other members. Issuers that contact one or more experienced, sophisticated members of the group through this type of referral may be able to rely on those members’ network to establish a reasonable belief that other offerees in the network have the necessary financial experience and sophistication. Whether there has been a general solicitation is a fact-specific determination. In general, the greater the number of persons without financial experience, sophistication or any prior personal or business relationship with the issuer that are contacted by an issuer or persons acting on its behalf through impersonal, non-selective means of communication, the more likely the communications are part of a general solicitation. *\[March 12, 2025\]* ## Practical takeaways for startups Many founders feel pressure to say something about fundraising during an accelerator demo day pitch. In most cases, it is unnecessary. The audience already understands that venture backed startups often raise capital, and the pitch itself will naturally attract inbound interest if the company is compelling. Mentioning valuation, target round size, or specific terms can also create avoidable questions and anchor expectations before you have a real lead investor. In plain English, treat demo day as a relationship building event, not an offering: avoid publicly stating round terms, and keep any fundraising follow up targeted to appropriate investors. - **Do** focus on product, traction, market, and why you are the team to win. - **Do** invite relevant conversations after the pitch, for example, “We are building relationships with potential partners and investors.” - **Do not** include offering language or deal terms on slides (valuation, amount being raised, security type, investor eligibility). - **Do not** ask the crowd to invest or describe how to participate in a round. ## Practical takeaways for accelerators Based on the SEC’s answer above, it is usually in a startup’s best interest to avoid offering language at an accelerator demo days, including any explicit discussion of an active securities offering. It is also not realistic to expect an accelerator to ensure that every audience member has a pre-existing, substantive relationship with every presenting company. The SEC staff has also pointed to Rule 148 as a framework for demo day style communications that are not treated as general solicitation when its requirements are met. If a pitch is treated as a general solicitation, the company may lose the ability to rely on Rule 506(b) for that offering and may be pushed into a Rule 506(c) process with accredited investor verification and additional friction. In plain English, treat demo day as a relationship building event, not an offering: avoid publicly stating round terms, and keep investor follow up targeted to appropriate, curated audiences. ## Suggested slide language (what to say instead) If you want to signal that you are open to investor conversations without turning the pitch into an offer, keep it high level and relationship oriented. Examples: - “If you want to learn more, we would love to connect after the program.” - “We are meeting with potential partners and investors over the next several weeks.” - “Please reach out if you are a good fit for our customer or strategic partner profile.” - “We are focused on execution and building relationships with the right long-term supporters.” ## Conclusion The SEC’s position is not that accelerator demo days are automatically general solicitations. It is that the analysis depends on the details, including who is in the room and what is actually said. As a practical matter, the easiest way to reduce risk is to keep fundraising terms out of the pitch deck and save securities discussions for one on one conversations with appropriate investors. If you are unsure where the line is for your situation, ask counsel before demo day. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [How to Survive a Co-Founder Divorce while at an Accelerator](https://startuplawyer.com/seed-funding/co-founder-divorce-accelerator) **Published:** December 8, 2015 **Author:** Ryan Roberts **Content:** **Accelerators can certainly help a startup reach new levels.** But if the relationship between the startup’s co-founders is already on shaky ground when they enter, the only thing the accelerator (through no fault of its own) may accelerate is a co-founder divorce…and possibly the death of the startup. ## The Co-Founder Divorce Problem In a co-founder divorce, instead of using an accelerator’s fresh capital to spur growth, that money can end up giving the departing co-founder leverage to get paid on the way out. Usually the main/first co-founder who originated the idea wants to continue with the startup, and the other co-founder wants out. It’s rare that both co-founders want out (or both want to stay), which leaves them negotiating who stays and who goes. This may be the first time the startup has had meaningful money in the bank and a real sense that the company could be “on its way.” That can make it a strategic departure point for a co-founder to ask for (or hint at) a buyout. Whether they intend to or not, the departing co-founder can also play on the emotions of the remaining co-founder, who likely has more invested emotionally and financially at this point. At the same time, the fresh capital gives the co-founder who wants to stay a kind of “currency” to get rid of the other co-founder, something other than stock. “Hey, what’s $5,000 now when pitch day is coming and there’s a prospect of more investment in 100 days?” Worst case, it gets the bad seed out of the company (and by this time the remaining co-founder might already have a backup plan to replace them). ## Don’t Go in the First Place If the co-founder relationship is already tumultuous, those co-founders should not join an accelerator in the first place. In reality, the co-founder divorce is already in progress. The accelerator, through its investment, the ensuing program, and dreams of VC money on pitch day, is not going to solve co-founder issues. If anything, the frenzy of an accelerator program acts like a stress test that finds (and often widens) cracks in the relationship. Using an accelerator as a last-ditch effort is a waste of everyone’s time and the accelerator’s money. If the co-founders have to pull rabbits out of hats just to make it to pitch day, it’s often a sign that one or both co-founders will be updating their LinkedIn profiles within the next few months. ## Self-Destructive Actions and Thoughts If the co-founders are at their breaking point and it is time to negotiate a co-founder’s departure, there are three main ways in which co-founders can mess it up for themselves and their startup by not negotiating a quick departure. ***Nasty Correspondence*** The first way to ensure an agreement will not be reached is by sending threatening, demeaning, and/or angry emails back and forth. This should never happen. It virtually guarantees the destruction of the startup because it pushes the co-founders farther away from settlement: once one or both people feel hurt, they often start trying to “win” instead of trying to resolve. And when a co-founder cc’s people at the accelerator (or those emails get forwarded to mentors), it just makes things worse. With all the emotion involved, it can be hard to remain civilized, but every nasty email is a hit to someone’s reputation. Startups fail all the time; at least give yourself a chance in the next one. People have long memories. ***One. Billion. Dollars.*** The second way to ensure a quick settlement will not be reached is to take the mindset that you are arguing over something worth one billion dollars. Co-founders going through a divorce at an accelerator have the tendency to feel that this is their “Social Network” moment and the whole world is watching. All the press from making the accelerator coupled with the attention from the accelerator and its mentors can have the negative consequence of co-founders massively over-valuing their startup. In reality, when there is a co-founder dispute, the accelerator, its mentors, and maybe even the startup’s lawyer often see a corpse of a company. The co-founders need to realize they are not a unicorn; they are closer to a nano-corpse. So the co-founders should value the company at about the cash invested (or, at most, the valuation implied by the accelerator investment). That extra 2 percent the departing co-founder is asking for and you’re refusing to give? It’s not $20,000,000. (And even if it someday becomes $20,000,000, the remaining co-founder will likely still be happy with the outcome.) ***“They deserve nothing!”*** The third way to self-destruct the process is to believe the departing co-founder should get nothing, simply because “they didn’t do anything” (or for some other reason, even if legitimate). It doesn’t matter. The remaining co-founder usually has to get the deal done quickly because the accelerator program is moving forward without them, and that timing gives the departing co-founder leverage to extract some premium. The fact that negotiations are happening, and that the company still needs signatures, often overrides all the reasons why the departing co-founder “shouldn’t get anything.” ## Accelerator Complications in a Co-Founder Divorce The accelerator’s investment in the startup (who wants a company to disappear mid-program, or to lose an investment in four weeks?) can become an unintended obstacle to a quick resolution. The best programs will try to help co-founders work it out, but it’s rarely a good use of the accelerator’s time to spend more than a nominal amount of effort brokering a divorce. There are usually many other companies in the class without co-founder issues that are actually building and selling, rather than fighting over a mythical billion dollars. Worst case, by spending too much time with the disgruntled company, the accelerator risks validating the co-founders’ belief that this is a huge deal and that they should spend weeks obsessing over every detail. ## What to do So what happens if you are in a co-founder divorce at an accelerator? The short answer: treat it like an emergency, keep it professional, and move fast. While there’s no magical solution, the best thing you can do is figure it out as quickly as possible. Not months or weeks; think a couple days. It really can take about 45 minutes if you sit down together and have a frank conversation (yes, really). The best solution for a co-founder divorce is generally an agreement in which one co-founder leaves with some vested equity (not a huge chunk) and **zero** cash, with the departing co-founder signing a non-disparagement and a release on the way out. Quite frankly, a co-founder who departs with equity and cash often gets the best deal: upside in equity, current cash compensation, and freedom to move on. The accelerator’s cash should be used to grow the company, not to buy out a departing co-founder. Again, figure it out fast. If you can’t agree on something reasonable within a week, consider giving the money back to the accelerator and rescinding the transaction (or doing something similar). Move on with your lives rather than waste good time fighting over a nano-corpse. *A couple final notes*: (1) Vesting shares may help somewhat in this situation, but not everything is as simple and ultimately taken care of by a repurchase of someone’s shares. There may be IP assignment issues, potential causes of action, etc., or the fact that you need to get a release agreement to give future investors’ comfort (which isn’t always easy to get…). (2) In addition to ‘co-founders’, the departing co-founder role could also be a “lost co-founder” or otherwise someone who may have a claim on the company’s equity or IP (think prior advisors, that one contractor who did some work for the company, etc.). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Accelerator Investments Should Be Convertible Equity](https://startuplawyer.com/seed-funding/accelerator-investments-convertible-equity) **Published:** May 18, 2016 **Author:** Ryan Roberts **Content:** I previously wrote that [accelerator documents should be easy](https://startuplawyer.com/accelerators/accelerator-documents-should-be-easy). At the time, I focused on adverse selection: the more difficult the terms or onboarding process (including the investment documents), the more likely the best startups would choose a different accelerator or decide not to join at all. As the accelerator ecosystem has evolved, and after seeing countless clients participate in accelerators, it is clear that accelerator documents should be easy and that accelerator investments should generally be structured as convertible equity. ## A Bit of History on Accelerator Investments Accelerators have tried everything when it comes to structuring accelerator investments, including common stock, convertible notes, combinations thereof, preferred stock, etc. This experimentation, as it usually does, has had varying levels of success. And, as per my earlier post, originally the structure of accelerator investments wasn’t that bad in terms of simplicity. The two main issues that created any type of difficulty in accelerator investments were either (1) tax-related (trying to minimize tax impact to the startup, their future employees and/or the accelerator and their LPs) or (2) issues because the accelerators investment was common stock. Basically, there is usually some base-level protection afforded the accelerator against founders “going crazy” and this made sense since most accelerators were getting common stock. Thus, in the investment documents, you’d typically find a covenant or two against granting more equity to the founders or some other type of limited non-dilution right. Maybe even limited consent right for a change of control that returns a relatively low dollar amount. So, even with these covenants it really wasn’t a big deal for the accelerator or startup and the onboarding process was easy and the deals worked, but then things started got more complicated. ## It’s Getting Complicated So what got complicated? Incoming startups began joining accelerators at a later stage and with bigger, more complicated cap tables. Originally, it felt like the incorporations for the accelerator portfolio companies were being done upon acceptance to the accelerator. This allowed for a clean and simple cap table. No issues with making a quick and easy cap table rep in the accelerator’s investment document…and certainly no issues with prior investors. But now, it’s somewhat common to see startups hop from accelerator to accelerator or even have a small seed round prior to joining an accelerator. And who can really blame the accelerators for taking startups that are theoretically further along? But because of this earlier accelerator/investment cap table complication, rather than a quick accelerator onboarding process, the accelerator is having to play VC, including conducting cap table diligence which may even include having to negotiate with current investors/founders on their terms and how their accelerator investment fits in with the current capitalization and investment structure. Problems normally arise because current investors (including sometimes an accelerator) were not even aware of the startup potentially joining an accelerator. Current investors may have anti-dilution provisions or are otherwise just puzzled why you want to accept an accelerator investment at a fraction of the pre-money valuation or price cap you just negotiated with them. Ideally, a startup should get way out ahead of their investors if they are thinking of joining an accelerator as it’s not really the accelerators job to handle your current investors. Alternatively, is it right that an accelerator that takes immediate common stock get diluted by a prior round of convertible notes? Probably not. Thus, enter the negotiation and ensuing “friction”. Ultimately, the complications lead to so much unnecessary friction for onboarding into an accelerator. And of course, this leads to way too much time spent on the onboarding process. It is not fun attempting to make everyone happy through various cap table reps, or having your seed investors freak out over the accelerator’s limited non-dilution rights (which may be something the current investors do not have). So, this naturally makes the startup feel like they have a “special circumstance” and that the accelerator should give in/carve out/ etc. because of their special circumstance. But even so, this part increases the transaction costs (including legal fees) for both the startup and the accelerator. ## Why Convertible Equity Can Help Accelerator Investments The fact that convertible equity doesn’t technically make the accelerator a stockholder may be easier for a current investor to tolerate. You can tell your investors, in all honesty, that the accelerator will not get shares until and as part of the next financing. So yes, the accelerator gets a “deal” relative to the valuation or price cap you just gave them (and I hope you fully-explain to your investors why the accelerator valuation is low), but from a blended point of view when factoring in the rest of the investment capital at the next round’s pre-money valuation, it’s likely that the “blended” pre-money valuation of the next round will be higher than their valuation or price cap. Additionally, because convertible equity is not debt, the accelerator will often have a higher priority than current noteholders upon liquidation or dissolution. Another reason accelerator documents should not be a convertible note is that negotiating interest and maturity on a $25,000 instrument can waste time for everyone. I would rather have the parties focus on the valuation cap or valuation, not on interest that may add up to less than $1,000 after a couple of years. ## When Everyone Is “Special” We are often asked by startups (and not just those who are our clients) entering accelerators how to negotiate with them because they are “special”. Either because they are “further along” than a typical accelerator participant and/or because they have raised some money. It was fine when it was maybe 1 team per accelerator class having a complicated cap table…but now everyone is claiming they are special, and thus it becomes an issue. Who really wants to negotiate carve outs to limited non-dilution rights? For a $25k+ investment, it’s pretty much annoying for all parties involved. And this is coming from a lawyer. Law firms really don’t want to charge you a lot for accelerator onboarding, if anything, but as it has gotten really complicated lately, maybe this is where convertible equity can help. So now it’s not just 1 startup an accelerator deals with these complicated issues, it’s multiple! ## Is Convertible Equity the Answer for Accelerator Investments? So, why convertible equity? It just makes sense that convertible equity should be able to be used early. Frankly, if you can’t use convertible equity this early, it shouldn’t be used later (or it follows that it should be easier to incorporate earlier than the seed rounds that convertible equity is currently being used). Is convertible equity the solution that cures all ills? Nah, there will never be a structure that solves all potential problems. But convertible equity can likely solve most of the problems better than other structures. ## Practical takeaways - **For startups:** if you are considering an accelerator and you already have investors, talk to them early. Surprises around dilution or priority can create unnecessary friction. - **For startups:** avoid negotiating carve outs to accelerator rights unless the issue is truly material. Every “special case” increases cost and time. - **For accelerators:** optimize for speed and standardization. The more your documents resemble a small VC round, the more diligence and negotiation you will invite. - **For accelerators:** consider convertible equity structures that convert in the next priced round, which can reduce cap table reps and minimize conflicts with existing investors. ## Conclusion Thus, it’s my belief that accelerator investments should be some form of convertible equity. If you are an accelerator that has some other structure, you aren’t ‘wrong’ for what you have, but I think you may end up being happier once you start using the convertible equity structure. At a minimum, it might be able to cut some of the diligence time and cap table rep issues. I think we’ll see accelerator investments structured more and more as convertible equity as accelerators continue forward. And lastly, if you are a startup entering an accelerator, don’t take this post and show your prospective accelerator why they are “wrong” for not using a convertible equity instrument for their accelerator investments…that’s certainly not the reason (or even indirect reason) why I wrote this. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [SAFE Seed Financing Documents](https://startuplawyer.com/seed-funding/safe-seed-financing-documents) **Published:** December 18, 2013 **Author:** Ryan Roberts **Content:** ***TL;DR:*** *In a typical SAFE round, the core document is the SAFE itself, plus board and stockholder approvals and basic closing paperwork. The document that quietly causes the most future pain is the side letter (usually pro rata rights or MFN), so treat it like a real deal term. If you use the YC post-money SAFE, you are usually choosing among three standard forms (cap, discount, or MFN) and optionally a pro rata side letter. The goal is one clean document set that is easy to administer at the next priced round, not a pile of bespoke promises you cannot track.* If you’re raising on [SAFEs](https://startuplawyer.com/startup-law-glossary/safe), you’re probably doing it for one reason: you want money in the bank without turning your life into a 200-page [preferred stock](https://startuplawyer.com/startup-law-glossary/preferred-stock) financing. Fair. But “simple” only describes the base instrument. The moment you add side letters, special information rights, or one-off promises to different investors, your SAFE round stops being simple in exactly the way that comes back to bite you at your seed or [Series A](https://startuplawyer.com/startup-law-glossary/series-a-round). When founders ask me about “SAFE financing documents,” what they usually mean is: what do I actually need to sign and approve so the investment is valid, fundable, and not a diligence fire drill later. This post is that answer, grounded in how most U.S. [pre-seed](https://startuplawyer.com/startup-law-glossary/series-pre-seed) and seed SAFE rounds actually close. ## The core SAFE document set (what you usually need) In most SAFE rounds, the “document set” is deliberately small. Investors are paying for economics now and getting stock later, so you are typically not negotiating a full governance package at this stage. - **The SAFE itself.** One SAFE per investor (or one per entity investing). It sets the conversion mechanics and the investor’s economic deal. - **Optional term sheet.** Sometimes you skip this and just agree on the cap/discount and round size over email. Sometimes you use a one-page [term sheet](https://startuplawyer.com/startup-law-glossary/term-sheet) to keep everyone aligned. - **Board consent (or board resolutions).** The board approves issuing the SAFEs and taking in the money. - **Stockholder consent, if required.** Many Delaware charters/bylaws do not require stockholder approval for SAFEs, but your documents might (especially if you have investor protective provisions already). - **Closing deliverables.** Wire instructions, a closing notice email, and a final PDF set circulated to all investors. The common misconception is that “because it’s a SAFE” you can treat the corporate approvals like optional paperwork. You cannot. If you take money without proper authorization, it tends to surface later when a priced round lead investor’s counsel asks for your prior financing consents and cap table support. That is not when you want to discover a missing approval. ## Which SAFE form are you using (and why it matters) Most U.S. seed SAFEs you’ll see are based on the [Y Combinator](https://www.ycombinator.com/) post-money forms. [YC](https://www.ycombinator.com/) offers three post-money SAFE variants and an optional pro rata side letter. That’s not the only way to do a SAFE, but it’s the gravitational center of the market right now. - **Valuation cap SAFE (no discount).** A valuation cap is a ceiling on the price used to convert the SAFE into equity, so the investor converts as if the company were worth no more than the cap. - **Discount SAFE (no cap).** A discount means the investor converts at a percentage discount to the price paid by new money investors in the next priced equity round. - **MFN SAFE (uncapped, no discount).** MFN means “most favored nation.” If you later issue a SAFE (or similar instrument) with better terms, the MFN investor can elect to upgrade into those better terms. - **Optional pro rata side letter.** This is a short separate agreement that can give an investor the right to buy additional shares in the next equity financing to maintain their ownership percentage. Post-money matters because it lets you measure ownership sold on each SAFE at signing, rather than waiting until conversion. Practically, each additional post-money SAFE dilutes you and your common stock pool rather than diluting earlier SAFE holders. That is not “bad,” but it is a reason to model dilution before you stack multiple SAFEs on the same cap. ## The side letter: where “simple” rounds get complicated If you only remember one thing from this post, make it this: the SAFE sets the economics, but the side letter often sets the future leverage. Investors leading a SAFE round (or writing a larger check) often ask for a [side letter](https://startuplawyer.com/startup-law-glossary/side-letters). That practice is common. The question is whether the side letter is modest and standardized, or whether it quietly turns your cap table into a spreadsheet of bespoke obligations. - **Pro rata rights.** Reasonable when limited to the next priced equity round and tied to a true pro rata formula. Risky when drafted as a perpetual right across all future financings or as a hard ownership target. - **MFN mechanics.** [MFN](https://startuplawyer.com/startup-law-glossary/most-favored-nation-clause) can be fine, but vague “more favorable terms” language creates disputes later. You want clear election mechanics and clear carve-outs. - **Information rights.** Light quarterly updates are common. Heavy reporting, audit rights, or anything that feels like public company obligations is usually out of place at SAFE stage. - **Board observer rights.** Sometimes requested by institutional investors. At pre-seed and seed, board observers can be more governance friction than value, especially if you later have multiple observers. - **Expense reimbursement.** Occasionally requested for lead investors. In small SAFE rounds, I generally view this as a poor trade unless it is tightly capped and truly reflects meaningful diligence costs. Example #1: You give three different investors “[pro rata rights](https://startuplawyer.com/startup-law-glossary/pro-rata),” each drafted a little differently. At your Series A, the new lead wants a clean allocation and a clean cap table. You spend two weeks reconciling who has what right, what “next financing” means, and whether those rights apply to a Series Seed, a Series A, or both. Example #2: You issue an uncapped MFN SAFE early, then later raise on a capped SAFE when you have more traction. The MFN holder asks to amend into the capped terms. That may be exactly what you agreed to. The problem is when nobody tracked the MFN holder, the terms were ambiguous, or you issued multiple later SAFEs with different “better” terms. Example #3 (M&A-aware): In an acquisition, buyer diligence teams will ask for all outstanding convertibles and side letters. If your “simple” SAFE round contains board observer rights, special consent rights, or odd information rights, the buyer may treat them like mini investors’ rights agreements that must be cleaned up before closing. ## How SAFE rounds actually close (rolling closes, in practice) Most SAFE rounds do not close like a priced round with a single “closing date” where everyone wires at 10:00 a.m. and you pop champagne at 10:03 a.m. Instead, you sign and collect wires on a rolling basis as investors are ready. - **Pick one form and stick to it.** One SAFE template for the round, not five versions floating around. - **Standardize the variables.** If the deal is “$X at a $Y cap,” make sure every SAFE matches that, and track exceptions intentionally. - **Decide who signs first.** In many rounds, the company signs the SAFE first and then circulates to the investor for countersignature, but the order matters less than consistency and tracking. - **Use one closing email per investor.** Final signed SAFE, wire instructions, and confirmation of receipt. Save it somewhere searchable. - **Update the cap table as you go.** Your future priced round lead will ask for your SAFE schedule. “We will reconstruct it later” is not a strategy. ## Theory vs. reality: what matters in a SAFE doc set Theory: because SAFEs are “standard,” you should spend your negotiation energy polishing every definition and every hypothetical corner case. Reality: in most rounds, 80% of the outcome comes from a short list. Your cap and discount set the economics. Your [post-money](https://startuplawyer.com/startup-law-glossary/post-money-valuation) math determines how much you sold. Your side letters determine whether your next round feels clean or pre-allocated. Everything else is usually second-order. - **Over-optimized:** perfecting MFN language for a single investor when you are likely to raise multiple SAFEs later anyway. **Focus instead:** tracking who has MFN and having a clear process for later issuances. - **Over-optimized:** getting “one more tweak” to the SAFE form to feel bespoke. **Focus instead:** staying within the mainstream form so later counsel and investors do not treat your documents as exotic. - **Over-optimized:** negotiating information rights that nobody will use. **Focus instead:** setting investor expectations for communication and sending consistent updates. ## If you remember one thing: keep the promises trackable The practical takeaway is not “never sign a side letter.” It’s: do not sign side letters you cannot administer. - Before you sign, make a one-page schedule of every investor and every non-standard right (pro rata, MFN, information rights, [observer](https://startuplawyer.com/startup-law-glossary/board-observer)). - Limit pro rata rights to the next equity financing unless you have a strong reason not to. - Model dilution for the whole round, not investor-by-investor. - Assume your next priced round counsel will read your SAFE package cold. Make it legible. ## FAQ **Do I need a term sheet for a SAFE round?** Usually no. If you have a lead investor and a clean SAFE form, you can often go straight to the SAFE after agreeing on cap or discount, round size, and any side letter asks. **What is the minimum I have to do to “properly” issue SAFEs?** At a minimum, you need an executed SAFE with each investor, valid board approval, whatever stockholder approvals your governing documents require, and clean records showing who invested what and when. **Should I give pro rata rights on SAFEs?** If the investor is meaningfully leading the round or writing a larger check, a limited pro rata right for the next equity financing can be market. Just understand you are pre-allocating some of your next round, and multiple pro rata promises can make the next round harder to lead. **Is an MFN SAFE “founder-friendly”?** It can be, but it is not free. You are agreeing to revisit terms later if you offer someone else a better deal. If you expect to raise multiple SAFEs over time, MFN is manageable only if you track it and keep later issuances disciplined. **Do SAFE investors get votes, board seats, or blocking rights?** Usually not from the SAFE itself. Those rights typically show up only after conversion in a priced round, or earlier through a side letter that grants information rights, observer rights, or other special terms. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [The Standard Financing Document Pipe Dream](https://startuplawyer.com/seed-funding/the-standard-financing-document-pipe-dream) **Published:** December 30, 2013 **Author:** Ryan Roberts **Content:** **TL;DR:** Even though venture financings often start from well-known templates, there is no single set of “standard” documents across seed and venture rounds. Larger rounds more often anchor on the [NVCA model forms](https://startuplawyer.com/startup-law-glossary/nvca-docs), while seed and especially incubator deals vary more because parties optimize for speed, leverage, and their preferred risk allocation. Treat “standard” as a starting point, not a promise, and focus on the handful of terms that drive economics, control, and future fundraising. ## What “standard” really means in venture deals When founders say they want “standard docs,” they usually mean two things: (1) documents that investors and lawyers have seen before, and (2) a process that is predictable on cost and timeline. In practice, “standard” almost always means “market-recognized templates plus deal-specific edits.” The smaller and earlier the financing, the more likely it is that people accept shortcuts, mix-and-match instruments, or bring their own preferred provisions. ## Why larger Series A and beyond rounds converge on the NVCA forms For priced venture rounds, especially [Series A](https://startuplawyer.com/startup-law-glossary/nvca-docs) and later, the ecosystem often gravitates toward the National Venture Capital Association (NVCA) model legal documents. The NVCA publishes a suite of venture financing templates intended to reduce transaction costs, establish industry norms, and provide internally consistent agreements. Even with widely used templates, deals still diverge because every firm develops preferences over time. Many funds maintain house versions based on NVCA forms, with revisions that reflect prior negotiations, portfolio lessons, and current market norms. The result is a strong center of gravity around familiar documents, but not true uniformity. Seed financings sit in an awkward middle. They are big enough that investors often want real governance and investor rights, but small enough that nobody wants a long, expensive documentation process. That tension has produced several widely used approaches, including lightweight priced equity document sets (such as the Series Seed documents) and simpler convertible instruments like SAFEs and convertible notes. Even when parties start from a recognized template, seed docs commonly drift based on a small set of pressure points: valuation mechanics (price, cap, discount), option pool size and whether it is carved out pre-money, liquidation preference and participation, pro rata rights, board composition, protective provisions, and information rights. Small wording changes in these areas can materially shift economics or control, so people negotiate them even when they claim they want “standard.” ## Incubators and accelerators: why it feels like the Wild West At the [incubator](https://startuplawyer.com/startup-law-glossary/incubator) or [accelerator](https://startuplawyer.com/startup-law-glossary/accelerator) level, variation tends to increase, not decrease. Programs optimize for fast onboarding, portfolio-wide consistency, and specific incentives, so terms can range from common stock purchases to preferred stock, convertible notes, SAFEs, or hybrids that combine a note with an equity component. Those instruments carry different defaults around maturity dates, interest, conversion mechanics, and investor rights, which naturally produces a wider spread of paper. It is tempting to assume a single standard should emerge here because the check sizes are smaller. In reality, early programs compete on terms, geography, sector focus, and follow-on strategy. Each of those choices drives a different view of what needs to be “baked into” the documents, so convergence is slow. ## Who drives the deviations from standard, and why it is not just the lawyers Lawyers do not invent most of the variation. They usually implement business preferences and risk tolerances that come from investors, founders, and prior deals. An investor might care intensely about pro rata, information rights, or protective provisions because it matches their fund strategy. A founder might prioritize speed, simplicity, and minimizing future cap table complexity. A useful mindset is to treat the first draft as a checklist, not a verdict. Ask which template it is based on, what the meaningful departures are, and which departures are non-negotiable for the other side. That approach keeps the conversation focused on the handful of terms that actually move outcomes. ## Key takeaways for founders - Expect more standardization as rounds get larger, but plan for customization in every deal. - Use NVCA-style documents as a familiarity benchmark for priced rounds. - At seed, decide early whether you are doing a priced equity round or using convertible instruments, since that choice drives most of the paperwork and negotiation. - In incubator contexts, assume program-specific terms and focus on understanding the instrument, conversion mechanics, and any control rights. - Spend time on the terms that affect ownership, control, and future fundraising, then simplify the rest. ## FAQs **Are NVCA documents required for a venture round?** No. They are widely used as a starting point for U.S. venture financings because they are familiar and internally consistent, but parties can use other forms or heavily modify them. **Why do smaller deals often have more variation?** Smaller checks amplify the desire to close quickly and keep legal spend down, so parties use shorter instruments, reuse old paper, or accept bespoke program terms. That speed can come at the cost of uniformity. **For seed, should I use a SAFE, a convertible note, or a priced equity round?** It depends on how ready you are to price the company and how much structure investors expect. [SAFEs](https://startuplawyer.com/startup-law-glossary/safe) and [convertible notes](https://startuplawyer.com/startup-law-glossary/convertible-note) can be faster and cheaper, while a priced round provides clearer ownership and a more complete governance package. Discuss the tradeoffs with counsel and model the cap table impact before choosing. **What should I review first when someone says the docs are “standard”?** Start with the terms that change economics and control: [liquidation preference](https://startuplawyer.com/startup-law-glossary/liquidation-preference), participation, [anti-dilution](https://startuplawyer.com/startup-law-glossary/anti-dilution), option pool treatment, [pro rata rights](https://startuplawyer.com/startup-law-glossary/pro-rata), board seats, [protective provisions](https://startuplawyer.com/startup-law-glossary/protective-provisions), and [information rights](https://startuplawyer.com/startup-law-glossary/information-rights). Then confirm how the instrument converts, and what happens in an exit before conversion. **Why does the option pool size show up in so many negotiations?** Because it directly affects founder dilution and can shift value between founders and new investors depending on whether it is created or increased before or after the financing price is set. **Why do accelerators and incubators use so many different instruments?** Programs design terms to match their model, including speed, follow-on investing plans, and how they want portfolio economics to work. Different instruments also handle valuation uncertainty differently, which matters early. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Buyers often deliver a broad, standard-form restrictive covenant package late in the process to create time pressure, and it can include a much broader noncompete than the narrower one you negotiated (or thought you settled) in the purchase agreement. Watch the scope if the restriction is tied to the buyer’s overall “business,” not the specific product silo you will work in. And if you plan to team up with a co-founder again, consider a narrow nonsolicit carve-out for each other so you are clearly in the safe zone after the retention or earnout period.* If you’re selling your startup and the buyer hands you their standard [employment agreement](https://startuplawyer.com/startup-law-glossary/employment-agreement) (or offer letter plus restrictive covenants), don’t treat it as HR paperwork. In real deals, it’s one of the main places the buyer manages risk and the founder manages regret. Here’s the plain-English frame: the [purchase agreement](https://startuplawyer.com/startup-law-glossary/purchase-agreement) answers “what are they buying and what are they paying?” Founder employment agreements answer “what are you doing after closing, what do you get for doing it, and what happens if either side decides this was a mistake?” This is why it’s often the most emotionally negotiated document in the whole [acquisition](https://startuplawyer.com/startup-law-glossary/acquisition). It’s the moment the founder becomes an employee, the power dynamics flip, and the paper starts describing your day-to-day life in a way you haven’t had to tolerate in years. ## Why buyers care so much about your employment terms In a typical venture-backed acquisition, the buyer is not just buying code and customers. They’re also buying continuity: someone has to explain why the product works, why the roadmap is rational, and which customers are held together by personal relationships and duct tape. Another pattern that surprises first-time sellers: the buyer’s employment paperwork often shows up very late, sometimes when everyone is already talking about a signing date. That is not an accident. A late-arriving “standard form” offer letter plus restrictive covenants gives the buyer two advantages: (1) it anchors you to their default terms, which are typically expansive, and (2) it compresses your review and negotiation time so you feel pressure to accept broad noncompete, non-solicit, and confidentiality language to keep the deal on track. One more surprise to watch for: founders sometimes negotiate (and mentally “settle”) a narrow [non-compete](https://startuplawyer.com/startup-law-glossary/non-compete) in the purchase agreement, drafted to match the specific business of the company being sold. Then the buyer’s employment agreement shows up (late) with a separate noncompete tied to the buyer’s much broader “business,” and it can feel like the issue got reopened at the worst possible time. Treat the purchase agreement and the founder employment agreements as two different places restrictions can live, and make sure the scopes are consistent (or that one clearly controls). Founders carry a lot of that continuity. That’s why buyers try to solve two problems at once: keep you engaged long enough to make integration real, and make it cheap to separate if integration goes sideways. Employment terms are the buyer’s favorite tool for that. They can pay part of the economics as ongoing compensation or retention equity, and they can put guardrails around post-close behavior through confidentiality, invention assignment, and restrictive covenants. Practically, you’ll see the same handful of levers over and over: - ***Role clarity***: your title, responsibilities, and who you report to. - ***Incentives***: salary, bonus, retention bonus, and any new equity (or treatment of unvested equity). - ***Exit ramps***: severance, “good reason” resignation rights, and what counts as “cause.” - ***Handcuffs***: noncompete (where enforceable), non-solicit, confidentiality, and IP obligations. None of that sounds emotional on paper. But for you, those bullets translate into: “Who am I after this deal?” “Do I still get to make decisions?” and “If this blows up, am I protected or exposed?” If the answer differs by stage, anchor the analysis to one primary stage first, then briefly explain how it changes later. Do not treat all stages equally. ## What’s “market” for founder employment agreements Let’s separate two things founders tend to blend together: (1) the acquisition purchase agreement, and (2) your ongoing employment deal. Before an acquisition, many founders are effectively at-will employees with an offer letter and standard IP and confidentiality paperwork, not a severance-heavy employment agreement. Investors typically don’t love giving founders contractual severance early because cash is scarce and equity is already the main incentive. Acquisitions change the calculus because the buyer wants you “in the box” after closing. They’re buying something that still needs a builder. And you’re being asked to take a job you did not apply for, in a company you did not create, under a manager you did not choose. So what’s market for founder employment agreements? It depends less on “stage” and more on whether the deal is talent-driven versus asset-driven. - *Talent-driven deal*: The buyer is paying for you and a handful of key people to keep building. Expect more negotiation on title, autonomy, retention equity, and severance. - *Asset-driven deal*: The buyer mostly wants IP, customers, or a product line, and you are optional. Expect a cleaner, more at-will style offer with fewer protections. In both cases, the buyer will usually push for (a) at-will employment, (b) broad confidentiality and IP assignment, and (c) restrictive covenants to protect the value they just bought. Buyers often plan for the possibility of a “rocky breakup,” even if everyone is smiling at signing. ## The 8 clauses that drive 80% of outcomes in founder employment agreements 1. **Role, title, and reporting line.** If you only negotiate one “soft” term, make it this. A great severance package does not fix a reporting line that makes you miserable on day 30. 2. **Scope of duties and decision rights.** Founders don’t lose sleep over job descriptions. They lose sleep over who gets to say “yes” and how often you’re forced to ask permission. 3. **Compensation structure (salary and bonus).** Salary is rarely the point. Bonus design is. Make sure the bonus is tied to things you can actually influence in the integration period. 4. **Retention economics.** This might be a retention bonus, new equity at the buyer, or deferred purchase price tied to continued employment. Ask what is truly discretionary versus contractual. 5. **Equity treatment and vesting.** Know what happens to your unvested company equity at closing, and whether any new equity you receive has vesting or forfeiture features (including “re-vesting” concepts in some deals). 6. **Termination definitions: “cause” and “good reason.”** “Cause” should be narrow and objective. “Good reason” is your exit ramp if the buyer materially changes your role, pay, or location. 7. **Severance and benefits.** Severance is not a trophy. It’s insurance for a very predictable risk: misfit after the deal. 8. **Restrictive covenants (noncompete/non-solicit/confidentiality).** The buyer’s form is often intentionally broad, especially when it arrives close to signing. Be wary of how “the business” is defined, because it may be tied to the buyer’s full, diversified business lines, not the small product silo you will actually work in. Treat scope as the negotiation: narrow definitions, shorten duration, add carve-outs, and confirm what is actually enforceable in your state. *Super-specific watch-out on the [non-solicit:](https://startuplawyer.com/startup-law-glossary/non-solicitation)* if you and your co-founder have historically paired up on deals (or you already know you will want to build something together after the earnout or retention period), consider asking for an explicit carve-out in the founder employment agreements that allows each of you to solicit and hire the other. I have seen founders finish a retention period, start exploring a new venture together, and then realize the buyer’s standard non-solicit technically made it risky for one to “recruit” the other. Most buyers are not trying to block co-founders from teaming up again; they are usually focused on preventing you from poaching their broader employee base. But because the form is broad, it is worth getting this one sentence of clarity while you still have negotiating leverage. ## Why these negotiations get emotional (and how to stay effective) In my experience, founders don’t get emotional because they’re “bad at business.” They get emotional because this is the first time, ever or in a long time, someone is putting a price on your autonomy. Three common flashpoints show up in deals: - *Status shock*: you went from CEO to “VP of Something” overnight. - *Control shock*: you’re now inside someone else’s operating system, and it has rules. - *Fairness shock*: investors are cashing out at close, while your upside is partly locked behind continued employment. The productive move is to translate emotion into a term you can negotiate. “I feel disrespected” often means “I need a clearer title and direct access to the business owner.” “I feel trapped” often means “I need a realistic good-reason clause or shorter restrictions.” This is all manifested by the founder employment agreements. ## Theory vs. reality: what you think you’re negotiating Theory: you’re negotiating a “job.” Reality: you’re negotiating a risk-sharing arrangement for a transition period. Once you see it that way, a lot of weird-seeming positions from the buyer make more sense. The buyer is trying to prevent two expensive outcomes: you leaving quickly, or you staying unhappily and dragging integration into the mud. *Example 1 (title and reporting):* You care about whether you’re “Head of Product” or “Director.” The buyer cares about whether your reporting line will create conflict with an existing exec. The compromise is often a title that preserves external credibility plus a reporting structure that makes day-to-day decisions fast. *Example 2 (severance):* You ask for six months of severance. The buyer hears “I might quit.” A better approach is to frame severance as integration insurance: if they change your role materially or terminate you without cause, you get a defined landing pad. *Example 3 (restrictions):* You read a broad noncompete and think “they’re trying to kill my career.” The buyer thinks “we just paid for the roadmap, the team, and the relationships.” The practical negotiation is scope: narrower definition of “competitive business,” shorter duration, and carve-outs for passive investing, advising, or general tech work that is not truly competitive. Also watch for a quiet mismatch: the covenant may be drafted to cover the buyer’s entire business, even if your post-close job sits in one narrow product silo. ## Leverage: when you can get better terms (and when you can’t) in founder employment agreements Your leverage on founder employment agreements is usually highest at one moment: after the buyer has decided they want the deal, but before they have locked down signatures. If you want to defuse the “last-minute form” tactic, ask for the buyer’s employment and restrictive covenant documents early, and treat them like any other closing deliverable with a deadline. Time pressure is a negotiation tactic. You do not have to accept it as a law of nature. - *Customer risk:* If customers will churn without you, your leverage increases. - *Team risk:* If the buyer needs you to keep key engineers, your leverage increases. - *Timing:* If the buyer is racing a quarter-end or a competitor, your leverage increases. - *Alternative paths:* If you can credibly walk and keep building, your leverage increases. If the company is out of runway, it drops. If you want better terms, don’t just ask for “more.” Ask for alignment. Tie the request to the buyer’s stated goals: integration, retention, and customer continuity. Employment lawyers on the buy side see dozens of founders a year; they respond best to clear, narrow asks that solve a business problem. ## A founder’s pre-sign checklist for founder employment agreements - Do you have a written role description that matches how the buyer talks about you in meetings? - Is your reporting line named, not implied? - Do you understand what “cause” means, and is it mostly objective (fraud, felony, material misconduct) rather than vibes? - Do you have a “good reason” exit if they demote you, slash pay, or move you across the country? - Is severance tied to termination without cause (and sometimes good-reason resignation) within a defined post-close window? - Are restrictive covenants narrow enough that you can still have a career if this isn’t a fit? - If there is a noncompete, is “competitive business” defined around what you actually worked on (your product/category), rather than everything the buyer does? - If you have a co-founder you expect to work with again, consider a narrow non-solicit carve-out that lets each of you solicit and hire the other after you depart. - Do you understand what happens to all your equity: vested, unvested, options, and any new grants? ## If you remember one thing **Founder employment agreements are not a formality.** It’s the part of the acquisition where you lock in what you’re doing next, how you’re protected if it goes wrong, and how much freedom you keep if you decide to move on. - Optimize for a workable role and reporting line first. - Make “cause” narrow and “good reason” real. - Use severance as integration insurance, not ego validation. - Negotiate restrictive covenants like you actually plan to have a career later. ## FAQs founders actually ask **Do I have to sign the founder employment agreement to close the deal?** Usually, yes if the buyer is buying you as much as they’re buying the company. If the buyer truly doesn’t need you post-close, they may still want a consulting arrangement or at least clean IP and restrictive covenant coverage. **What severance is “reasonable” for a founder in an acquisition?** There isn’t one number that is always market. In practice, the right answer tracks how essential you are to integration and how likely a mismatch is. The more the buyer needs you to stay, the more they’ll consider real severance tied to termination without cause (and sometimes good-reason resignation) in the first 12–24 months. **Can I negotiate the noncompete***?* You can usually negotiate scope and duration, even if the buyer starts with something aggressive. Also remember: enforceability varies significantly by state and role, and that practical reality often shapes what buyers will ultimately accept. **What’s the biggest mistake founders make here?** Over-optimizing for the cash number and under-optimizing for the operating reality. If you hate the role, no amount of “retention” will make you stay engaged, and the buyer will feel that in the first quarter. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits --- ### [Startups Should Invest in a Quality Scanner](https://startuplawyer.com/seed-funding/startups-should-invest-in-a-quality-scanner) **Published:** December 31, 2013 **Author:** Ryan Roberts **Content:** When your startup goes through due diligence for an investment round or an exit, investor’s or buyer’s legal counsel will typically send a laundry list of document requests. These documents range from the startup’s [bylaws](https://startuplawyer.com/startup-law-glossary/bylaws) to stock option agreements to third party contracts to prior financing documents. Quite often, these diligence materials are not readily available and/or can be difficult to track down. Or, only pieces of documents can be found (e.g, a signature page rather than the full document). This leads to “corporate cleanup” which is ultimately a time consuming and expensive process. Most of this time and expense can be prevented with the use of a quality scanner. (In our experience, online signature services are only good for a one-off contract.) Good scanners today won’t wreck your burn rate. For example, the fujitsu line of scanners like the iX500 can usually be found in the $420 to $495 range. We have a fujitsu here as a backup scanner to our large Bizhub. If your startup raises a [pre-seed round](https://startuplawyer.com/startup-law-glossary/series-pre-seed) in the low six figures or more, it should purchase a scanner soon after the wire comes through. It will save time and money down the road. 2026 Update: OK, maybe investing in a [DocuSign](http://docusign.com) subscription is the way to go now. 🙂 ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Advisor Stock Option Grants](https://startuplawyer.com/board-of-directors/advisor-stock-option-grants) **Published:** January 2, 2014 **Author:** Ryan Roberts **Content:** 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](https://startuplawyer.com/startup-law-glossary/advisory-board) through incubators, operator communities, investors, and your own customer network. The best ones tend to be motivated by “paying it forward,” staying close to a space they care about, or building relationships with founders they respect. If someone is primarily motivated by getting a title on your website, take that as useful information. ## Start Informal, Then Put It in Writing Most advisor relationships should start informally. Have a few working sessions. See if they actually understand your business. See if they can disagree with you without being weird about it. Once it is clear the relationship is real and valuable, that is the moment to professionalize it. Professionalizing usually means two things. First, you define scope and cadence in plain English. Second, you paper it with an advisor agreement that covers confidentiality, invention assignment where appropriate, and the equity grant mechanics. If the advisor is going to influence product, strategy, or key hires, you want clean ownership and clean expectations. ## Advisor Equity: What’s Typical (and Why) If you want to take an advisor relationship from “helpful person” to “incentivized teammate,” incentive equity is the usual tool. Most commonly that is a stock option grant, though occasionally it is restricted stock. Options are typical because they are administratively cleaner for advisors and align the upside with future value creation. In U.S. startup practice, a common range for an advisor grant is about 0.10% to 0.50% of the company’s [fully diluted capitalization](https://startuplawyer.com/startup-law-glossary/fully-diluted-basis). A very standard grant is 0.25%. Vesting is often monthly over 12 to 24 months, and it is common to see no cliff for true advisors because you are not trying to replicate employee retention. You are trying to pay for ongoing, measurable help. Two quick examples. If you have an advisor who is opening enterprise doors and doing monthly pipeline reviews, 0.25% over two years is often defensible. If you have an advisor who is available for occasional questions and maybe one introduction a quarter, you are probably closer to 0.10% and a shorter term. If you are giving 0.50%, you should be able to describe the advisor’s contribution in the same sentence as you would a key early hire. ## Don’t Be Stingy, But Do Your Diligence on the Advisor Some founders are understandably protective of equity. You should be. Equity is expensive and it is hard to get back. But advisor grants are usually small in absolute terms, and a good advisor can change outcomes that dwarf the dilution. The real risk is not “giving up 0.25%.” The real risk is giving up 0.25% to the wrong person. - **Validate expertise.** Ask for two or three concrete examples of how they have helped a company at your stage. - **Check references**. Do not skip this just because you like them. - **Define deliverables**. For example, one monthly working session plus a reasonable response time on tactical questions. - **Avoid “advisors” who want to negotiate like a Series A investor**. That usually ends poorly. ## The Practical Takeaway Use advisors to accelerate learning and execution, not to collect logos. Start informal, then document the relationship once you have proof of value. When you grant equity, stay in market ranges, tie it to ongoing contribution, and keep the paperwork clean. You are buying leverage and speed. You are not buying a name. **FAQ:** Should an advisor sign an [NDA](https://startuplawyer.com/startup-law-glossary/nda)? Usually no. If you need an NDA to talk, the relationship is probably not ready. If you are sharing true trade secrets, use a simple confidentiality agreement as part of the advisor agreement. **FAQ:** Can I just issue stock instead of options? Sometimes, but stock grants to advisors create tax and paperwork complexity. In most venture-backed startups, options are the default for a reason. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Boards and Observers --- ### [If I Launched a Startup in 2014](https://startuplawyer.com/incorporation/if-i-launched-a-startup-in-2014) **Published:** January 2, 2014 **Author:** Ryan Roberts **Content:** I thought I would expand upon and update my “[If I Launched a Startup](https://startuplawyer.com/startup-issues/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](https://startuplawyer.com/incorporation/the-when-to-incorporate-decision-matrix), but after I [checked my current job’s employment contract](https://startuplawyer.com/incorporation/current-employer-invention-assignment-startup) (2) Type of Legal Entity: [C Corporation](https://startuplawyer.com/incorporation/the-5-second-guide-to-choosing-your-startups-legal-entity), and [not an S Corporation or LLC](https://startuplawyer.com/venture-capital/why-startups-are-corporation-for-venture-capital) (3) State of Incorporation: [Delaware](https://startuplawyer.com/incorporation/top-5-reasons-to-incorporate-in-delaware) (since I’m at least potentially looking to raise capital) (4) Authorized Shares in Certificate of Incorporation: [10,000,000 shares](https://startuplawyer.com/incorporation/how-many-shares-authorized-stock-should-startup-company-incorporation) of [Common Stock](https://startuplawyer.com/startup-law-glossary/common-stock) (5) Par Value of Common Stock: [$0.00001 per share](https://startuplawyer.com/incorporation/par-value-for-a-startup-companys-stock) (6) Aggregate Stock Issuance to the Initial Founders: [6,000,000 shares](https://startuplawyer.com/incorporation/how-many-shares-should-be-issued-to-founders-at-incorporation) (7) Founders Equity Split: [Depends on the Team, But Quickly](https://startuplawyer.com/incorporation/how-to-split-the-startup-founder-equity-pie) but only after the [Difficult Conversation(s)](https://startuplawyer.com/startup-issues/keep-your-startup-co-founder-closer) (8) Vesting For All Founders?: [Heck yeah](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time) (9) Vesting Schedule: [4 years with a 1-year Cliff](https://startuplawyer.com/incorporation/what-is-four-years-with-a-one-year-cliff) with [Double-trigger Acceleration](https://startuplawyer.com/startup-law-glossary/double-trigger-acceleration) (10) Payment for Founders’ Shares: [Cash and Intellectual Property](https://startuplawyer.com/incorporation/you-cant-spell-corporation-without-ip) (11) Handling of “Lost Founders”: [Get an Assignment and/or Release (then wish them well)](https://startuplawyer.com/incorporation/lockdown-lost-founder-ip) (12) Freak-Out on My Lawyer When I get My Delaware Franchise Tax Bill?: [No](https://startuplawyer.com/incorporation/the-delaware-franchise-taxes-freak-out) ## Startup Incubators, Mentors, Advisors and Developers (1) Choosing an Incubator: [It’s all about the mentorship](https://startuplawyer.com/accelerators/accelerator-mentors-money-office-space) (2) Incubator Funding Documents: [Easy and Light](https://startuplawyer.com/accelerators/accelerator-documents-should-be-easy) (3) Strike a Deal with a Mentor During the Incubator Program?: [Probably not](https://startuplawyer.com/boards-advisors/of-mice-and-mentors) (4) Raise a Round Before Demo Day?: [No, wait until after…unless it’s a great Series A.](https://startuplawyer.com/accelerators/should-startup-close-seed-round-accelerator-demo-day) (5) Option Grant Size to an Advisor: [.10% to 0.50%](https://startuplawyer.com/boards-advisors/advisor-stock-option-grants), but only after execution of an [Advisor Agreement](https://startuplawyer.com/boards-advisors/advisor-agreement) (6) Outsource all Technical Development?: [No](https://startuplawyer.com/employees-consultants/outsourcing-software-development-startup) ## Raising Capital for your Startup (1) Length of Investor NDA: [0 pages](https://startuplawyer.com/venture-capital/why-a-vc-will-take-a-lighter-to-your-nda) (2) Fees Paid to Pitch: [$0](https://startuplawyer.com/startup-issues/never-ever-ever-ever-pay-to-pitch) (3) Investors: [Accredited only](https://startuplawyer.com/seed-rounds/life-is-too-short-to-deal-with-non-accredited-investors) ([no crowdfunding until the rules are easier on startups](https://twitter.com/startuplawyer/status/393728237974470656)) (4) Seed Round Structure: [Convertible Notes](https://startuplawyer.com/seed-rounds/how-convertible-debt-works) (5) Convertible Note Incentive: [Discount and Price Cap](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap), but with a [liquidation preference regulator](https://startuplawyer.com/seed-rounds/price-cap-liquidation-preference-windfall-regulators). (6) Convertible Note Interest: [8%, but hopefully 2%](https://startuplawyer.com/seed-rounds/convertible-note-interest) (7) When to Hold Closing: [On a Rolling Basis](https://startuplawyer.com/seed-rounds/the-rolling-close) (8) First Purchase after Closing: [A Legit Scanner](https://startuplawyer.com/seed-rounds/startups-should-invest-in-a-quality-scanner) ## If you remember one thing… Most startup law “gotchas” aren’t mysteries—they’re just incentives and trade-offs hiding in plain English. The move is to stop optimizing for the term you can brag about and start optimizing for the term that actually changes your outcome: who controls the next decision, who takes the downside, and what has to happen for you to get paid (or to keep building). - Circle the one or two provisions that create real leverage (and ignore the rest until those are settled). - Ask, “What does this let the other side say ‘no’ to?” If the answer is “a financing, a sale, or your ability to hire/fire,” it’s material. - Treat ‘market’ as a starting point, not an argument. Your leverage comes from timing, alternatives, and how badly the other side wants *this* - Before you sign, translate the key terms into one sentence each you’d be comfortable explaining to a future cofounder, board member, or acquirer. If you’re about to sign something and you can’t tell—quickly—who has the veto and who eats the downside, pause. That’s the moment to get clarity, not after the document becomes your new “business partner.” ## Conclusion If you’re looking for a theme across all of this, it’s that the early legal and financing moves aren’t about being fancy. They’re about buying yourself room to iterate without stepping on landmines that are expensive to undo later. Delaware C-Corp, clean founder vesting, lightweight mentor/advisor arrangements, and simple seed financing documents are all just different ways of saying the same thing: keep the cap table and governance straightforward until you’ve earned the complexity. The practical takeaway: optimize for momentum and clarity, not for headline terms. Get incorporated when you’re truly committing, paper the founder relationships like grown-ups, choose mentors for signal and time (not just brand), and raise from people who can actually fund you without making your life weird. Then go build. Everything else is commentary. - Keep your documents and ownership clean. - Avoid premature complexity (especially in seed financings). - Pick advisors and programs that increase execution speed, not meetings. - Spend your early energy on product and customers, not legal theater. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Why Startups are a Corporation for Venture Capital](https://startuplawyer.com/venture-capital/why-startups-are-corporation-for-venture-capital) **Published:** July 17, 2008 **Author:** Ryan Roberts **Excerpt:** Why Your Startup Company Will Need to be a C Corporation to Raise Venture Capital **Content:** Choosing a startup’s legal entity can be a frustrating experience for the entrepreneur. Who has time to deal with the LLC, S-Corp, C-Corp, LP, GP, LLP & LLLP when you’re already buried with things like CSS, RoR, AJAX, PYTHON, PHP & ASP? Thankfully, if your startup is absolutely determined to raise venture capital, there’s only one viable legal entity decision your startup can make–the Corporation. Here’s why your startup will be structured as a corporation for venture capital investment: **Does this include S Corporations?** No. While the [S Corporation structure](http://en.wikipedia.org/wiki/S_corporation) is a popular choice for entrepreneurs and other small businesses, it comes with regulatory limitations that do not make it a feasible vehicle for raising venture capital. The three main regulatory limitations are: - S Corporations may only have one class of stock; - S Corporation stockholders must be natural persons (except for some extremely limited circumstances); and - S Corporations can not have more than 100 stockholders. The one class of stock requirement is fatal to a venture capital investment since venture capital firms will demand [preferred stock](https://startuplawyer.com/venture-capital/what-is-preferred-stock) in return for their investment. Also, most venture capital firms are organized as limited partnerships and less frequently as LLCs–but both legal entity types aren’t “natural persons.” And finally, as your startup grows, the 100 stockholder maximum comes into play once your startup begins issuing stock and stock options to employees. Thus, the only type of viable corporation for venture capital investment is the C corporation. **Why not an LLC?** While the LLC is also a common startup vehicle, the C Corporation wins hands down when it comes to raising venture capital. The following 4 reasons explain why the LLC is suboptimal compared to the corporation for venture capital: *1. Pass Through Entity* While the pass through feature (income/losses are passed down to the shareholders rather than dealt with at the entity level) of LLCs are desirable to most entrepreneurs, venture capital funds do not find pass through taxation to be a similarly desirable feature. The venture capital firm does not want the accounting and tax matters of a funded venture to be passed down to the firm, and thereby be attributed to the venture capital firm’s tax exempt and foreign limited partners. Such a scenario could create unrelated business taxable income (UBTI) issues or have their foreign investors be deemed “doing business” in the United States and thus have to file a U.S. tax return. *2. Transferability* The membership interests of an LLC are typically not freely transferable by state statute. This makes the LLC a lousy entity for one of venture capital’s exit strategies: the IPO. (Not that IPOs for venture backed companies are hot at the moment.) *3. Predictability* Started in the late 1980s and only made more popular in the last decade or so, LLCs are a relatively new type of legal entity. Thus, there just isn’t a well developed set of laws and regulations for LLCs. Corporations, on the other hand, provide a larger degree of predictability with regards to corporate governance and stockholder rights. *4. The Venture Capital Firm’s Organizational Documents* Primarily due to the reasons outlined above, many venture capital funds will have specific provisions in their own organizational documents that prohibit them from making a venture capital investment in an LLC, or any other legal structure than a C Corporation. Thus, if your startup is absolutely against being a C Corporation, you could be declined by the venture capital firm regardless of how spectacular your startup is. **The Conclusion** The C Corporation is a venture capital firm’s clear-cut choice for the type of entity in which to place their investment. When the to-be-venture-funded startup is a C Corporation, various administrative and other burdens are minimized for the venture capital firm, which allows them (and their capital) to focus on developing the startup company’s business. You startup should be structured as a corporation for venture capital. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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The short version: once you sign them, you can’t do a bunch of very normal startup things (raise money, sell the company, change the [option pool](https://startuplawyer.com/startup-law-glossary/option-pool), even sometimes hire/fires at the senior level) without investor consent, and you usually discover the friction when you’re trying to move fast. The biggest misconception is thinking protective provisions are just about “major” decisions like selling the company. In real startup law practice, they’re often used politely, rationally, and sometimes relentlessly, to shape your negotiating leverage later. This applies to you most directly if you’re signing a priced round (seed preferred or Series A), because that’s when protective provisions become a real governance feature rather than a handshake. But the dynamic matters in M&A too: acquirers and their counsel will ask early, “Who has blocking rights?” because one misaligned veto can slow or kill a deal. Let’s walk through what protective provisions actually are, which ones matter, where founders over-optimize, and how to negotiate the *scope* without trying to negotiate away the concept. ## **Why this shows up in real venture deals (and why it’s not “investor control theater”)** [Protective provisions](https://startuplawyer.com/startup-law-glossary/protective-provisions) exist for a reason. Venture investors are buying preferred stock, not common. They’re taking a different risk profile and expecting different protections. In startup law terms, protective provisions are the mechanism that prevents common stockholders and the board (which founders often influence) from doing something that disproportionately harms the preferred. Investors also know something you may not want to admit yet: your incentives and their incentives aren’t identical. - You might rationally prefer a “swing for the fences” financing that risks wiping out existing preferred. - You might prefer a fast acquisition at a price that makes founders emotionally whole but produces a mediocre fund return. - You might prefer to issue a bunch of new equity to recruit executives because you feel the operating pain today. Those can all be defensible moves. They can also be value transfers. Protective provisions are how preferred holders get a seatbelt—one that locks at inconvenient times. If you’re reading this hoping for a speech about how veto rights are unfair, you’ll be disappointed. These rights (at least the high-level rights) are market-standard in venture financing for a reason. The goal isn’t to eliminate them. The goal is to keep them from becoming a multipurpose remote control for your company. ## **The common founder assumption (and why it’s incomplete)** The usual founder mental model goes something like: 1. The board runs the company. 2. Investors have board seats. 3. So investor influence is basically board governance. That’s incomplete. Preferred investors often have *two* levers: - **Board rights** (a seat or observer rights), and - **Stockholder veto rights** (protective provisions), which operate *outside* the board vote. The practical difference matters: - A board vote is (usually) majority-based and subject to fiduciary duties. - A protective provision is (usually) a class vote requirement. If consent is required and you don’t have it, the action is simply blocked. No fiduciary balancing test, no “business judgment” deference, no tie-breaker. Just “no.” Founders also assume these rights are only used for “extraordinary” moments. In real deal rooms, they’re often used for ordinary moments that have extraordinary *economic* consequences, like the terms of your next round. ## **How protective provisions actually work** “Protective provisions” is startup lawyer shorthand for a list of actions that the company cannot take without the approval of some threshold of the preferred stock, often a majority of the preferred, sometimes a specific series, and sometimes multiple thresholds. Mechanically, they live in the charter (certificate of incorporation) and are enforced at the stockholder level. You can have a board unanimously in favor of something and still be blocked by a preferred class consent requirement. The list varies by stage, market conditions, and leverage, but the categories are pretty consistent. Here are the ones that most often show up as real friction, including those in the [NVCA Docs](https://startuplawyer.com/startup-law-glossary/nvca-docs). **1) Issuing new [senior or equal securities](https://startuplawyer.com/startup-law-glossary/senior-securities) (a/k/a “don’t mess with the stack”)** This is the core. Investors don’t want you issuing a new class of stock that sits ahead of them [economically (liquidation preference) or that changes control](https://startuplawyer.com/startup-law-glossary/economics-vs-control) dynamics. In practice, this becomes relevant when: - you want to do a bridge round with “senior” terms, - a new lead investor wants to be senior to everyone else, or - you want to create a new class for strategic reasons (rare, but it happens). This one is usually market. The negotiation is usually around definitions (what counts as “senior,” what about convertible notes, SAFEs, or equipment lines) and around thresholds. **2) Selling the company (and the surprisingly broad definition of “sale”)** Most founders expect this veto. Still, two things catch people: - “Sale” usually includes mergers, consolidations, and sometimes a sale of all or *substantially all* assets. - The consent right can apply even if the board approves and common would vote yes. Where this gets spicy is when [preferences are stacked](https://startuplawyer.com/startup-law-glossary/stacked-preference) and the preferred have different outcomes from a given price. In M&A, it is very normal for buyer’s counsel to ask early: “Do you need separate class consents?” because a misaligned veto holder can demand a side deal (or just run out the clock). **3) Changing the charter or bylaws** This sounds like paperwork, so founders ignore it. Then it becomes the mechanism to block something substantive: new authorized shares, option pool changes that require charter amendments, or changes to rights that might impact preferred economics. In startup law practice, this is often the “hidden hook” that [gives investors leverage](https://startuplawyer.com/seed-rounds/safe-vs-convertible-note-leverage-you-didnt-mean-to-give-away) over equity housekeeping. **4) Paying dividends or repurchasing stock (usually not the fight you think it is)** Most venture-backed startups aren’t paying dividends. That’s why this provision is usually more about preventing value leakage: buying out founders, repurchasing common cheaply, or doing anything that looks like cash coming out before investors get a return. This is usually market and not worth burning credibility on unless you have a specific reason. **5) Incurring debt above a threshold (where founders underestimate how often it matters)** Debt covenants aren’t just for big companies. Lines of credit, venture debt, equipment financing…these come up earlier than you think, especially when equity markets tighten. A protective provision might require consent to incur debt above $X or to pledge IP as collateral. If you’re in a capital-efficient business and you expect to use debt strategically, you should negotiate this with that future in mind. **6) Increasing or [creating an option pool](https://startuplawyer.com/incorporation/dont-create-an-issuance-pool) (yes, sometimes)** This is not always in the charter list, but it shows up often enough (especially later-stage) that it’s worth flagging. The logic is simple: increasing the option pool dilutes everyone, including the preferred. Investors usually prefer dilution that comes with new money (because it hopefully increases company value) rather than dilution that’s purely compensatory. This one often becomes a negotiation in the *next* round, not the current one. Which is exactly why it hurts “too late.” ## **Three concrete examples where veto rights show up at the worst possible time** **Example 1: The “fast bridge” that isn’t fast** You’re running low on cash and want a quick bridge: a [convertible note with a discount and a cap](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap). You assume this is operationally routine because everyone does it. Then your startup lawyer tells you: you need preferred consent because the note might be deemed a new security with rights that are senior or potentially disruptive, or because the charter’s protective provisions explicitly cover convertible instruments. Now you’re not doing a “quick bridge.” You’re negotiating with a class of investors, on a deadline, with asymmetric information. The practical lesson: if you anticipate bridge risk, negotiate clearer carve-outs for standard [convertible instruments upfront while you have leverage](https://startuplawyer.com/seed-rounds/safe-vs-convertible-note-leverage-you-didnt-mean-to-give-away) and time. **Example 2: The “great acquisition offer” that triggers investor math** A strategic buyer offers $75M. You’re thrilled. Your early investors are happy. Your late-stage investors… are less enthusiastic because their liquidation preference stack means their outcome is fine-but-not-fund-returning, and they have a class veto on a sale. No one is being irrational here. They’re responding to incentives. This is where protective provisions become very real in M&A. The buyer is not going to wait forever while your cap table debates the meaning of “good outcome.” The practical lesson: understand who has blocking rights and how preferences shape their vote *before* you’re in exclusivity. **Example 3: The option pool increase that turns into a pricing fight** You’re raising Series A. The lead wants a 15% post-money option pool “refresh.” You assume this is just dilution and you’ll swallow it. But you already have preferred protective provisions that require investor approval to increase authorized shares or amend the charter in ways needed to create that pool. Your existing investors now have leverage over the terms of your Series A—sometimes to protect pro rata, sometimes to improve economics, sometimes just to avoid being surprised. The practical lesson: founders often over-optimize price (valuation) and under-optimize governance friction. If your cap table can block routine equity actions, your next financing gets harder. ## **Negotiating protective provisions: what you can actually move (and what you usually can’t)** Here’s the market reality: you probably cannot negotiate “no protective provisions” in a normal venture financing, and trying too hard to do so is a good way to signal you don’t understand how venture works. What you *can* negotiate is **scope, thresholds, and definitions**, which is where 80% of the value lives. **1) Scope: keep the list tight and tied to real investor protection** A good protective provision list is about preventing: - senior securities, - value leakage, - fundamental transactions, - and changes that alter the bargain. A bad list turns into a general “investor permission slip” for operational decisions. If you see a long laundry list that includes things like approving annual budgets, hiring/firing executives, opening new offices, or entering material contracts, that’s less “market norm” and more “control creep.” Sometimes it’s justified in later-stage rounds or distressed contexts. Often it’s just a term sheet that drifted. Your negotiation posture should be: “I get why you need veto rights on fundamental economics and exits. Let’s not use the charter to manage the company day-to-day.” **2) Thresholds: majority vs. supermajority vs. per-series consent** This is where founders get surprised. - **Majority of preferred** is common. - **Supermajority** (e.g., 66 2/3%) sounds minor but can create minority holdout power. - **Separate series consent** (Series A must approve, Series B must approve, etc.) can create multiple veto points, which is the governance equivalent of adding extra stops to your commute. If you’re early-stage, pushing hard for “single class vote only” is often a reasonable ask, especially if you expect multiple rounds. Multiple veto gates compound friction. **3) Definitions: carve out normal-course actions so you don’t have to ask permission to operate** This is the unsexy part that matters. Examples of carve-outs that can materially reduce future pain: - Clear treatment of convertible notes/SAFEs or other standard bridge instruments. - Debt thresholds that match a realistic financing plan (not a number that was pulled from a template). - Pre-approved equity issuances under the option plan within reasonable bounds. You’re not trying to create loopholes. You’re trying to avoid a situation where the charter forces you to assemble an investor committee for basic company operations. **4) Process: make consent logistically achievable** This is not a “legal” point so much as a real-world one. If your preferred includes angels, micro-funds, or people who don’t respond quickly, you can end up in consent purgatory. Make sure your threshold isn’t so high that one unreachable holder becomes a blocker. Founders almost never think this through until they’re trying to close something in 72 hours. ## **What founders commonly over-optimize (and what matters more)** You’ll be tempted to spend negotiation capital on the stuff that feels measurable and X-friendly: valuation, option pool size, maybe a board seat. Those matter. But if you have limited leverage, a clean win is often: - getting a tighter protective provision list, - avoiding multiple class consents, - and ensuring the definitions don’t accidentally treat routine actions as “fundamental.” In practice, I’d often rather see you accept a slightly lower valuation with cleaner governance than win the valuation headline and bake in ongoing veto friction that shows up at every meaningful inflection point. Not always. But more often than founders expect. ## **Theory vs. reality: protective provisions on paper vs. in the deal room** **Theory:** protective provisions are “rarely used” and “only apply to major actions.” **Reality:** they are frequently used, but often in subtle ways: - as a forcing function to bring investors into a conversation, - as leverage in the next financing, - as a speed bump that changes negotiating posture, - or as a backstop when the board dynamics are messy. Also, the tone is usually not adversarial. Most investors don’t wake up wanting to veto your day. But when there’s a downside scenario, a controversial round, or an M&A offer with uneven outcomes, people behave predictably. And this is the part that’s hard to internalize early: the veto is valuable even if it’s never used, because its existence changes the negotiation landscape. If that feels abstract, here’s a cleaner way to put it: protective provisions are like having the ability to pause the song mid-track. Even if you rarely hit pause, everyone plays differently when they know you can. ## **So what should you do differently in your next venture financing?** 1. **Ask your startup lawyer to translate the protective provisions into “things you will want to do.”** Not categories. Actual actions: raise a bridge, expand the option pool, take venture debt, sell a subsidiary, do an acqui-hire, etc. If the veto list blocks normal actions without clear investor-protection logic, that’s negotiable. 2. **Negotiate for fewer veto points, not fewer words.** A shorter list is good. But a single consent threshold is often even better. If you can avoid multiple series consents, do it. 3. **Treat definitions as economics.** Founders treat definitions as lawyer noise. Investors treat them as future optionality. If you expect to use debt or bridge instruments, make sure the charter doesn’t turn that into a consent crisis. 4. **Model M&A governance early.** If you raise multiple rounds, ask: who can block a sale, and what price outcomes make them likely to block? That’s not pessimism. That’s understanding incentive alignment. 5. **Don’t confuse “market” with “non-negotiable.”** Market norms exist. But within the market band, there is real room to negotiate scope and mechanics—especially if you’re a strong company, have multiple term sheets, or are raising in a founder-friendly moment. ## **If you remember one thing…** Protective provisions aren’t evil; they’re leverage. If you don’t negotiate their scope while you can, you’ll negotiate it later when you can’t….usually in the middle of a financing or an acquisition, with a deadline and less leverage. That’s the version founders “feel too late.” ## **Quick FAQs founders actually ask** **Are protective provisions the same thing as board control?** No. They’re stockholder-level veto rights. Even if the board approves something, protective provisions can still block it if the charter requires preferred consent. **Can investors use protective provisions to force a sale (or stop one)?** They can usually stop one if they have the required consent right for a sale. Forcing a sale is harder and depends on board dynamics, drag-along rights, and specific deal structure. **Do these rights get worse in later-stage rounds?** Often, yes. Later-stage investors may ask for more operational vetoes, higher thresholds, or separate class approvals—especially if the company is raising in a tough market or needs structured terms. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Glorified Employees](https://startuplawyer.com/seed-funding/glorified-employees) **Published:** September 19, 2013 **Author:** Ryan Roberts **Content:** Standard seed financing terms have moved well beyond the Bay Area, but they still vary by region, network, and investor experience. Most seed investors should protect their investment with reasonable governance and information rights. The problem starts when a seed investor, whether in Dallas or Denmark, treats your startup like a distressed asset and insists on terms that are far harsher than what is typical for an early seed round. Worst case, the co-founders become glorified employees of their own startup. ## What “Harsh” Control Terms Can Look Like in a Seed Round Control terms are deal points that let an investor influence decisions beyond their ownership percentage. In moderation, some oversight is normal. In excess, it can leave founders with responsibility but little real authority. Examples of control terms that may be disproportionate in a small seed financing include: - **Multiple investor board seats** (or a board structure where investors can outvote founders) - **Overly broad protective provisions** that require investor approval for routine operating decisions, such as hiring plans, ordinary-course spending, or standard customer contracts - **Veto rights** tied to low thresholds, which can turn day-to-day management into a permission-based process - **Founder restrictions** that go beyond market norms, such as unusually aggressive vesting resets or penalties that are not aligned with the risk profile of a seed round When the governance burden is too heavy, founders can shift from majority owners to functional employees, accountable for outcomes but constrained in how they run the business. At small seed financings, such as a $100k to $250k round, the tradeoff can feel even more lopsided because founders often accept reduced pay and significant personal risk in exchange for the chance to build long-term value. ## What to Do If You Are Offered a Seed Deal That Makes You and your Co-Founder “Glorified Employees” If the proposed terms would leave you unable to operate without constant approvals, the simplest answer is often to not take the deal. A seed round should help you move faster, not slow your company down at the moment you most need speed. That said, you can usually decline without burning the relationship. Instead of coming down hard on the investor, consider a professional, educational approach: - **Ask for the rationale** behind each control term, then separate legitimate risk concerns from blanket “we always do this” positions. - **Offer market context** by describing what you are seeing in comparable seed financings, including typical board structures and the limited scope of protective provisions at this stage. - **Suggest alternatives** that protect the investor without freezing operations, such as one board seat (or an observer role), narrower approval lists, clear spending thresholds, and regular reporting. - **Keep the door open** by inviting them to re-engage if they are willing to move toward standard seed terms. Investors who are new to seed, investing outside their home market, or transitioning from distressed or private equity style deals may not realize how off-market a control package is for an early-stage startup. Pointing them in the right direction can help future founders too. Pay it forward. ## FAQ **Are investor control rights always a red flag?** Not necessarily. Some governance is normal. The question is whether the rights are proportionate to the check size, stage, and the day-to-day needs of the business. **What is a reasonable board setup in a seed round?** It depends on the company, but many seed-stage startups keep the board small and founder-influenced, sometimes with a single investor seat or a board observer rather than multiple voting investor seats. **How do I push back on protective provisions without sounding difficult?** Anchor on operating practicality. Explain that you want clear oversight and aligned incentives, but you also need the ability to run the company without constant approvals. Propose specific thresholds and a narrower list of investor consent items. **Should I take a small seed check with heavy control terms if I have no other options?** Be cautious. A restrictive governance package can make it harder to raise the next round, hire, and move quickly. Consider whether you can reduce the control terms, find alternative capital, or extend runway in other ways. **What if the investor refuses to change the terms?** You can decline politely and keep the relationship intact. Share what terms you could accept and invite them to reconnect if their position changes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Notes typically do not include a stated [pre-money valuation](https://startuplawyer.com/venture-capital/pre-money-and-post-money-valuation). Instead, the note converts into equity in a later priced financing (often a Series A), and the conversion price is usually based on the price paid by new investors in that round, adjusted by any agreed conversion discount (and sometimes a valuation cap). The conversion discount is meant to reward the seed investor for taking earlier risk. When the note converts, the investor effectively pays a lower price per share than the new money investors in the priced round, because the conversion price is reduced by the discount. ## How a convertible note discount works **Example:** If the Series A price is \\$1.00 per share and the note has a 20% conversion discount, the note converts at \\$0.80 per share. That means the noteholder receives 25% more shares for the same principal and accrued interest than they would at the Series A price. Conversion discounts are set to approximate the additional risk the note investor is taking by investing earlier than the priced-round investors. In addition to general early-stage risk, the discount is often influenced by timing (how long until the next round), how quickly the company expects its valuation to increase, and market norms for similar deals. ## Common convertible note discount ranges Many convertible note deals use a fixed **convertible note discount**, often somewhere between 10% and 40%. In practice, 15% to 25% is common in many seed financings, with higher discounts usually reflecting either higher perceived risk or a longer expected time to the next priced round. ## Time-based step-ups Sometimes the discount increases over time, which can motivate the company to raise the next round sooner and compensate the investor if the conversion takes longer than expected. If you use this approach, be careful that the tiers are simple to administer and do not create surprises in the cap table model. **Example tiered discount:** (i) 15% if the Series A occurs within 6 months after the note investment; (ii) 25% if the Series A occurs within 7 to 12 months after the note investment; or (iii) 40% if the Series A occurs 12 or more months after the note investment. ## Founder considerations If your note also has a valuation cap, the conversion mechanics typically give the investor the benefit of the better price, meaning the lower of the discounted price or the cap-based price. Founders should model both scenarios, because the cap can drive the outcome even when the discount looks modest. Also watch for term creep across multiple note closings. If you issue notes over time with different discounts, caps, or most favored nation rights, the conversion math and investor expectations can get messy. A clean term sheet, a single note form, and a simple model you can share with counsel will save time later. If you keep the terms simple and model a few outcomes in advance, a **convertible note discount** can be an efficient way to reward early risk without debating a valuation too early. The key is to pick a number you can explain, document it consistently across closings, and avoid adding complexity you cannot administer. ## FAQ for founders **Q: Is a conversion discount the same thing as a valuation cap?** No. A discount reduces the priced-round share price by a percentage. A valuation cap sets a maximum company valuation for conversion math. Notes sometimes include one or both, and if they include both, the investor typically converts at the better price. **Q: What convertible note discount should we offer?** Many seed notes land in the 15% to 25% range, but there is no universal right answer. The right number depends on your leverage, the round timeline, whether there is also a cap, and what similar companies are offering in your market. **Example:** If you expect to raise a priced round in 6 to 9 months and you have strong demand, 15% to 20% may be sufficient. If the timeline is uncertain, you may see pressure for 25% or more. **Q: We are doing multiple note closings. Do early investors need a better discount?** Not necessarily, but you should be intentional. Some companies keep terms identical for simplicity. Others use a small step-up over time to reflect added risk for earlier checks. Either way, document it clearly so investors understand whether later investors are getting the same deal or a different one. **Q: What happens if we never do a priced round?** The note terms govern. Some notes convert upon a defined event, may be repayable at maturity, or may allow conversion in a change of control. Make sure you understand maturity date, interest, and any conversion triggers so you are not forced into a bad outcome later. **Example:** A 24-month maturity note that has not converted could become due and payable, which is a problem if the company does not have cash to repay it. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** conversion discount, convertible note, seed capital, series a --- ### [Update to Accredited Investor Definition](https://startuplawyer.com/seed-funding/update-to-accredited-investor-definition) **Published:** August 20, 2010 **Author:** Ryan Roberts **Content:** The [Dodd-Frank Wall Street Reform and Consumer Protection Act ](http://www.washingtonpost.com/wp-dyn/content/article/2010/07/15/AR2010071500464.html)and later SEC rulemaking changed how the accredited investor definition works in a few important ways. Two updates that commonly show up in startup fundraising paperwork are the exclusion of primary residence from the net worth test and the SEC’s 2020 expansion of additional [accredited investor](https://startuplawyer.com/startup-law-glossary/accredited-investor) categories. ## Dodd-Frank update: primary residence excluded from net worth for accredited investor status In 2010, Dodd-Frank directed the SEC to exclude the value of a person’s primary residence from the $1,000,000 net worth test. Here is the statutory language. **SEC. 413. ADJUSTING THE ACCREDITED INVESTOR STANDARD.** (a) IN GENERAL.—The Commission shall adjust any net worth standard for an accredited investor, as set forth in the rules of the Commission under the Securities Act of 1933, so that the individual net worth of any natural person, or joint net worth with the spouse of that person, at the time of purchase, is more than $1,000,000 (as such amount is adjusted periodically by rule of the Commission), excluding the value of the primary residence of such natural person, except that during the 4-year period that begins on the date of enactment of this Act, any net worth standard shall be $1,000,000, excluding the value of the primary residence of such natural person. **Translation:** Your primary residence does not count toward the $1,000,000 net worth test. It can also reduce net worth if the mortgage debt on the home exceeds the home’s value. **Example 1:** You own a $500,000 house free and clear. $0 is added to your net worth for the $1,000,000 test. **Example 2:** You own a $500,000 house with a $300,000 mortgage. $0 is added to your net worth for the $1,000,000 test. **Example 3:** You own a $500,000 house with a $600,000 mortgage. $100,000 is subtracted from your net worth for the $1,000,000 test. ## SEC 2020 update: expanded categories of accredited investors In 2020, the SEC amended Rule 501(a) to expand who can qualify as an accredited investor, largely by adding categories tied to financial sophistication rather than wealth alone. The income and net worth thresholds did not change, but the set of people and entities who can qualify did. - **Individuals with certain professional certifications** designated by the SEC (initially including FINRA Series 7, Series 65, and Series 82), if held in good standing. - **Knowledgeable employees of private funds**, but generally only for investments in their own fund. - **Spousal equivalent** status, allowing individuals to pool finances with a partner equivalent to a spouse for the joint tests. - **Family offices and family clients** meeting specific requirements, including at least $5M in assets under management for the family office. - **Certain entities** such as SEC-registered investment advisers, state-registered advisers, exempt reporting advisers, and entities owning more than $5M in investments, if not formed for the specific purpose of buying the offered securities. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** accredited investors --- ### [Why a Finder is a Loser](https://startuplawyer.com/seed-funding/why-finders-are-losers) **Published:** October 28, 2010 **Author:** Ryan Roberts **Content:** When a startup considers paying a “[finder](https://startuplawyer.com/startup-law-glossary/finder)” for investor introductions, I usually have the same conversation with founders. It goes something like this. ## A typical conversation about a finder **Startup:** A finder knows a lot of investors and will introduce us if we pay 6% of any capital we raise through those introductions. **Me:** Is the finder a registered [broker-dealer](https://startuplawyer.com/startup-law-glossary/finder)? **Startup:** No. **Me:** That can be a serious issue. If someone is regularly paid to help raise capital for your company, they may be acting as a broker under federal or state securities laws, which often requires registration. Regulators have increased scrutiny of unregistered activity. More importantly for founders, using an unregistered broker can jeopardize your private placement exemptions and create problems you do not want to discover during diligence for your next round. **Startup:** But how does everyone else do it? **Me:** Other people doing it does not make it legal or low risk. Lack of enforcement in a particular case is not a stamp of approval. The reality is that a lot of unregistered “brokers,” as that term is defined by the SEC, operate in the startup ecosystem. ## Why a finder is risky Paid finders are one of the startup world’s open secrets. If someone offers to help you raise seed capital only in exchange for a percentage of what you raise, treat it as a major red flag. In practice, these arrangements tend to fail in one of two ways: the finder does not deliver meaningful introductions, or the introductions are to people who are not active early-stage investors and who slow the process down with unusual requests. You may feel like fundraising will consume an obscene amount of time, and it often does. You may also feel like you do not know any investors. Even so, raising capital is not something you can outsource. Founders have to own the story, build relationships, and run the process. A finder may claim to have a Rolodex of wealthy people, but it is often chock-full of people who do not typically invest in early-stage startups. Even when a finder produces an investor, that investor may be unfamiliar with venture norms and may ask for highly investor-favorable terms that can complicate a future financing. ## Legal and financing implications The worst-case outcome is not just an expensive fee. You can end up with a messy financing, a distracted team, and avoidable securities-law risk. In a later priced round, investors and their counsel may ask whether any unregistered brokers were used, what fees were paid, and whether rescission rights or exemption problems exist. Even if you can resolve the issue, it can slow diligence and weaken your negotiating position. ## What to do instead - Build your own investor pipeline: ask existing supporters for warm intros, attend relevant founder and operator communities, and keep a simple CRM of outreach and follow-ups. - Work with reputable counsel on your fundraising plan and compliance basics, including who can be paid, how, and under what structure. - If you want help sourcing investors, focus on value-add advisors who will help you refine the pitch, make selective introductions without transaction-based compensation, and coach you through the process. ## FAQ for founders **Q: Is it ever okay to pay someone a percentage of the money they introduce?** Often, no. Paying transaction-based compensation for capital raising can trigger broker issues. If you want help, focus on non-transaction-based advisory support, or work with properly registered and compliant intermediaries where appropriate. **Example:** Paying an advisor a fixed monthly fee to help refine your pitch and make a handful of introductions is generally less risky than paying 5% to 8% of all proceeds they “source.” **Q: What should I ask if someone claims they can raise money for us?** Start with registration and role clarity: Are you a registered broker-dealer, or associated with one? What exactly will you do, and who will talk to investors? How are you compensated? What is your track record raising money for startups at our stage? **Example:** If the person avoids the compensation question or insists on being paid only if money closes, that is a sign to pause and get counsel involved. **Q: What can go wrong later if we used an unregistered finder?** In a priced round or an acquisition, diligence may uncover the arrangement, and investors may ask for extra reps, indemnities, or a fix before closing. At minimum, it can slow the deal. In some cases, it can create rescission risk or complicate your reliance on securities exemptions, depending on the facts and jurisdiction. **Example:** Your Series A lead asks for copies of any agreements related to fundraising and flags a 6% success-fee contract, delaying signing while lawyers assess exposure. **Q: I do not have an investor network. What is the safest way to get introductions?** Leverage warm paths: existing angels, other founders, operators in your space, accelerators, and customers. Build a simple outreach funnel and ask for targeted intros rather than broad blasts. If you work with an advisor, prioritize someone who is willing to help you improve your narrative and who is compensated for time and expertise, not for closed capital. **Example:** Make a list of 25 founders one stage ahead of you, ask each for two relevant investor intros, then follow up with a short monthly progress update to keep the relationship warm. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** commissions, finders, startup --- ### [The Rolling Close](https://startuplawyer.com/seed-funding/the-rolling-close) **Published:** February 8, 2013 **Author:** Ryan Roberts **Content:** Unlike [Series A Rounds](https://startuplawyer.com/startup-law-glossary/series-a-round), most seed rounds do not have every investor fund on the same date. Logistics can play a role, but the bigger driver is that many startups are still meeting, pitching, and adding angels over time while the round is already in motion. Therefore, most startups implement a rolling close structure to their documents or round. ## Why a rolling close happens Because a startup usually cannot afford to wait to close until it has commitments from everyone, it may use a rolling close. This structure allows the company to complete an initial closing with one or more investors, then complete additional closings as new investors come in. ## How the structure works in practice In most rolling closes, each investor signs the same core financing documents and receives the same economics, but they join on different dates. The company and counsel track signatures, collect funds, issue equity or convertible instruments, and update cap table records each time a new closing occurs. Some items can still vary by investor, such as side letters, information rights, or pro rata rights. If the round uses a note or SAFE, founders also need to be clear on whether any early investor gets special protections like a most favored nation clause and whether later investors can participate on identical terms. ## Timing and outside date Rolling closes often include an outside date, meaning a deadline after the initial closing when no further investors can be added on the same terms. A common window is 60 to 90 days after the initial closing, although some companies try to negotiate up to 180 days. In many SAFE rounds, though, there is not always a formal outside date, and the company may keep accepting additional SAFE checks until it reaches the target amount. Even so, a lead investor may still ask for an outside date to preserve urgency and fairness to early committers. ## Trade-offs for founders and investors using a rolling close A longer period for additional closings is generally favorable for the company because it preserves flexibility to keep raising without reopening terms. Investor pushback is that a long window can let someone wait on the sidelines, then decide later whether to invest after seeing more traction, while still getting the same deal as the early backers. Founders can reduce friction by setting clear expectations upfront: communicate the target close schedule, define the outside date in writing, and be disciplined about any investor-specific concessions. If you expect a long fundraise, consider using milestones for price increases or allocating a specific amount for later investors so early investors feel their commitment was rewarded. ## FAQ for founders **Q: Should I agree to a rolling close in my seed round, and how long should the window be?** In most seed rounds, a rolling close is practical and often expected, especially when you are still meeting angels. Aim for a window that is long enough to finish fundraising but short enough to preserve urgency, commonly 60 to 90 days after the initial closing. If you need longer, be prepared to explain why, and consider adding safeguards such as a clear outside date, limited special terms, and a plan to keep momentum with prospective investors. **Example:** You close $1.2M of a $2M seed on May 1, set an outside date of July 30, and tell the market that the remaining \\$800K is available until that date, with no guaranteed allocation after. **Q: What should I put in the outside date clause?** Spell out the final date for additional closings and what happens after it. Typical terms include: no new investors can join on the same documents after the outside date unless the lead (or a defined majority of investors) consents; and any extension must be documented in writing. This protects momentum and avoids a round that never ends. **Example:** “Additional closings permitted until \[August 15, 2029\]. After that date, any new investor requires written approval of the Lead Investor and will sign documents on terms set by the Company at that time.” **Q: Do SAFE rounds usually have an outside date for additional closings?** Often they do not. Many SAFE rounds are run as “accept until full,” meaning the company keeps taking SAFE subscriptions until it reaches the target raise, then stops. However, some lead investors will ask to add an outside date or a clearly stated stop date so the round does not stay open indefinitely and so late investors are not getting the benefit of extra time on the same terms. **Example:** Your SAFE says the company can accept investments until it has raised \\$2M. A lead asks for an added term that the company will stop accepting new SAFE checks 90 days after the first \\$500K closes unless the lead consents in writing. **Q: Can I let a late investor in on different terms?** You can, but it often triggers renegotiation risk with earlier investors and creates extra legal work. If you must offer different terms, try to keep differences in a side letter, keep them narrow, and confirm whether any prior investor has a most favored nation right that would require you to match those terms for them as well. **Example:** A late investor asks for monthly KPI reporting and a pro rata right. If an early angel has MFN, they may be able to adopt those same rights, so you should model the impact before agreeing. **Q: How do MFN clauses and side letters interact with rolling closes?** An MFN clause can allow an early investor to adopt better terms you give to later investors, usually within a defined period. In a rolling close, that period can overlap with new investors joining, so you should track side letters carefully and decide upfront which terms are eligible for MFN treatment. If you want flexibility, negotiate to limit MFN to a short list of economic terms, not every right in a side letter. **Example:** You grant a later investor a discounted valuation cap on a SAFE. If an early SAFE investor has MFN covering economic terms during the closing window, they can typically elect that lower cap too, increasing dilution. **Q: What operational steps should I plan for each closing?** For each closing, confirm the final investor list, collect executed signature pages, receive funds, issue the instrument or shares, and update your cap table and board or stockholder consents if required. Assign an internal owner for investor status tracking and keep a single source of truth for who has signed and who has wired to avoid last-minute confusion. **Example:** At the initial close, 6 investors sign and wire. Two weeks later, 3 more investors join, so you circulate signature pages only to them, issue their SAFE countersignatures the same day funds land, then update the cap table and send one consolidated closing notice. **Q: How do I keep urgency if the round is rolling?** Set a clear initial close date, announce when it happens, and communicate the outside date early. Many founders use an allocation approach: reserve a limited amount for later investors and be transparent that space is filling. You can also plan a modest valuation step-up or tighter terms after the initial close, as long as you communicate it consistently and document it cleanly. **Example:** You tell investors that $500K remains, with priority given to anyone who commits by June 15. After June 15, you will accept new checks only if space remains, and new SAFEs will have a slightly higher cap. **Q: Should I keep the round open for a strategic investor?** Only if you know who you are targeting and why they add value beyond capital. If you want room for a strategic, consider reserving a specific allocation and setting a short decision deadline for that investor. Otherwise, it is usually better to close cleanly and revisit additional capital as a separate extension or the next round. **Example:** You reserve $250K for a strategic partner that can drive distribution and give them 14 days to decide. If they pass, you immediately reallocate that $250K to two warm angels rather than extending the round indefinitely. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Startup Advisor Agreement: A Primer on the Basics](https://startuplawyer.com/board-of-directors/advisor-agreement) **Published:** January 2, 2014 **Author:** Ryan Roberts **Content:** **TL;DR:** If you are giving a member of your [advisory board](https://startuplawyer.com/startup-law-glossary/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 equity Once you start paying an advisor in equity, you are not just being generous. You are creating an ongoing relationship where the advisor may get access to sensitive information and may influence product or strategy. An Advisor Agreement is the basic document that keeps that relationship clean. It is also the easiest way to avoid misunderstandings later about what the advisor is doing and what they are getting in return. ## What an Advisor Agreement is (and what it is not) An Advisor Agreement defines the startup-advisor relationship and the guardrails around it. A typical Advisor Agreement covers: - The advisor’s role and scope (what they are actually doing) - The equity being granted and the form of equity (options or restricted stock) - The vesting schedule and any service expectations tied to vesting Important: an Advisor Agreement is usually not a substitute for the actual equity paperwork. If you are issuing options or restricted stock, you still need the applicable option or stock grant documents. ## Confidentiality is usually non-negotiable If you want an advisor to be useful, you will likely share confidential information. That can include product roadmaps, customer plans, fundraising strategy, and technical details. A confidentiality clause sets the baseline expectation that the advisor: - Will not disclose your confidential information - Will not use it for any purpose other than advising your company In most deals, confidentiality is a hard requirement. The only point that sometimes gets negotiated is duration. If a prospective advisor will not agree to confidentiality at all, that is a strong signal to move on. ## Consider an IP assignment clause in the advisor agreement, but right-size it for advisors The other big issue is intellectual property. With employees, you generally want a broad inventions assignment. With advisors, the right answer is often narrower. [Inventions assignment](https://startuplawyer.com/startup-law-glossary/inventions-assignment) in an Advisor Agreement may make sense when: - The advisor is deeply involved in product or technical development - The advisor will be working with confidential technology - The advisor is creating materials, designs, code, or other work product It may be unnecessary, or at least more limited, when: - The advisor’s role is high-level - The advisor is primarily making introductions - The advisor’s contributions are general feedback rather than creation The more hands-on the advisor is, the more you should push for at least a light IP assignment that captures what they create for the company. ## Term and termination: keep it simple Most advisor relationships should be easy to end. Many advisor agreements allow either party to terminate at will, effective immediately. Sometimes an advisor asks for a longer notice period. Before you agree, ask why. In a lot of cases, the real concern is economic, not emotional. The better fix is often in the equity grant terms (for example, how vesting works at termination), not in forcing a longer relationship. ## Practical takeaway If you are granting an advisor equity, treat the Advisor Agreement as part of the equity grant, not an optional extra. It is how you protect confidentiality, handle IP cleanly, and make sure both sides agree on what the relationship is supposed to be. If you remember one thing: grant advisor equity only when the expectations and protections are written down. ## FAQs **Do I need an Advisor Agreement if I give an advisor equity?** Usually yes. Equity plus access to sensitive information is exactly when you want the relationship defined in writing, including confidentiality and IP terms. **Is an Advisor Agreement the same as an option grant agreement?** No. The Advisor Agreement governs the relationship. The option grant agreement or stock grant agreement governs the equity instrument itself. **Should my Advisor Agreement include inventions assignment?** Often yes, but usually narrower than an employee inventions assignment. It depends on how involved the advisor is with product development and confidential technology. **Can either side terminate an Advisor Agreement immediately?** Often yes. At-will termination is common, and if someone wants a long notice period, it is worth understanding what problem they are trying to solve. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Boards and Observers --- ### [How Many Shares Should be Issued to Founders at Incorporation?](https://startuplawyer.com/incorporation/how-many-shares-should-be-issued-to-founders-at-incorporation) **Published:** January 2, 2014 **Author:** Ryan Roberts **Content:** **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% to 80% of authorized common at incorporation When you incorporate, you pick a number of [authorized shares](https://startuplawyer.com/startup-law-glossary/authorized-shares) in your certificate of incorporation. A practical rule of thumb is to issue **roughly 50% to 80%** of those authorized common shares to the initial founders right away. Example: if you authorize **10,000,000** shares of common stock, you might issue **5,000,000 to 8,000,000** shares to founders at incorporation. This gets founders properly “on cap table” from day one, while still leaving enough equity flexibility for what comes next. ## When to stay closer to 50% If you expect meaningful equity needs immediately after formation, you generally want more room left unissued. You might stay closer to 50% issued if: - You plan to add an additional co-founder in the very near future. - You want a larger option pool early (for hires, advisors, or early team incentives). - You are trying to avoid reworking grants right after incorporation. ## Why leaving authorized but unissued shares matters Authorized but unissued shares are your built-in reserve. Keeping a reasonable reserve can reduce friction and cost later. If you run out of authorized shares and need more, you can usually increase the number, but it is not free or instant. ## Increasing authorized shares usually means a charter amendment To increase authorized shares, the company typically needs the proper approvals (board and stockholders, depending on the circumstances) and then must file a certificate of amendment with the Secretary of State. That filing involves: - Filing logistics - Filing fees - Legal time and transaction costs None of this is catastrophic. It is just avoidable churn if you can plan your initial authorization and issuance sensibly. ## Practical takeaway Issuing 50% to 80% of authorized common stock to founders at incorporation is not about “saving shares.” It is about keeping enough flexibility that your next equity step does not force a charter amendment. ## FAQs **How many shares should founders get at incorporation?** Often 50% to 80% of the authorized common stock, with the exact number depending on near-term equity needs like an option pool or an additional founder. **Why not issue 100% to founders and fix it later?** Because if you issue too much, you can end up needing a charter amendment to increase authorized shares sooner than you want, which adds time and cost. **If I need more authorized shares later, can I just increase them?** Usually yes, with the right approvals and a certificate of amendment filing, but expect filing fees and additional transaction work. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [When Majority of the Board Doesn't Mean Board Control](https://startuplawyer.com/venture-capital/when-majority-of-the-board-doesnt-mean-board-control) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** **TL;DR:** Giving up “only one [board](https://startuplawyer.com/startup-law-glossary/board-of-directors) seat” doesn’t automatically mean you kept control. In venture deals, board [control](https://startuplawyer.com/startup-law-glossary/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 lot at startup events: “It’s great, we only gave up one board seat, so founders still control the company.” That conclusion is often incomplete. A board majority matters, but it’s not the only lever. In real term sheets, you can have a majority of seats and still be meaningfully constrained on the decisions that actually matter. ## Board seats are one board control lever. Veto rights are another. A common control mechanism (especially starting around a meaningful seed round) is a requirement that a specific director must approve certain action, often the investor-appointed director. In plain English: even if the board passes a resolution by majority vote, it might not count unless the investor director also votes “yes.” That effectively gives a minority board holder a veto over a defined list of corporate actions—typically the list that maps to investor downside protection. ## Don’t forget stockholder class votes (they can override the board math) Board Control can also shift at the stockholder level. Certain actions may require approval not just by the board, but by a particular class or series of stock (for example, a series of preferred stock). If investors hold that class, they can block the action even if founders “control the board.” This is one of the reasons founders can feel like: “Wait—why do we need investor sign-off? We have the board.” Different approval layers can apply to the same decision. ## Weighted voting boards exist (rare) and can be a trap Very occasionally, you’ll see a board structure where certain directors get **more than one vote per seat**. So on a three-person board, one director could effectively control outcomes if their seat carries enough votes. This is another example of “minority in seat count, majority in voting power.” (And yes—I generally don’t recommend trying to get cute with this in your docs.) ## What you should do in a seed or Series A term sheet review If you’re negotiating a seed round or priced round, don’t stop your “control” analysis at board composition. Instead, go line-by-line through the control hooks and ask: - **What decisions require investor-director approval (veto)?** - **What decisions require preferred stock approval (class/series vote)?** - **What decisions require both?** - **Where are the definitions doing the work?** (e.g., what counts as “budget,” “indebtedness,” “liquidation,” “sale,” etc.) In most deals, the real story isn’t “how many seats did we give up?” It’s “what decisions did we agree not to make without them?” ## Practical takeaway on board control A founder can give up one board seat “in absolute terms” and still give up real control if the investment comes with veto rights or class votes tied to key corporate actions. If you remember one thing: control is about approval rights, not just seat count. ## FAQs **Can an investor control a company with only one board seat?** Yes—sometimes. If the documents require that the investor-appointed director approve certain actions, that director can block those actions even without a board majority. **What’s the difference between a board vote and a stockholder class vote?** A board vote is director approval. A class (or series) vote is approval required from a specific group of stockholders (often preferred holders) on top of the board’s approval. **Is weighted voting on a startup board normal?** No, it’s uncommon. It can also create governance and optics issues, so it’s usually not where you want to spend your negotiation budget. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Dual Class Common Stock Structure for Founders](https://startuplawyer.com/incorporation/dual-class-common-stock-structure-for-founders) **Published:** December 10, 2015 **Author:** Ryan Roberts **Content:** A startup founder’s desire to hold equity better than plain vanilla common stock is not new. Several years ago, [Series FF](https://startuplawyer.com/incorporation/series-ff-stock-how-some-founders-get-liquid-at-funding) stock for founders was a popular approach for founder liquidity in subsequent financing rounds. We implemented Series FF for a handful of clients back then, but we have not done so recently. In the past couple years, we have received frequent requests, or at least questions, about setting up a dual class common stock structure to create super voting rights for one or more founders. This interest in a dual class common stock structure is often driven by the fact that large technology companies like [Google](http://www.bloomberg.com/bw/articles/2014-04-03/why-google-is-issuing-c-shares-a-new-kind-of-powerless-stock) and Facebook have implemented variations of this structure. The founder is usually worried about losing control over time and wants super voting rights through a dual class common stock system. ## The dual class common stock setup The usual way to create super voting rights is a dual class common stock structure, generally “Class A” and “Class B.” Class A and Class B are typically identical economically, except for voting power. Usually Class A has multiple votes per share, and a common multiple is 10 to 1. For example, Class A common stock might have 10 votes per share and Class B common stock might have 1 vote per share. At formation, one or more founders receive Class A common stock, and everyone else (employees, advisors, consultants) receives Class B common stock. ## Benefits of a dual class common stock structure As with most governance choices, there are positives and negatives to a dual class structure. The main benefit for founders is control. As the company issues more shares and founders get diluted, super voting rights can allow founders to maintain voting control with a much smaller economic ownership percentage. With a 10 to 1 vote multiple, a founder can potentially maintain control well below 50% ownership. This is why the structure is appealing. Founders often put enormous effort into their startups and the idea of losing control can be intimidating. A dual class structure can feel like protection against smaller holders collectively overruling a founder on major decisions. That said, the next question is whether it is a good idea to implement it by default. ## Potential red flag for investors and hires A dual class common stock structure can scare off potential investors and even future hires. Leaving aside other mechanisms that can give investors control (such as protective provisions), a dual class structure can signal that a founder is trying to lock in control too early. A common investor concern is that the founder wants to be treated like the leader of a public company before the startup has proven traction, such as real customers, meaningful revenue, or user growth. The takeaway is that the structure is easier to justify when the company has leverage, for example, strong traction or multiple competing investors. In those situations, investors may be willing to accept a governance structure that is more founder friendly. Without that leverage, it is less common for a lead investor to accept a dual class structure. ## Preemptive strikes do not work by themselves, you need leverage Some founders believe that installing a dual class structure before seeking outside investment gives them leverage to keep it. I am not confident that is true. Even if a dual class structure is built into your certificate of incorporation, venture financings commonly require filing an amended and restated certificate of incorporation. If an investor wants to remove the dual class structure as a condition to investing, the legal change is often straightforward, because an amended and restated certificate is likely being filed as part of the financing anyway. This leverage point comes up in other founder friendly terms as well. For example, some founders try to “game” vesting schedules with the belief that if they install a founder favorable vesting schedule early, it will be difficult for a future investor to change it. In reality, if the change is part of a financing negotiation, it can be as simple as amending a few provisions in a founder’s restricted stock purchase agreement. If a term is not a rational position in context, writing it down early does not mean negotiations should start there later. ## Tips on implementing a dual class common stock structure If you are set on a dual class common stock structure, make sure it is actually included in your certificate of incorporation. We have seen founders talk about a dual class structure when the charter does not create separate classes at all. To implement the structure correctly, the certificate of incorporation must authorize both classes, and every stock issuance must clearly state which class is being issued. You should also consider mechanisms that convert super voting shares (usually Class A) into normal voting shares, either optionally or automatically. Common approaches include: (i) optional conversion at the holder’s election, (ii) automatic conversion upon a vote of the Class A holders, and (iii) automatic conversion upon any transfer of the shares. ## What investors usually care about - **Control and accountability:** who controls board seats and major decisions, and what checks exist. - **Protective provisions:** investor veto rights over key actions, regardless of vote multiple. - **Conversion triggers:** when super voting shares convert, especially on transfer or upon an IPO. - **Future financings:** whether the structure will make it harder to bring in a lead investor later. ## Conclusion In general, I would not recommend that startups implement a dual class common stock structure by default. If you have leverage, you may be able to implement it later in a financing. That said, we have been installing dual class structures more frequently, and in the right situation they can make sense. The key is to understand that super voting rights are a governance choice that comes with tradeoffs, and investors will evaluate those tradeoffs based on traction, trust, and the overall terms of the deal. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Convertible Note Maturity Date Terms](https://startuplawyer.com/seed-funding/convertible-note-maturity-date-provisions) **Published:** April 27, 2016 **Author:** Ryan Roberts **Content:** [Convertible notes](https://startuplawyer.com/startup-law-glossary/convertible-note) are a very common startup financing method. They typically include a maturity date, at which point the notes are, in theory, due and payable with interest. Convertible note maturity is often set 18 to 24 months after the first note investment. In practice, repayment at maturity is usually not a great outcome for the company or the investors. The startup rarely has the cash to repay principal plus interest, and most investors did not invest for a 2 to 8% interest return. From the outset, both the startup and the investors are usually expecting the notes to convert in the next priced equity round. So what happens when the convertible note maturity date arrives and the startup cannot repay the notes? Is the startup in trouble because note investors might try to foreclose? In practice, that is uncommon. Investors still have to ask what they would actually foreclose on, and what it would cost in time and legal fees. Because both sides usually have leverage, the most common outcome is a negotiated extension of the maturity date. ## What usually happens at convertible note maturity Because founders sometimes worry about the worst case, one school of thought is that notes should automatically convert into equity at maturity. Under that approach, the note includes a maturity date automatic conversion provision, or conversion at maturity occurs at the option of investors. In practice, an automatic conversion at maturity is usually a mistake because it tends to be investor favorable, not company favorable. If you are a startup, you should be cautious about agreeing to a maturity date conversion provision for the reasons below. ## Extra negotiation and the punitive pre-money valuation at convertible note maturity First, the maturity date conversion term will add an extra layer of negotiation to the convertible note process. One of the desirable characteristics of the convertible note is that it is a quick and easy way in which to raise capital, and adding this term will prolong the process. This added term opens the door for important questions that will have to be answered, including: *(1) Into which kind of stock will the notes convert at maturity?* Most investors do not want to receive common stock through a maturity conversion. So if you agree to a maturity conversion provision, you may have to define a form of preferred stock for the notes to convert into. Sometimes this can be expressed by referencing a standard seed round document set (such as [seriesseed.com](http://www.seriesseed.com)). Other times, you end up negotiating note terms and a preferred equity round framework at the same time, which defeats much of the speed advantage of a note. *(2) At what pre-money valuation should the notes convert at maturity?* Some investors take the view that if a startup has not completed an equity financing before the maturity date, it must be a sign the company is not doing well. Under that logic, they push for a conversion at a punitively low pre-money valuation, often much lower than the [price cap](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap) that would otherwise apply at the next equity round. This view is often wrong. A startup may not need additional financing before maturity, or it may be waiting to hit development or sales milestones to support a higher pre-money valuation in a priced round. Reaching a maturity date is not, by itself, proof of “failure.” But it can still become leverage for investors seeking a lower conversion valuation than the price cap. ## Side note: incentive misalignment can flip the wrong way Interestingly, convertible note alignment issues can come full circle. Originally, the price cap was introduced because note investors had less incentive (at least in theory) to help a portfolio company raise a priced round. If their help increased the pre-money valuation, the notes would convert into a smaller percentage of the company, even after applying a [discount](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap). With an automatic maturity conversion at a lower valuation than the price cap, the incentive can flip. Investors may have less reason to push for a priced round if waiting for maturity yields a higher percentage of the company. Relatedly, if the maturity conversion valuation is close to the price cap, and you are effectively negotiating conversion into something like Series Seed preferred stock at maturity, you should ask a practical question: why not just do a Series Seed equity round at that valuation and skip the convertible note? ## Increased transaction costs upon conversion An automatic convertible note maturity conversion can also increase transaction costs. If the notes convert into preferred stock (whether Series Seed or another series), the company often ends up paying for both a note financing process and, later, a preferred stock financing process. In many cases, the combined legal and administrative cost is higher than if the company had simply done a preferred equity round from the beginning. ## Practical alternatives to automatic conversion - **Extend the maturity date:** the most common solution, typically approved by a majority of noteholders (in terms of investment $). - **Convert in a priced round:** keep the original bargain, meaning conversion at the discount and price cap when the next equity round closes. - **Negotiate a clean up:** in some cases, repurchase a portion, exchange into a new instrument, or otherwise simplify, but only with careful tax and securities analysis. ## Conclusion Automatic conversion at the maturity date of a convertible note is usually a bad idea and is often not in the best interests of the company. Fortunately, there are alternatives. The simplest solution is often an extension of the maturity date. While an extension requires investor consent (or at least majority consent), many investors will agree because they still want the notes to convert in a priced round. Of course, there are occasional situations where investors act irrationally and threaten foreclosure, but that usually reflects a mismatch in expectations and investor selection, not a problem inherent in the note structure. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Sorry, Not Sorry: Still Delaware C Corporation for Early-Stage Tech Companies](https://startuplawyer.com/incorporation/delaware-c-corporations-for-early-stage-tech-companies) **Published:** October 9, 2019 **Author:** Ryan Roberts **Content:** If you plan to raise venture capital or sell your tech startup one day, it is extremely likely that you should form as a Delaware [C corporation](https://startuplawyer.com/startup-law-glossary/c-corporation). In the last few years I have seen a disturbing trend of people calling themselves “startup lawyers” and steering high growth startups toward LLCs. In most venture-style cases, that advice is misguided. ## The short version for why a Delaware C Corporation VC investors almost always want to invest in a Delaware C corporation. Forming as an LLC and converting later usually creates extra cost, delay, and tax complexity, with little or no upside for a company that is actually pursuing venture funding. ## The “LLC first” arguments and why they usually fail The usual pitch is that a corporation is too complex early, that an LLC is easier, and that you can “clean it up later.” Sometimes the pitch is that you will save a few hundred dollars in filing fees. None of that is a compelling reason to choose the wrong entity for a venture path. I wrote about this a long time ago: [if you can get on the internet, you can handle the complexity of a corporation](https://startuplawyer.com/incorporation/the-5-second-guide-to-choosing-your-startups-legal-entity). The “administrative burden” argument is usually overstated. Here are the common “administrative requirements” people cite for corporations: 1. Hold an annual stockholder meeting and keep basic minutes. 2. File an annual report and pay franchise taxes. 3. Respect the roles of the board, stockholders, and officers. For the annual meeting, it can be held anywhere and in any format. A short call with signed written consents and a simple set of minutes is usually enough. This is not the scary corporate formality people imagine. You will have annual compliance obligations regardless of entity type. For many startups, the delta between an LLC and a corporation is not the deciding factor people make it out to be, especially when compared to the cost of fixing the wrong structure later. What is ironic is that when “startups” choose an LLC, the founders often try to run it like a corporation anyway, with managers, officers, and member votes. So you can end up with similar governance complexity plus an entity form that VCs do not want. Yes, there can be additional costs with being a Delaware corporation, but a few hundred dollars, or even $1,000, should not drive your choice of entity. More importantly, I generally do not think you should incorporate until you are truly all in on the startup. ## Double taxation is usually a red herring for startups A common objection is “double taxation.” A C corporation can be taxed at the corporate level, and then stockholders can be taxed again on dividends. That is the basic idea. But early stage tech startups generally do not pay dividends. Any cash the company has is usually reinvested into growth. Founder compensation is typically treated as an expense of the business, not a dividend. So in most venture-style scenarios, “double taxation” is not the practical issue people make it out to be. ## QSBS can be a real tax benefit for founders and investors A C corporation can provide another tangible tax benefit: Qualified Small Business Stock (QSBS). C corporation stock, not LLC interests and not S corporation stock, can qualify. If you hold qualifying C corporation stock for five years and meet the other requirements of Section 1202 of the Internal Revenue Code, you may be eligible for a significant reduction in long term capital gains taxes, often between 50% and 100%, subject to caps and other limitations. ## Why I care about the Delaware C Corporation First, I suspect some lawyers recommend LLCs because they are treating “startup” as a synonym for any small business. Sure, a business that does not intend high growth or venture funding can be an LLC. But that is not what most people mean when they say “tech startup.” And these lawyers often write articles or give presentations with titles like “The Delaware C Corp Myth” to justify an LLC for a venture style company. But the real myth might be that the lawyers recommending LLCs actually work with early stage tech startups seeking actually closing venture capital. Second, converting later can be expensive, and it can create opportunities for extra legal fees. Conversions are often more work than forming the right entity at the start. ## When an LLC can make sense An LLC can make sense for a profitable small business, a consulting business, many real estate ventures, and some lifestyle businesses that do not plan to raise venture capital. It can also make sense in special cases where pass-through tax treatment is central to the business model. The key is to be honest about which path you are on. ## Why Delaware? **1) Predictable case law:** Delaware case law is unmatched if an issue comes up. The goal is to reduce uncertainty about how courts will treat common corporate disputes. If your issue does not have strong precedent in a given state, outcomes can become harder to predict. **2) VC familiarity and standard documents:** VC lawyers and VC firms are already familiar with Delaware law and requirements. Many venture documents assume Delaware as the governing law, and it becomes costly to customize a full venture document set for many different states across a portfolio. **3) More detail if you want it:** Here is an article I wrote years ago on the [top 5 reasons to incorporate in Delaware](https://startuplawyer.com/incorporation/top-5-reasons-to-incorporate-in-delaware). ## Delaware C Corporation: Quick decision checklist - If you want venture funding, default to a Delaware C corporation. - If you want [QSBS](https://en.wikipedia.org/wiki/Qualified_Small_Business_Stock) potential, you need qualifying C corporation stock. - If you are building a non venture small business, an LLC may be fine. - If you are unsure, decide based on your intended financing path, not based on minor filing fee differences. So do your tech startup a favor: if you are an early stage technology company that plans to raise venture capital, incorporate as a Delaware C corporation at the start. It is the structure investors expect, it keeps financings smoother, and it reduces the odds that you have to pay to unwind a mismatched entity later. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Acceleration Book Update - 1 Month](https://startuplawyer.com/startup-lawyer/acceleration-book-update-1-month) **Published:** April 9, 2019 **Author:** Ryan Roberts **Content:** I wanted to share a brief update on the launch of my startup law book: [Acceleration](https://www.amazon.com/Acceleration-What-Entrepreneurs-about-Startup/dp/1544513933). The book launched on March 5, 2019 and the next day I left for a family vacation on the other side of the world, so I did not do much of a marketing push beyond a blog post and a LinkedIn update. Even with that minimal promotion, the book did well in its first week, selling about 700 copies and reaching Amazon Best Seller status in categories including business law, corporate law, contracts law, and venture capital. ![](https://startuplawyer.com/wp-content/uploads/amazon_acceleration-1024x648.png "amazon_acceleration – Startup Lawyer")It took a Roberts to dethrone Roberts Rules of OrderI did not write the book to chase rankings or lists, but it was a pleasant surprise. The early numbers also surprised the publisher, who had estimated I might do roughly 30% of the first-week total. In the coming months, I will likely start promoting the book more actively, including a few local events that are currently in the works. If you are interested in hosting a talk or book event, feel free to reach out. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [Acceleration Startup Law Book Title and Cover Design](https://startuplawyer.com/startup-lawyer/acceleration-startup-law-book-title-and-cover) **Published:** February 27, 2019 **Author:** Ryan Roberts **Content:** Thought I might take some time to explain the origin of the title and the book cover design for “[Acceleration: What All Entrepreneurs Must Know About Startup Law](https://www.amazon.com/Acceleration-What-Entrepreneurs-about-Startup/dp/1544513933/)“. ## The Title: Acceleration Quite often, a new client starts our first meeting with something like: “We messed up the legal at our last startup, so we want to use you.” Then we get into what happened, and it is usually something basic in terms of startup legal. Most of the time it is an early issue, like missing vesting schedules, not addressing co-founder dynamics, or letting an advisor take too much. It is rarely a sensational story about a terrible term in a Series Seed or Series A financing. So I started asking: why do so many entrepreneurs have to learn these lessons the hard way? A lot of the early-stage issues are not rocket science, and you should not have to learn, by painful experience, that vesting matters or that granting 20% to an advisor is usually a mistake. Many of the most common traps show up long before a startup ever gets to a seed financing. That is why the first two parts of the book focus on setting up the entity, vesting schedules, and how to anticipate and deal with issues involving co-founders, hires, and advisors. The last part focuses on financing, including how these early decisions can affect later fundraising. “Acceleration” is the title, and it is based on a simple idea: if you read the book, you may (no guarantees) avoid some of the early startup legal mistakes that can derail a first company. Put differently, the goal is to help founders move faster past avoidable legal landmines. There is also a second meaning behind the title. “Acceleration” is a concept that is near and dear to most co-founders as it relates to vesting schedules, for example, [double trigger acceleration](https://startuplawyer.com/startup-law-glossary/double-trigger-acceleration) and [single trigger acceleration](https://startuplawyer.com/startup-law-glossary/single-trigger-acceleration). ## The Cover: Acceleration For the cover I was inspired by a few things here. First, I really like the design of psychology and math textbooks of the 70s and 80s (and earlier), so I wanted sort of a funky retro classic design. ![](https://startuplawyer.com/wp-content/uploads/old-schol-math-book.jpg "old schol math book – Startup Lawyer")Funky Math Design![](https://startuplawyer.com/wp-content/uploads/the-psychology-of-learning-maths-632x1024.jpg "the-psychology-of-learning-maths – Startup Lawyer")Psychology and MathSecond, I was a big fan of the ‘choose your own adventure books’ as a kid growing up in the 1980s — *and isn’t launching a startup the greatest choose your own adventure book of all time*? Like your own personal career “[bandersnatch](https://en.wikipedia.org/wiki/Black_Mirror:_Bandersnatch)“. So I wanted to pay a little hommage here to this series of books. ![](https://startuplawyer.com/wp-content/uploads/choose-your-own-adventure-books.jpg "choose your own adventure books – Startup Lawyer")Read so many of these I solved Bandersnatch in my 2nd tryFinally, I wanted it to take the concepts of the old school psychology/math books and the choose-your-own adventure books but make it look modern and crisp. And the way I thought best to do that was to picture this startup law book on a coffee table in a mid-century modern house in Palm Springs, California….in 2019. Now, growing up in Palm Springs, I figured I had some insight on this but certainly some pictures helped. ![](https://startuplawyer.com/wp-content/uploads/palm-springs-modern-1024x865.jpg "palm springs modern – Startup Lawyer")PS I love youSo in the end, I was very pleased with the end result. ![](https://startuplawyer.com/wp-content/uploads/Startup-Law-Cover-e1551307442476.jpg "Startup Law Cover – Startup Lawyer")I should probably get a better camera ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [Importance of Using Exact Share Numbers Instead of Percentages](https://startuplawyer.com/hiring/importance-of-using-exact-share-numbers-instead-of-percentages) **Published:** April 15, 2020 **Author:** Ryan Roberts **Content:** 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](https://startuplawyer.com/startup-law-glossary/capitalization-table). Vague percentage promises are one of the most common sources of avoidable equity disputes—especially with early hires, advisors, and co‑founders. And in the wrong moment, a casual “2%” can start to look like a non‑dilution right you never intended to give. Here’s the bottom line I give founders as a startup lawyer: If you want to avoid preventable equity drama, don’t promise percentages. Promise exact share numbers, and explain what the exact share numbers you gave are based on. The biggest misconception is thinking that “2%” is a fixed promise. It isn’t. Percentages move because your cap table moves—and it moves more often than founders expect. ## Why Percentages Break Down in Practice A percentage only has meaning if everyone agrees on what it’s a percentage of and as of when. When founders say “2%,” they usually leave several critical questions unanswered: - Is it 2% of issued and outstanding shares, or fully diluted? - Is it measured today, when the promise was made, or when documents are signed? - What happens if the cap table changes in between? - Is this stock, options, or something else—and is there even a plan in place? If those details aren’t explicit, you’re not setting a clear deal. You’re deferring a negotiation to a later—and usually worse—moment. ## The Lag Problem of not Using Exact Share Numbers: Where Most Equity Disputes Come From The most common real‑world scenario looks like this: You agree by email or verbally that a new hire will get “2%.” Everyone gets busy. The equity paperwork doesn’t get done for months. Meanwhile, the company issues equity to other hires, advisors, or creates an option pool. When you finally document the grant, the hire asks: “Does this actually equal 2% of the company?” From the company’s perspective, the answer is often: *“It was 2% as of when we talked.”* From the hire’s perspective, the expectation was: *“I’m getting 2% of the company.”* Both positions feel reasonable. And that’s exactly the problem. These disputes rarely turn on technical math. They turn on expectations, and expectations are shaped by how the promise was framed. A clean number of options tied to a defined baseline avoids this entirely. ## When It Gets Risky: Percentages in Actual Documents instead of Exact Share Numbers Things get more dangerous when percentages make their way into actual equity documents—offer letters, advisor agreements, or side letters—especially without careful qualifiers. Even if the company intended “approximately 2% as of the grant date,” ambiguous language can later be read as: “I own 2% of the company, period.” That’s not how startup equity is supposed to work. But ambiguity becomes leverage when timing matters—like during a financing or acquisition. At that point, it often doesn’t matter whether the claim is legally strong. If the clock is ticking, the company may pay to make the problem go away. ## Theory vs. Reality: Why “Percentages Are Simpler” Is Misleading **Theory:** Percentages are easier for non‑lawyers to understand. **Reality:** Percentages are easier only until they’re disputed. In practice, percentages tend to: - Inflate expectations - Obscure dilution mechanics - Create friction when the cap table changes (which it always does) A specific grant size—properly documented—may feel less intuitive at first, but it’s far more durable over time. ## Three Common Scenarios Where This Blows Up **1. Early Hires Before an Option Pool Exists** Founders promise “2%” before there’s an equity plan. Later, the company creates a 10–20% option pool (very common). The early hire sees dilution and feels the deal changed. **What mattered:** The lack of a defined, fully diluted baseline. **What didn’t:** That “2%” sounded reasonable at the time. **2. Financing + Pool Increase** A founder promises “1.5%” pre‑Series A. The lead investor requires a larger pre‑money option pool. By the time the grant is documented, honoring “1.5%” requires far more options than the founders expected. **What mattered:** Pre‑ vs. post‑money framing and timing. **What didn’t:** The original conversational shorthand. **3. Acquisition Timing Pressure** During an acquisition, someone points to old “2%” language and claims entitlement to 2% of proceeds. Even if the company disagrees, uncertainty at signing can be expensive. **What mattered:** Ambiguity in old documents. **What didn’t:** Whether the claim was “reasonable.” ## Market Norms: How Experienced Startups Handle This In most venture‑backed companies: - Equity grants are expressed as a number of shares or options, not a percentage. - If ownership is discussed at all, it’s framed as approximate and tied to a defined baseline. - Grants are approved and documented promptly, especially after financing events. Percentages may be used to communicate magnitude—but they’re translated quickly into real, board‑approved grants. ## If You Must Use a Percentage, Do It Safely Sometimes ownership framing is helpful. If you go there, don’t leave it vague. A safer way to frame the conversation is: “We’re targeting an equity grant that would represent approximately X% of the company on a fully diluted basis as of \[date\], with the final grant being a specific number of options subject to board approval.” That sentence does real work: - “Approximately” softens the guarantee - “Fully diluted” defines the denominator - A specific date and board approval limit future reinterpretation It’s not about legal magic words—it’s about clarity. ## Why Exact Share Numbers Should Go in Offers and Grant Documents If you want to avoid equity disputes, your process should consistently do four things: 1. **Use numbers, not percentages** “20,000 options” beats “2%” every time. 2. **Define the baseline if ownership is referenced** Specify fully diluted capitalization and the measurement date. 3. **Paper grants quickly** The longer the delay, the more the cap table changes—and the more room there is for disagreement. 4. **Centralize equity communications** Equity should not live in emails, Slack messages, or memory. It should live in approved documents and the cap table. ## The Real Negotiation Lesson Equity ambiguity isn’t just a legal issue—it’s a leverage issue. When documentation is unclear, the person holding the ambiguity often gains negotiating power at exactly the wrong moment. This is why experienced founders and investors are obsessive about clean equity records. Not because paperwork is fun—but because ambiguity always shows up when timing is tight. ## Practical Takeaways **What actually matters:** - Issuing equity as a specific number of shares or options - Defining fully diluted ownership and timing if percentages are discussed - Prompt board approval and documentation **What usually doesn’t:** - Whether “2%” sounds intuitive - Whether everyone “understood what was meant” - Whether a future dispute feels unreasonable **What to do differently next time:** Before you say “you’ll get 2%,” translate it into a real grant tied to a defined cap table—and paper it before the cap table moves again. Use exact share numbers! ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring --- ### [How to Check Availability and Reserve Your Startup's Name in Delaware](https://startuplawyer.com/incorporation/how-to-check-availability-and-reserve-your-startups-name-in-delaware) **Published:** January 6, 2021 **Author:** Ryan Roberts **Content:** Delaware has a free online system for checking legal entity name availability. You can use it to see whether another business is already formed or registered in Delaware with the same name (or a confusingly similar name). The tool is available here: [Delaware name reservation and availability search](https://icis.corp.delaware.gov/Ecorp/NameReserv/NameReservation.aspx). ## How the Delaware name reservation system works The system is easy to use and can make your filing process more efficient. For example, if you file a [Certificate of Incorporation](https://startuplawyer.com/startup-law-glossary/certificate-of-incorporation) with a name that is already taken, Delaware will reject the filing and you will need to refile with a new name. ## Should you reserve the name for $75? If the name you want is available, Delaware will give you the option to reserve it for $75. The reservation expires, so it is not a long term hold. Whether you should reserve the name depends on your timeline and how you plan to file. If you are filing the entity yourself soon, and you are confident this is the only name you want, reserving can reduce the risk that someone else takes the name before you file. On the other hand, if you plan to use a law firm or another third party to file, a reservation can create extra administrative friction because the Delaware process for using a pre-reserved name is not always intuitive for third-party filers. If you are using counsel, ask them whether they prefer to reserve the name or simply proceed straight to filing. ## What the Delaware name reservation does not cover Even if a name is available in Delaware, that does not mean it is available in other states. It also does not mean you have cleared trademarks, secured a matching domain, or confirmed that the name is safe to use from a branding perspective. The Delaware name reservation system is checking only one narrow question: whether another entity is formed or registered in Delaware with the same name (or a name that is close enough to block your use). Before you commit to a name, you should also do a quick reality check elsewhere. - **Do a quick web search:** see what shows up and whether there are obvious conflicts. - **Check domains:** confirm whether a domain you can live with is available, even if it is not the exact match. - **Do a basic trademark search:** check the [USPTO](http://uspto.gov) database for similar marks in relevant categories. - **Think about expansion:** if you plan to qualify to do business in other states soon, do a quick availability check there too. If you find a conflict, it is usually cheaper to adjust the name before you file than to fix it after you have started building brand equity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Why Your Current Employer Invention Assignment is Key](https://startuplawyer.com/incorporation/current-employer-invention-assignment-startup) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** 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 a day job can materially affect a startup’s viability: before launching, each co-founder should review their current employer [invention assignment](https://startuplawyer.com/startup-law-glossary/inventions-assignment) to confirm the intellectual property they are developing for the startup cannot be claimed by the employer. ## An employer’s invention assignment is not part of every job In the technology sector, many employers require employees to sign an invention assignment agreement, either as a standalone document or as part of a broader employment agreement. In simple terms, an employer invention assignment defines what intellectual property an employee must assign to the employer. (For what it is worth, a startup should also have each co-founder sign a proper invention assignment so the startup owns the IP it needs.) If your day job is not related to technology, or your employer is not building technology, you may not have signed an invention assignment at all. ## Check the scope of your employer invention assignment Some employer invention assignments are broad, while others are narrow. Regardless of what the contract says, certain jurisdictions (like California) limit how broad these agreements can be. In many cases, invention assignments are reasonably scoped and do not try to claim every idea you have ever had, but some employers do take an aggressive approach. The broader the scope of the invention assignment, the greater the risk for the founder and the startup. A founder can unintentionally assign startup-related intellectual property to the day job instead of to the startup. The risk increases if the startup is related to the day job, if the founder is working on the startup during work hours, or if the founder uses the employer’s equipment, software, or confidential information while building. ## Common red flags to look for - Language that assigns inventions created “at any time,” including nights and weekends, with no carveout for work done on your own time. - A definition of “inventions” or “intellectual property” that is extremely broad (for example, any idea, concept, know-how, or work product). - Assignment provisions tied to anything “related to” the employer’s business, products, research, or anticipated roadmap, especially if those terms are vague. - Requirements to disclose all outside projects or to submit inventions for review, even if unrelated. - Restrictions on using any employer equipment, accounts, code, data, or confidential information, combined with a wide assignment clause. ## Practical steps before you build - Do not use employer devices, accounts, repos, or SaaS tools for startup work. - Do not build during work hours or on work premises. - Keep a clean record of when you worked on the project and what you created. - If the agreement requires disclosure of outside inventions, follow the process before you launch. - Make sure each co-founder signs a startup-friendly invention assignment to the company early. ## When to talk to a lawyer Consider getting legal advice early if your startup overlaps with your employer’s line of business, if you have already written code or developed designs while employed, or if the invention assignment language is broad or unclear. A short review can help you understand your risk, plan a clean development process, and avoid a future diligence issue that can derail fundraising or an acquisition. ## Conclusion If you are keeping a day job while building a startup, locate your employment paperwork and read the invention assignment carefully. Identify what types of intellectual property are assigned to the employer and what exceptions apply. At a minimum, you should understand the scope of any invention assignment, even if your startup seems unrelated to your day job. If you are unsure how it applies, consider speaking with your employer’s human resources team to confirm what the company’s position is, and consider speaking with a startup lawyer before you invest significant time or money into development. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [The Delaware Franchise Taxes Freak-Out](https://startuplawyer.com/incorporation/the-delaware-franchise-taxes-freak-out) **Published:** January 4, 2010 **Author:** Ryan Roberts **Content:** The New Year. For some, it’s time to reflect on the past and look forward to the future. For others, it’s time to make resolutions to change for the better. But for me, it’s time to respond to client inquiries regarding their apparent 5-figure bill for Delaware [franchise taxes](https://startuplawyer.com/startup-law-glossary/franchise-tax) due March 1. Here’s how to avoid the surprise on your Delaware franchise tax bill. ## Authorized Shares Method for Delaware Franchise Taxes The bill for Delaware franchise taxes sent out by Delaware is based on the number of shares the startup corporation has authorized, known as the “Authorized Shares Method”: -$175 for 1 to 5,000 shares; -$250 for 5,001 to 10,000 shares; or -$250 plus $85 *for each additional 10,000 shares* (or portion thereof) above 10,000 shares. Thus, if your startup authorized 10,000,000 shares, your startup’s Delaware franchise taxes bill will likely be $85,165 under this method. Not exactly a number a bootstrapped startup wants to see. Thankfully, there is an alternative way to calculate your startup’s Delaware franchise taxes, and one that is very likely to lead to a much lower tax bill. ## Assumed Par Value Capital Method for Delaware Franchise Taxes Instead of using the Authorized Shares Method, a Delaware startup can choose to have its annual franchise taxes calculated using the “Assumed Par Value Capital Method.” In this method, your startup’s Delaware franchise tax bill is calculated based on all issued shares, authorized shares, [par value](https://startuplawyer.com/startup-law-glossary/par-value), and total gross assets in the following manner: Step 1: Divide Total Gross Assets by Total Issued Shares (“Assumed Par Value”) Step 2: Multiply Assumed Par Value by Total Authorized Shares (“Assumed Par Value Capital”) Step 3: The franchise tax is calculated at $400 per every $1,000,000 or portion thereof of Assumed Par Value Capital (subject to the $400 minimum under this method). Here’s an example of a calculation of a startup with total gross assets of $250,000, 5,000,000 issued shares and 10,000,000 authorized shares: Step 1: $250,000/5,000,000 shares = $0.05 Assumed Par Value Step 2: $0.05 \* 10,000,000 shares = $500,000 Assumed Par Value Capital Step 3: $400 \* ($500,000/$1,000,000) = $200.00, but because the minimum tax under this method is $400, the franchise tax would be $400.00 (Note: The example assumes the startup’s actual par value on its shares (i.e., in the charter) is lower than the assumed par value. Otherwise, the actual par value is used in place of the assumed par value in Step 2 above) **Two quick reminders:** (1) Delaware domestic corporations must file the annual report and pay franchise taxes by March 1 each year, and the annual report filing fee is currently $50 (in addition to the franchise tax). (2) The franchise tax is capped at $200,000 for most corporations under either method (and $250,000 for certain large corporate filers). ## Conclusion Most startups will benefit by using the Assumed Par Value Capital Method when calculating Delaware franchise taxes, but you only see that lower number after you enter the required information when you file. So if you get a scary auto-calculated bill based on authorized shares, do not assume it is your only option. Log in, run the alternative calculation, and then pay the lower amount that applies to your company. Here is a link to a [Delaware Franchise Tax Calculator](http://corp.delaware.gov/taxcalc.shtml). Here is a link to [FAQ regarding Delaware Taxes](http://corp.delaware.gov/taxfaq.shtml). *UPDATE*: Delaware’s minimum franchise tax is currently $175 under the Authorized Shares Method and $400 under the Assumed Par Value Capital Method (plus the $50 annual report filing fee). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** delaware, franchise taxes, par value --- ### [Term Sheet Purgatory](https://startuplawyer.com/venture-capital/term-sheet-purgatory) **Published:** January 10, 2011 **Author:** Ryan Roberts **Content:** There’s plenty of advice on (1) how to attract VCs and (2) how to negotiate a venture capital term sheet. What gets less attention is the messy middle, the period between an investor expressing interest and you actually receiving a term sheet. I call that waiting period **term sheet purgatory**. Term sheet purgatory is an eternity for a startup, even when it “only” lasts a week or two. In practice, it can stretch from one week to over a month while the investor does internal work to get comfortable and tee up the investment. During this phase, it’s normal to have progressive conversations that touch on diligence, timing, and process. The risk is when those conversations drift into “agreeing” on valuation and check size before you see the full set of terms. ## Why verbal agreement on valuation can backfire without a term sheet It can be a mistake to reach a “consensus” with an investor on [pre-money valuation](https://startuplawyer.com/startup-law-glossary/pre-money-valuation) and the investment amount before receiving the full term sheet. The reason is simple: valuation is just one variable in a bundle of terms that determine economics and control. When you “lock in” the headline number too early, you may unconsciously treat everything else as secondary. That sets you up for whiplash when the term sheet arrives with terms that move real value away from founders, or shift control in ways you didn’t anticipate. ## Other terms that can matter as much as valuation Terms like the [option pool](https://startuplawyer.com/startup-law-glossary/option-pool), [liquidation preference](https://startuplawyer.com/startup-law-glossary/liquidation-preference), and board composition are just a few examples of provisions that can meaningfully impact your outcome. You’ll feel great about a $6,000,000 pre-money until you receive a term sheet that includes a 25% option pool “pre-money,” a 1x participating liquidation preference, and an investor-favorable board. Depending on the deal, other terms can also change the practical value of the “headline” valuation: participation caps, dividends, pay-to-play, pro rata rights, protective provisions, founder vesting refreshes, and the scope of drag-along rights. You don’t need to memorize every term, but you do want to see the full package before you mentally commit to a number. ## Why “we can always renegotiate later” is a trap Yes, you can try to re-negotiate the pre-money and/or the investment amount after you see the term sheet. But it can create awkward conversations and, in the worst case, feelings of mistrust. Neither is a great way to start a long-term relationship with a lead investor. Even worse, some founders feel they “can’t” re-trade the valuation because they already verbally agreed to the numbers. ## What to do instead: ask for the term sheet So if your potential investor keeps discussing investment terms verbally, consider simply asking for the term sheet. A reasonable investor knows the term sheet is the right place to put the key terms in writing. **Simple script:** “This is helpful. To make sure we’re aligned across all the key points, can you send over a draft term sheet so we can react to the full set of terms?” ## A quick sanity check Even if you’re comfortable negotiating verbally on one facet of your startup’s capital raise and blindly on the rest, ask yourself: what’s the point of talking about the color of your corsage if you haven’t received a (non-binding) invitation to the dance? Request that all key terms of the investment are laid out in front of you in the form of a term sheet. If the investor says it’s “too early,” you can suggest a lightweight draft, even if it is high-level, with the understanding that it may evolve after diligence. The goal is not to freeze everything; it is to avoid anchoring on valuation while the rest of the deal is still unknown. **Takeaway:** Treat valuation discussions during term sheet purgatory as preliminary. The fastest way to reduce uncertainty, and avoid preventable friction, is to get the key terms into an actual term sheet. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets **Tags:** angel investor, startup, Term Sheet, Venture Capital --- ### [So I wrote a Startup Law Book called "Acceleration"](https://startuplawyer.com/startup-lawyer/startup-law-book-called-acceleration) **Published:** February 26, 2019 **Author:** Ryan Roberts **Content:** If you follow this blog, then you probably know new posts have been harder to find than a four-leafed clover in the desert. But I had a good reason — I’ve spent the good portion of the last 3 years putting together a startup law book, when I wasn’t doing my venture lawyer day job or the more important family job (nah it’s not really a job but you know what I mean). Launching March 5, 2019 [Acceleration: What All Entrepreneurs Must Know About Startup Law](https://www.amazon.com/Acceleration-What-Entrepreneurs-about-Startup/dp/1544513933/) is the culmination of those 3 years. This startup law book isn’t really meant to compete with any books out there, and frankly it likely best complements some of the other really good books out there like “Venture Deals”. ## What The Startup Law Book Is You could think of *The Startup Law Book* as a premium, expanded version of this blog. That was the initial goal when I started writing it. But as I kept going, it evolved into something more useful: a chronological guide to the legal journey most startups actually take, with a lot of new material and practical context that is hard to fit into standalone blog posts. It brings together the questions I hear most often from founders, the pitfalls that show up repeatedly, and the lessons that come from seeing both great outcomes and painful ones across roughly 1,000 client matters over the past decade-plus. The book is designed to walk you through the path from incorporation to early operations and then into seed and venture financings. It covers co-founders, employees, advisors, accelerators, cap tables, fundraising dynamics, and more, written in the same conversational “fireside chat” style as the blog. Think of it as the version of this material you would get if we were talking through it in real time while watching a San Francisco Giants double-header at Oracle Park. **Who it’s for:** founders and early startup teams who want plain-English guidance on common legal issues, and who prefer a practical roadmap over scattered articles. It is also useful for operators who touch equity and fundraising (for example, CFOs, COOs, and heads of people) and want to understand the why behind the documents. **What’s different from the blog:** the book is organized as a start-to-finish narrative, with expanded explanations, additional examples, and anonymous client anecdotes that illustrate how these issues play out in real life. That structure makes it easier to see how early decisions (like founder equity splits or option pool planning) can affect later fundraising terms. **How to use it:** you can read it cover to cover, but many people use it as a reference. When a new issue pops up, for example, a co-founder disagreement, a first hire, an advisor grant, or a term sheet, you can jump to the relevant chapter and get oriented quickly before you talk to counsel. If you want a single resource that reflects the issues startups repeatedly run into, and that explains the tradeoffs in a founder-friendly way, the book was written for you. ## What’s in “Acceleration” (Table of Contents) If the easiest way to see whether the book is relevant to your situation is to skim the chapter list first, here is the table of contents for the 332-page Startup Law Book: ![](https://startuplawyer.com/wp-content/uploads/Acceleration-Table-of-Contents-1.png "Acceleration Table of Contents 1 – Startup Lawyer")![](https://startuplawyer.com/wp-content/uploads/Acceleration-Table-of-Contents-2.png "Acceleration Table of Contents 2 – Startup Lawyer")![](https://startuplawyer.com/wp-content/uploads/Acceleration-Table-of-Contents-3.png "Acceleration Table of Contents 3 – Startup Lawyer")![](https://startuplawyer.com/wp-content/uploads/Acceleration-Table-of-Contents-4.png "Acceleration Table of Contents 4 – Startup Lawyer")![](https://startuplawyer.com/wp-content/uploads/Acceleration-Table-of-Contents-5.png "Acceleration Table of Contents 5 – Startup Lawyer")![](https://startuplawyer.com/wp-content/uploads/Acceleration-Table-of-Conents-6.png "Acceleration Table of Conents 6 – Startup Lawyer")![](https://startuplawyer.com/wp-content/uploads/Acceleration-Table-of-Contents-7.png "Acceleration Table of Contents 7 – Startup Lawyer")I hope you like it! If not, maybe you’ll like the 2nd edition. 🙂 ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [Voting Rights of Vesting Shares](https://startuplawyer.com/incorporation/vesting-shares-voting-rights) **Published:** January 27, 2018 **Author:** Ryan Roberts **Content:** One of the most common questions I get when helping founders set up a new startup is: “Do my unvested shares have any voting rights?” Put differently, do you only get to vote based on the number of *vested* shares you have at a given time? Because founders often subject most (or all) of their founder stock to vesting and start with zero vested shares, it’s an important question to get right. ## Do Unvested Shares Get Voting Rights? And the answer is simple—shares, whether vested or unvested, come with all associated voting rights. Put another way, on day one (regardless of your vesting schedule), you own every share of stock you purchased or were issued, even if the company has a repurchase right over the unvested portion. Because you own the shares on day one, you generally can vote all of those shares on day one. **Example:** Suppose you purchase 4,000,000 founder shares subject to a [4-year vesting schedule with a 1-year cliff](https://startuplawyer.com/startup-law-glossary/4-years-with-a-one-year-cliff). On day one, you typically still have 4,000,000 shares outstanding in your name. Even though 100% of those shares may be unvested at that moment, you can generally vote all 4,000,000 shares (unless your documents say otherwise). The confusion usually comes from what “vesting” means in the context of stock. For founder stock, vesting typically means the *unvested* portion of your shares is subject to a company repurchase option at a low price (often your original purchase price), as described in your stock purchase agreement. As you vest, fewer of your shares remain subject to that repurchase option. But you are not receiving “new shares” each month you vest; you already hold the shares, and the vesting schedule is really about whether the company can take some of them back if you leave. - **Stock you’ve purchased/been issued:** typically has voting rights immediately, even if it is unvested. - **Vesting for stock:** usually means a repurchase right exists over the unvested portion. - **Vesting does not:** mean you “earn” additional shares over time. ## What About Unvested Options? Options work differently. Whether an option is vested or unvested, an optionholder is not a stockholder until they actually exercise the option and receive shares. That means options, by themselves, do not carry voting rights. You could have 1,000,000 vested options and still have zero votes until you exercise and become a record holder of the underlying shares. **Common misconceptions:** - “My options vested, so I can vote now.” (Not unless you exercise and receive shares.) - “My shares are unvested, so I don’t own them yet.” (You often own them, but the company can repurchase the unvested portion if you leave.) - “Vesting is the same thing for stock and options.” (The mechanics and consequences are different.) **Bottom line:** unvested shares usually still vote because they are already issued and outstanding, while options (vested or unvested) typically do not vote until exercise. If you have an unusual arrangement (for example, restricted voting agreements or special classes of stock), your governing documents can change the default outcome. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Right of First Refusal in Company Bylaws](https://startuplawyer.com/incorporation/right-first-refusal-company-bylaws) **Published:** May 5, 2016 **Author:** Ryan Roberts **Content:** A [**Right of First Refusal (ROFR)**](https://startuplawyer.com/startup-law-glossary/right-of-first-refusal) provision gives a startup the right to step into the shoes of a third-party buyer when a current stockholder wants to sell their shares. In other words, before the shares can be sold to an outside purchaser, the company has the option to buy the shares itself on the same terms. This Right of First Refusal is a common way for startups to keep tighter control over who ends up on the cap table. Where to place the ROFR, such as in an individual agreement with a shareholder, or in the bylaws, is a common question startups face. **Example:** If an early employee wants to sell 10,000 shares to an outside buyer for $2.00 per share, a Right of First Refusal allows the company (and sometimes other permitted holders) to purchase those same shares at $2.00 per share instead. This is how a ROFR can prevent an unexpected third party from showing up on the cap table. ## Structuring the Right of First Refusal A Right of First Refusal can be implemented in a few common ways: it can live in individual stock purchase or equity grant agreements, it can be included in the company’s bylaws, or both (the “belt and suspenders” approach). In practice, many startups include a ROFR in each stock agreement so that the restriction clearly travels with the shares. Including a Right of First Refusal in the bylaws can also be convenient because you are not relying on every individual agreement to contain the same language. - **Equity agreements only:** ROFR appears in stock purchase agreements, option agreements, restricted stock agreements, etc. - **Bylaws:** ROFR appears in the bylaws and applies to covered transfers. - **Both:** ROFR appears in the bylaws and in each equity agreement for redundancy. Also note that in a seed or venture round, investors may require a separate Right of First Refusal and co-sale agreement (or similar transfer restriction agreement) that gives the company and certain investors the right to purchase shares that a stockholder proposes to transfer. ## Potential problem A Right of First Refusal provision in the bylaws can cause issues if it is drafted too broadly. We have seen this when the ROFR applies to “all securities,” rather than only common stock. A blanket Right of First Refusal can unintentionally cover preferred stock, meaning investors’ shares would be subject to company buyback rights and transfer restrictions that they did not negotiate for. Investors typically do not want their preferred shares restricted this way, but this kind of Right of First Refusal provision can fall through the cracks during diligence. - **Read the bylaws early:** transfer restrictions are often buried and not top of mind during a fast fundraise. - **Confirm what is covered:** does the Right of First Refusal apply to “shares,” “common stock,” or “all securities” (including preferred)? - **Check for exceptions:** estate planning transfers, transfers to affiliates, and other customary carveouts should be clear. - **Consider convertible rounds too:** even if the investment is a note or SAFE, the investor will likely diligence the charter and bylaws. ## Solution: carve out preferred stock If you want the Right of First Refusal in your bylaws, a practical fix is to draft the Right of First Refusal so it applies only to common stock (or to other specifically defined securities), and explicitly excludes preferred stock. This can preserve the company’s intended Right of First Refusal protection while avoiding the need to amend and restate the bylaws later as part of a financing. - **Define the covered securities:** limit to common stock unless you have a specific reason to include more. - **Add clear exemptions:** estate planning, family trusts, and affiliate transfers are common. - **Match your financing documents:** confirm the bylaws do not conflict with any investor Right of First Refusal/co-sale agreement. - **Make it easy to administer:** specify notice mechanics, response deadlines, and how the purchase price is determined. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Why Seed Round Due Diligence Should Not Start Too Early](https://startuplawyer.com/seed-funding/seed-round-due-diligence) **Published:** January 21, 2014 **Author:** Ryan Roberts **Content:** 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 deck, a current cap table summary, and a handful of key contracts). The red flag is when the list looks like full Series A-style diligence: dozens of document categories, detailed written narratives, and requests that require coordination with counsel before an investor has even indicated a likely check size. ## 1) Time is money (and likely money you don’t have yet) First, the early diligence process can be a waste of your startup’s time and cash. If the investor is “fishing” rather than seriously moving toward a check, then the hours spent gathering documents, writing explanations, and looping in your lawyer can turn into pure loss. Until there’s at least a soft commitment (for example, a clear verbal indication of amount and timing), it’s reasonable to ask—why incur the cost? ## 2) You could be working on customers, product, or other investors Second, responding to a long seed round due diligence list without commitment can bring your startup to a standstill. It often pulls founders and key employees away from product development, sales, and customer support, exactly the work that creates momentum during a fundraise. Even a “short” diligence sprint can cost you a week or two of meaningful progress. It can also create a false sense of progress. Founders may treat the diligence request as a signal that the investor is “in,” and then deprioritize other conversations. If that investor ultimately passes, you may be left with lost time, stalled outreach to other investors, and a legal bill, without any increase in closing certainty. ## 3) Too much information, too soon Third, some seed round diligence requests ask for information you may not want to share at such an early stage (confidential details, intellectual property or trade secrets, customer names and contacts, pricing, or sensitive cap table information). For example, you generally don’t need to send a detailed cap table to someone who hasn’t shown real intent; a high-level cap table summary (founders, option holders, SAFEs/convertible notes, etc.) is often enough. Be deliberate about what you share and when. A common mistake is sending the “kitchen sink” to every potential investor without a clear signal they’re likely to invest. ## What to do if you get an 8-page seed round due diligence list A long seed round due diligence list doesn’t automatically mean the investor is acting in bad faith, but you should manage the process. A few practical options: - **Ask for sequencing.** Offer a two-step process: (1) lightweight diligence now, (2) deeper diligence after a clear investment indication (amount, timeline, lead/follow dynamics). - **Request a focused list.** Ask which 5–10 items are truly gating their decision, and deliver those first. - **Use summaries first.** Provide short written summaries (key customer metrics, IP status, material contracts list) instead of full document dumps until there’s momentum. - **Protect sensitive information.** For highly sensitive items (customer names, source code, detailed pricing), consider sharing later, redacting, or limiting distribution, especially if no NDA is in place. - **Set a time box.** Define a quick turnaround window (for example, 48–72 hours for the initial batch) so the diligence request doesn’t sprawl into weeks. If you want a simple script: “Happy to share diligence materials. Before we spin up a full data room, can you confirm the check size you’re underwriting, your decision timeline, and the top items you need to see to get to a yes?” ## Conclusion Due diligence can benefit both seed investors and startups. The investor learns whether the company is investable, and the startup can learn a lot about the investor from the questions they ask. But you generally shouldn’t enter an extensive seed-round diligence process without some form of commitment from the potential investor. A signed term sheet is one clear signal; an investor should usually be able to demonstrate seriousness before that, especially if they’re asking for more than nominal diligence. **Rule of thumb:** before you open the data room, get clarity on the investor’s likely check size, timeline, and what would make them say “no.” Handled well, early diligence can still be useful: it can surface issues you’ll need to address anyway, and it can help you build a repeatable set of materials for future investors. The key is to match the depth of your response to the investor’s demonstrated seriousness. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Unintended Consequences of a Long Additional Closing Period](https://startuplawyer.com/venture-capital/unintended-consequences-of-a-long-additional-closing-period) **Published:** February 7, 2014 **Author:** Ryan Roberts **Content:** 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 a single-day closing becomes increasingly difficult, if not impossible. Therefore, startups often rely on one or more additional closing. ## What “initial closing” and “additional closing” mean To make it easier to close a round with multiple investors, the documents can allow the company to hold multiple closings. The first closing is typically the **initial closing**, and any later closing is called **additional closing**. ## How long is the additional closing period? The deal documents usually set a final date by which the startup can hold any additional closings. This window is often referred to as the **additional closing period**. It commonly runs 30–90 days from the initial closing, although it can be longer (for example, 120 or even 180 days). ## Why investors often push back on longer periods Investors often dislike long additional closing periods because they can allow late-to-the-table investors to invest on the same terms as earlier investors: 30, 60, or even 90+ days later. The early investors may feel they later investors have a de-risked investment and shouldn’t get the same earlier price. ## One more risk: optics and signaling There’s also a behavioral risk: a longer additional closing period can tempt some investors to wait and see. The thinking is, “Why invest now if I can invest in a few months on the same terms?” Because optics and signaling matter, a very long period can also (fairly or not) suggest weaker demand—even when that’s not the reality. Of course, any investor considering this approach has to weigh it against the chance the round closes without them. The wait-and-hedge approach is especially problematic because startups usually need the capital as soon as possible. If the company has already spent 6+ months fundraising before the initial closing, being pushed another 60–90 days can be brutal. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Introducing the Startup Law Glossary](https://startuplawyer.com/startup-lawyer/introducing-the-startup-law-glossary) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** In case you didn’t know, this blog includes a growing [**Startup Law Glossary** ](https://startuplawyer.com/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 you can go there directly. I created the Startup Law Glossary because startup law is full of shorthand and jargon that gets used in pitch meetings, term sheet negotiations, board discussions, and due diligence—often without anyone stopping to define it. When you’re moving fast, it’s easy to miss a nuance that later turns into a costly misunderstanding. My goal is to make this a practical reference you can bookmark and come back to whenever a new term pops up in a document or conversation. If you’re reading a financing term sheet and see something unfamiliar, you should be able to look it up quickly, get a clear definition, and understand why it matters (and what questions to ask next). Some of the topics covered include: - Company formation basics (e.g., charter, bylaws, equity authorization) - Venture financing terms (e.g., liquidation preference, pro rata rights, valuation caps) - Cap table and equity concepts (e.g., option pools, vesting, 83(b) elections) - Governance and board mechanics (e.g., protective provisions, consents, quorum) - M&A and exit terminology (e.g., representations and warranties, earnouts, indemnities) We started out with about 150 terms, and now we’re over 500—and still adding more. If there’s a startup law term you’ve seen that isn’t included (or if you think a definition could be clearer), please let me know and I’ll consider it for a future update. To access the Startup Law Glossary, use the **“Glossary”** link in the site navigation, or head straight to the glossary page and keep it handy the next time you’re reviewing documents or prepping for a call with investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) --- ### [Preferred Stock: Where "F" in a Class Can Equal Success](https://startuplawyer.com/venture-capital/preferred-stock-where-f-in-a-class-can-equal-success) **Published:** November 28, 2008 **Author:** Ryan Roberts **Content:** If you pay any attention to [TechCrunch](http://www.techcrunch.com) or [Venturebeat](https://www.ventureBeat.com), you’ll see stories titled “Startup Raises $X Million in Y-round Financing.” When the “Y” in story is a large number, do not assume that the startup company is tanking. Instead, the startup could be gaining momentum and approaching positive cash flow…but just needs one more round to get over the top. Rounds of financing are tied to classes of [preferred stock](https://startuplawyer.com/venture-capital/what-is-preferred-stock). You can name the preferred stock rounds whatever you like, but the norm is to follow the alphabet. For example: 1st round = Series A 2nd round = Series B 3rd round = Series C 26th round = Series Z If a startup raises its rounds of financing at increasingly higher company valuations, each new class of preferred stock will represent an increase in price. This means that value is being created and progress is being realized at the startup. Thus, a startup may be going through a sixth-round financing (or Series F) simply because the startup needs more time or money than it anticipated. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets **Tags:** series a --- ### [Draft a Complete Employment Contract](https://startuplawyer.com/hiring/draft-a-complete-employment-contract) **Published:** January 30, 2007 **Author:** Ryan Roberts **Content:** If you’re hiring an employee early—especially your first few non-founders—the practical answer is: you don’t need a 20-page “complete employment contract,” but you do need a clean offer letter plus a small set of attached policies and invention/IP paperwork that hold up in a financing or an acquisition. The biggest misconception is that “more pages = more protection.” In real startup law, overbuilt employment agreements often create negotiation friction without meaningfully reducing risk. I’m going to assume you’re a U.S. startup, you want something that feels credible in venture financing diligence, and you want the 80/20: the terms that actually drive outcomes when something goes wrong or when you’re in a deal room. ## Why this shows up in real startup and venture deals Employment contracts become “important” in startups for three reasons that are not very glamorous: 1. **Equity compensation creates leverage and misunderstandings.** Options and restricted stock are a retention tool until they become a dispute about what someone “earned.” 2. **IP and confidentiality are existential.** A buyer or investor doesn’t just diligence your product. They diligence whether your company actually owns what it’s selling. 3. **Terminations happen under time pressure.** When you’re terminating someone, you’re usually trying to reduce risk, protect the team, and move on. The document should make that easier, not harder. In venture financings and M&A, diligence questions often start simple: “Do you have signed offer letters? Do you have invention assignment agreements? Are there any change-of-control or severance obligations?” If you don’t, you end up doing expensive clean-up work at the exact moment you want fewer distractions. ## The common founder assumption (and why it’s incomplete) Most founders oscillate between two extremes: - “We’ll keep it simple—just send an email with salary and start date.” - “Let’s download a big employment agreement template so we’re protected.” The first approach fails diligence and creates IP risk. The second approach often creates a negotiation you didn’t need, with terms you don’t actually understand or want to enforce. The more realistic approach is: **use a short, startup-standard offer letter plus a few essential companion documents**. That’s what most venture-backed companies do because it works and scales. ## How an employment contract actually works in practice (what “complete” usually means) In startups, “complete employment contract” usually isn’t one document. It’s a small set: 1. **Offer letter** (the business deal: title, compensation, reporting, at-will, etc.) 2. **Proprietary Information and Inventions Assignment Agreement (PIIA)** (IP + confidentiality) 3. **Equity documents** (option grant notice + plan + award agreement, or restricted stock docs) 4. **Policies** (as needed): code of conduct, expense policy, bring-your-own-device, etc. 5. **If termination risk is real:** a separate severance agreement and release (typically only when you need it, not at hire) Trying to cram everything into one “master agreement” can be done, but it’s not the market norm for early-stage startups because it’s harder to update and harder to administer. ## The employment contract terms that actually matter (and what they’re doing) Below are the clauses that tend to drive real outcomes. ### 1) At-will employment (and saying it correctly) In most U.S. startup employment (outside a few special cases), employment is **at-will**: either side can end the relationship at any time, with or without cause, subject to applicable law. A good offer letter states this plainly and avoids language that accidentally implies a guaranteed term. Why it matters: in a dispute, the company wants to show there was no promise of continued employment, especially if equity expectations are tied to continued service. ### 2) Compensation and benefits (be precise, not fancy) Spell out: - base salary (and pay frequency), - bonus eligibility (if any) and whether it’s discretionary, - benefits eligibility (if applicable), - and when compensation starts. Founders over-optimize bonuses early. If you don’t have a mature bonus program, keep it discretionary and avoid formulas you’ll regret. ### 3) Equity: the “you will receive” trap Equity language causes more drama than almost anything else. If you’re offering options: - state that equity is subject to board approval, - specify the type (option vs. restricted stock), - include the intended number of shares (or a range) only if you can deliver it, - and reference the plan documents that control. In real venture deals, you want the equity to be approved properly and documented cleanly. The offer letter should not accidentally promise equity that your board never approved. ### 4) IP ownership and invention assignment (PIIA) If you do nothing else, do this. Your PIIA should cover: - assignment of inventions created during employment that relate to the company’s business, - confidentiality obligations, - return of company property, - sometimes non-solicit language (with jurisdiction caveats), - and acknowledgement of pre-existing inventions (a carve-out schedule). This is the clause acquirers care about because it answers: “Does the company own the product, or does an ex-employee?” ### 5) Confidentiality that is real (not performative) Keep it readable. Define confidential information in a way that’s broad but not absurd. Make it clear confidentiality survives termination. But don’t pretend confidentiality language replaces security practices. In M&A diligence, a signed confidentiality agreement helps, but sloppy access controls still show up. ### 6) Moonlighting, outside work, and conflicts Startups often lose IP in slow motion through side projects. A reasonable clause: - requires disclosure of outside work that could conflict, - prohibits use of company resources for outside projects, - and clarifies that inventions related to the company belong to the company (subject to state law limits). This isn’t about being controlling. It’s about protecting the cap table from “Wait, who owns that code?” ### 7) Non-compete: don’t assume you can use one This is where generic templates get founders in trouble. Non-compete enforceability varies dramatically by state, and in many places it’s heavily restricted or effectively unavailable for many employees. If you’re venture-backed and hiring nationally, the “one-size-fits-all non-compete” is often the wrong tool. Practical approach: - focus on strong confidentiality + invention assignment, - use non-solicit where enforceable and appropriate, - and be careful with broad restraints. ### 8) Termination mechanics (what you need at hire vs. later) At hire, you usually only need: - at-will statement, - return of property, - ongoing confidentiality, - and a reminder that final pay will be handled per law/policy. Severance is usually not “default” for early employees unless you’re hiring an executive where market norms expect it. If severance is on the table, treat it as its own negotiation (often tied to a release). Which leads to the next point. ### 9) Releases belong in a separate severance agreement Founders sometimes want the employee to “pre-sign” a release at hire. In practice, that’s not how releases work if you want them enforceable and credible. Releases are typically signed at termination in exchange for severance. In deal rooms, buyers care about whether you have unusual severance/change-of-control obligations. They don’t care that you stuffed a release clause into an offer letter in a way that won’t hold up later. ### 10) Change of control and acceleration (handle with care) Acceleration provisions (single-trigger or double-trigger) can be appropriate, especially for executives. They can also scare buyers or complicate M&A economics. This is one of those areas where leverage and stage matter: - Early stage: keep acceleration modest and market. - Later stage: investors and boards are more sensitive; acceleration is negotiated. If you want acceleration, be explicit whether it’s: - time-based vesting acceleration, - performance-based, - single-trigger (on acquisition), or - double-trigger (acquisition + termination). ## Concrete examples (how this goes wrong in real life) ### Example 1: The “we forgot the IP assignment” problem You hire an engineer fast, they build key infrastructure, then they leave. Later, you raise a venture financing and counsel asks for invention assignments. You don’t have one. Now you’re chasing signatures from someone who has no incentive to help you. That’s not a legal theory problem. It’s a leverage problem. ### Example 2: The “equity promised, board never approved” problem You wrote “you will receive 1% equity” in an email or offer letter. But the board never approved the grant, the option plan wasn’t adopted yet, and there’s no paperwork. In a dispute, the employee argues reliance. In diligence, the investor asks you to clean it up. Either way, you’re paying lawyers to fix an avoidable drafting mistake. ### Example 3: The “template non-compete” problem You copy a non-compete clause from a template, then you hire in a state where it’s restricted. You think you’re protected; you’re not. Worse, you might have created compliance risk if the clause conflicts with local requirements. That’s why sophisticated startup lawyer advice often looks “boring”: it’s built to work across reality, not just on paper. ## A short internet/tech-trend employment contract analogy (because incentives matter) Using a generic “complete employment agreement” template for a startup is like bolting every possible open-source license restriction onto your repo “just to be safe.” You don’t end up safer. You end up harder to ship, harder to hire, and more likely to create conflicts you don’t understand. The goal is a clean, maintainable system that survives growth, not maximum clause count. ## Theory vs. reality: a longer employment contract don’t reduce your real risk **Theory:** “If we cover every scenario in the employment contract, we’re protected.” **Reality:** Your risk is driven by (a) whether you own the IP, (b) whether equity is documented correctly, (c) whether you follow your own process, and (d) whether you handle terminations cleanly. A 25-page agreement doesn’t fix weak governance. It just creates more places for ambiguity to hide. ## What you should do differently (the practical startup lawyer checklist) If you’re hiring now, here’s the practical checklist I’d use: 1. **Use a short offer letter** with at-will language, compensation, start date, reporting line, and “subject to board approval” for equity. 2. **Get a signed PIIA before day one.** No signature, no access. 3. **Adopt your equity plan early** if you’re granting options, and document board approvals properly. 4. **Keep restrictive covenants jurisdiction-aware.** Don’t copy/paste non-competes. 5. **Save severance + release for when you need it,** and tie it to a release at separation. 6. **Run your process consistently** (signed docs, cap table updates, onboarding checklist). Consistency is what diligence teams reward. ## If you remember one thing about an employment contract… If you want a “complete employment contract” in a startup sense, focus on **clean IP ownership + clean equity documentation**, not maximum pages. In venture financing and M&A, those two items do more to protect you than any beautifully drafted clause you never enforce. ## Quick FAQ ### Do I need an employment contract or just an offer letter? For most startup employees, an offer letter plus a PIIA (and equity docs if applicable) is the market approach. Full-blown executive employment agreements are usually reserved for senior hires. ### Should I include a non-compete in the employment contract? Don’t assume you can. Enforceability is state-specific and increasingly restricted. Strong confidentiality and invention assignment usually matter more in real outcomes. ### Can I promise equity in the employment contract? You can describe intended equity, but it should be clearly subject to board approval and plan documents. If you want to avoid future conflict, avoid casual “you will receive X%” language unless it’s fully papered and approved. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring --- ### [Why Bylaws are Important for Your New Company](https://startuplawyer.com/incorporation/why-bylaws-are-important-for-your-new-company) **Published:** February 17, 2007 **Author:** Ryan Roberts **Content:** If you’re forming a corporation, you should treat your bylaws as required infrastructure, not ceremonial paperwork. The short version: bylaws are the rulebook that makes your board and stockholder actions valid, keeps governance disputes from turning into existential ones, and gives investors and acquirers confidence that your company can actually make decisions the way it claims it can. You can start with “standard” bylaws, but you can’t treat bylaws as optional. The biggest misconception is that bylaws are just internal guidelines you’ll “clean up later.” In real startup law, “later” has a habit of arriving during a financing or an acquisition, when you’re already time-conpressed and your leverage is worse. ## Why bylaws show up in real startup and venture deals Bylaws matter because they’re one of the first places diligence teams look when they’re trying to answer a simple question: is this company governable? A corporation is a legal machine. It only “acts” through properly authorized board and stockholder action. Your bylaws are what tell you (and your investors) how that authorization happens: how meetings are called, what constitutes a quorum, who can sign consents, how directors are appointed and removed, and what officers can do without asking permission every time. If you’re pre-seed, this feels theoretical. If you’re doing a seed round, it becomes real. If you’re doing M&A, it becomes brutally real. Here’s the practical point: **bad governance doesn’t usually kill your company day-to-day. It kills speed and certainty in deals.** And speed and certainty are what venture financings and acquisitions run on. ## The common founder assumption (and why it’s incomplete) The founder assumption usually sounds like this: “We’re only two founders. We trust each other. We’ll handle decisions informally.” You might. For a while. But that assumption ignores how startups actually evolve: - Ownership changes (options, SAFEs converting, new investors). - Power changes (a board appears, preferred stock comes with veto rights). - Interests diverge (not because anyone is evil, but because incentives change). - Time pressure shows up (financings and acquisitions do not wait for governance cleanup). Bylaws are less about what happens when everyone agrees, and more about what happens when you need the company to act quickly, cleanly, and defensibly—even if someone is distracted, unavailable, or unhappy. ## How bylaws actually work in practice (plain English) Think of your corporate documents like layers: - **Certificate of Incorporation (Charter):** the constitution. It’s filed with the state and controls major items like authorized shares, classes of stock, and (after financing) many investor rights. - **Bylaws:** the operating system. They’re not filed publicly, but they dictate governance mechanics. - **Board and Stockholder Resolutions / Consents:** the transactions. This is how you approve equity issuances, option plans, financings, IP assignments, officer appointments, and major contracts. Bylaws answer the “how” questions, such as: - How do you call a board meeting? Who gets notice, and how much? - What’s a quorum for the board or stockholders? - Can directors act by written consent instead of meeting? - Who are the officers, and what authority do they have? - What’s the process if you add or remove a director? - How do you handle committees (like an audit committee later)? - What indemnification protections exist for directors and officers? They don’t typically set your cap table, vesting, or investor economics. They set the **procedural validity** of decisions that affect all of that. ### What founders typically over-optimize Founders often over-optimize “custom bylaws”—trying to predict every future conflict and write bespoke governance mechanics early. In real venture practice, you’re usually better off with **clean, market-standard bylaws** at formation, then letting the charter and investor documents handle most of the heavy negotiated rights later. Where bylaws matter is not cleverness. It’s correctness and compatibility with what you’ll do next. ## Three concrete examples where bylaws suddenly matter a lot ### 1) You’re raising money and need clean approvals (and you’re already late) You’re signing a seed round. Your counsel asks for board and stockholder approvals for: - issuing shares or preferred stock, - adopting an equity incentive plan, - increasing authorized shares (if needed), - approving protective provisions, - appointing directors, - and ratifying prior actions. If your bylaws are missing, inconsistent, or ignored, you get a scramble: “Was there a valid board? Was notice proper? Was there a quorum? Did the right people sign?” Do deals close anyway? Often, yes, by papering over issues with ratifications. But ratifications are like duct tape: useful, not aspirational. Investors notice when governance is held together with duct tape. ### 2) A co-founder leaves and everything becomes a process question This is where “we’ll handle it informally” breaks. Common issues that become governance issues: - Who has authority to terminate an officer (like a CEO)? Board or stockholders? - Who can sign on behalf of the company? - Can you remove a director, and how? - What counts as a valid board action if the relationship is tense? Even if your core dispute is economic (equity, vesting, severance), the leverage often runs through governance. Bylaws are part of the terrain. ### 3) You’re being acquired and the buyer asks: “Show me the corporate record that proves you can sell.” Acquirers and their counsel care that the company can validly approve: - the merger agreement or stock purchase agreement, - any required stockholder vote/consent, - option acceleration or payout treatment, - paying transaction bonuses, - and signing ancillary documents. If your bylaws are sloppy (or worse, your practice doesn’t match your bylaws) you can end up with delays, extra closing conditions, and sometimes a request for special indemnities. This is one of the most annoying ways to lose leverage: not by having a business problem, but by having a paperwork credibility problem. ## The Bylaws sports analogy (because governance is mostly about execution under pressure) Bylaws are like the rules for how you get a play called and snapped before the clock runs out. When you’re just messing around in practice, you can improvise. In a real game situation—two minutes left, crowd noise, everyone tired—you need a system that reliably gets 11 people lined up and moving in the same direction. Venture financings and acquisitions are your two-minute drill. Bylaws don’t win the game, but if you don’t have them (or you ignore them), you waste time, burn downs, and sometimes fumble. ## Where stage and leverage change what you should care about in your bylaws ### Pre-seed / formation stage At formation, bylaws should be: - standard and internally consistent, - aligned with your initial board structure (often just the founders), - compatible with written consents (because startups rarely hold formal meetings early), and - paired with basic corporate housekeeping (initial action, officer appointments, stock issuances, IP assignment). You’re optimizing for “clean enough to scale,” not “perfect forever.” ### Seed to Series A This is where bylaws get stress-tested. You now have: - investors who care about governance hygiene, - more frequent approvals, and - an increasing chance that someone asks, “Wait, who actually approved that?” You’ll also see more interaction between bylaws and the charter (especially as preferred stock terms come in). At this stage, you care that bylaws don’t conflict with investor rights and that your approval mechanics are consistent. ### Later-stage / M&A Later-stage companies often evolve bylaws to: - formalize committees, - refine officer roles, - support more structured board processes, and - strengthen indemnification frameworks. In M&A, the spotlight is on whether you can prove valid authorization, not whether your bylaws read beautifully. ## Theory vs. reality: “Nobody looks at bylaws” vs. “Everyone looks at bylaws” **Theory:** “Bylaws are internal; no one cares.” **Reality:** Investors, acquirers, and litigators care. Sometimes your bank cares. Sometimes a disgruntled former founder cares. Even if nobody reads the bylaws line-by-line early, they become the baseline reference when something needs to be defensible. And when something goes wrong, people stop accepting “we meant to” as a governance strategy. There’s also a subtle reality: bylaws influence behavior. If your bylaws clearly support written consents and clear officer authority, you’ll operate cleaner because it’s easier to operate clean. ## What to do differently (the practical part) If you’re forming a new corporation, here’s the practical checklist I’d want you to internalize: 1. **Have bylaws at formation, and keep them consistent with your charter.** If there’s a conflict, the charter generally wins—but you don’t want conflicts. 2. **Make sure your bylaws support how startups actually operate (written consents).** Most early companies act by consent far more than by meetings. 3. **Match your governance documents to your actual governance.** If your bylaws say you need notice and meetings, but you never do them, you’re building a gap that will need cleanup later. 4. **Keep them market-standard unless you have a real reason not to.** Custom governance provisions can be tempting. They can also be landmines in financings. 5. **Treat bylaws as part of corporate hygiene, not a one-time task.** If your board structure changes, your officers change, or you adopt investor rights, make sure the document stack stays coherent. ## If you remember one thing… Bylaws are not about being formal. They’re about making your company’s decisions valid, fast, and defensible when it matters—during venture financing, founder transitions, and M&A. You can use standard bylaws, but you should not treat them as optional or “later” paperwork. ## FAQ (the questions you’ll ask once you’re already in a deal) **Do LLCs have bylaws?** Not exactly. LLCs use an operating agreement. Same concept (internal rules), different mechanics. **Can I just use template bylaws?** Often, yes—if they’re solid, consistent with your charter, and fit venture norms. The risk isn’t using a template; it’s using one that doesn’t match your actual structure or future financing path. **What’s the biggest bylaws mistake you see?** Not having them isn’t even the worst one. The worst is having bylaws and then operating in a way that contradicts them, so you can’t easily prove your approvals were valid when diligence hits. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Crowdfunding Should Be Used as a Last Resort](https://startuplawyer.com/seed-funding/crowdfunding-as-a-last-resort) **Published:** March 11, 2015 **Author:** Ryan Roberts **Content:** 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 willing to submit to equity crowdfunding’s increased regulation and incur its significant transaction costs, non-accredited investors may not collectively be the untapped well of investment capital that hopeful startups eagerly anticipate. A lot of attention has recently been given to the top 1% and their share of U.S. wealth, and accredited investors are said to represent about the top 5%. While the inclusion of non-accredited investors may increase the investor pool by a factor of 20x, the increase in available wealth may not even double, even though any increase would be welcomed by startups. Further, it is likely that the typical non-accredited investor may not have a portion – or any – of his or her wealth readily available or otherwise earmarked for high-risk investments in startup companies. **(2) It May Signal Your Startup has already been passed over** Crowdfunding, at least for the time being under current and proposed regulations, will be less appealing to startups than typical angel or venture capital investment.Those companies that engage in equity crowdfunding may unknowingly signal that they have been passed over for investment by such angel and venture capital funds, leaving the equity crowdfunding companies to represent their leftovers. Even companies with successful campaigns will be presented with challenges from obtaining routine consents to shepherding hundreds or even thousands of investors through subsequent financing rounds, as raising capital is typically not a one-time event for a startup. **Conclusion** Please know that I \*want\* equity crowdfunding to be a boon for startups, I just can’t recommend it as a go-to option today. And, please realize I distinguish this from “rewards-based crowdfunding” which I do believe can be a positive for a startup at this point. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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This would increase the authorized preferred shares of the last round, and the investors would purchase more of those same at the same price. This takes minimal if any updates to the other financing documents. With the extension round at the same valuation, your startup would need the following: - Amendment to last SPA (to authorize more to be sold under the SPA and other updates) OR a new SPA with updated reps/warranties and other items - Amendment to current COI (to authorize more of the series of preferred and common stock, if necessary) - Board Consent - Stockholders Consent - Preferred Stockholder waiver (for any applicable protective provisions and to waive preemptive rights as applicable, to the extent someone is not participating) which could be integrated into the stockholders consent. If your valuation is changing, either higher or lower, then it would take a newly created series of preferred and we’d have to amend the current certificate of incorporation, investors’ rights agreement, right of first refusal and co-sale agreement, and voting agreement. You are basically doing a whole ‘new’ round at this point and layering in the new security Less often, I see the convertible structure used whether it’s a SAFE or convertible note. Of course, many investors have used the last 6-18 months to do down rounds and other pay-to-play structures, and you might see a hesitancy to do a convertible if they feel the valuation now is at an ‘all-time low’. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Why Your Startup's Founders Stock Should Vest Over Time](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time) **Published:** July 11, 2008 **Author:** Ryan Roberts **Excerpt:** How to vest your startup company's founders stock over time to prepare for an exiting founder **Content:** If your startup has more than one founder and you plan to raise venture capital or sell the company, your founder shares should vest over time. In the U.S. venture market, that almost always means four‑year vesting with a one‑year cliff. This isn’t about mistrust or formality—it’s about keeping the company fundable and acquirable if the founding team changes. This article applies to U.S. startups with multiple founders that expect to pursue venture financing or an acquisition. If you’re bootstrapping indefinitely or running a lifestyle business, some of this may be overkill. For venture‑backed startups, though, founder vesting is not optional in any meaningful sense. The biggest misconception founders have is thinking vesting is primarily about fairness between founders. In reality, vesting exists to protect the company—and by extension, the founders who actually stick around and build it. ## **Why Founder Vesting Exists** Founding teams change. People burn out, disagree on strategy, get better offers, or realize startup life isn’t for them. That’s normal. What investors and acquirers care about is *what happens next*. A startup where a departed founder still owns a large, fully vested chunk of common stock is harder to finance, harder to sell, and harder to manage. That equity is effectively dead weight: it doesn’t motivate anyone, but it still votes and still needs to approve major transactions. Founder vesting solves this by ensuring that equity tracks continued contribution. If a founder leaves early, the company can repurchase the unvested shares and reuse that equity for new hires, replacement executives, or simply to keep the cap table clean. This is why experienced startup lawyers treat vesting as foundational startup law hygiene, not a negotiable perk. ## **The Market Standard: Four Years, One‑Year Cliff** For U.S. venture‑backed startups, the standard founder vesting schedule is: - Four years total vesting - One‑year cliff - Monthly vesting thereafter Here’s what that actually means: - No shares vest at all until the first anniversary of vesting commencement. - On the one‑year mark, 25% of the shares vest at once. - The remaining 75% vests monthly over the next 36 months (1/48th per month). This structure is so standard that deviating from it raises questions. Not red flags necessarily—but questions you’ll have to explain during a venture financing or acquisition. If a founder leaves before the first anniversary, they leave with zero vested shares. If they leave after 15 months, they leave with 31.25% vested (25% at the cliff plus three months of post‑cliff vesting). ## **What Happens to Unvested Founder Shares** When founders vest their stock, they typically purchase all their shares upfront for a nominal price, and the company retains a repurchase right over the unvested portion. If a founder leaves: - The company repurchases the unvested shares at the original purchase price. - The vested shares remain with the departing founder. - The repurchased shares return to the company’s equity pool. That reclaimed equity is often critical later—especially when hiring a new CTO, VP of Sales, or other executive who needs meaningful ownership to join. This mechanism is routine in venture financings and baked into standard startup law documentation. ## **The Theory vs. Reality of “Founder Trust”** **Theory:** “We’re co‑founders. We trust each other. Vesting feels unnecessary or insulting.” **Reality:** Vesting protects the founders who stay. In real deals, vesting is not viewed as a sign of mistrust. It’s viewed as acknowledgment that startups are unpredictable and that equity should align with long‑term contribution. Investors are especially wary of startups where a non‑participating founder still holds a meaningful stake. Even if that founder is friendly, the risk isn’t personal—it’s structural. Approvals get harder. Incentives get misaligned. Negotiations slow down. This is why startups without proper vesting often get forced to “fix” it later, usually at the worst possible moment—right before a financing or acquisition. ## **How Vesting Shows Up in Real Venture Financings** In a priced venture round, investors will almost always review founder vesting closely. Common scenarios include: - **Re‑vesting requirements:** If founder shares are fully vested or not subject to vesting, investors may require founders to re‑vest some or all of their equity as a condition to closing. - **Acceleration negotiations:** Founders sometimes push hard for acceleration on a change of control. Partial acceleration is common; full single‑trigger acceleration is not. - **Departed founder clean‑up:** If a founder left without proper vesting, investors may require equity restructuring before investing. These issues rarely improve deal economics for founders. They mostly introduce friction, delay, and leverage for the investor. ## **Acceleration: Where Founders Often Fight the Wrong Battle** Founders frequently focus on acceleration provisions, especially “double‑trigger” acceleration (vesting accelerates if the company is acquired *and* the founder is terminated). Here’s the practical view: - Double‑trigger acceleration is market‑standard and usually reasonable. - Single‑trigger acceleration (vesting accelerates just because of an acquisition) is rarely accepted in venture‑backed companies. - Acceleration typically applies to some, not all, remaining unvested shares. If I were advising a founder, I’d say this: don’t over‑optimize acceleration early. Clean vesting matters far more to investors than aggressive acceleration terms, and pushing too hard here can cost credibility without moving outcomes. Leverage and deals may vary, however. ## **Stage Matters More Than Founders Expect** Vesting norms are remarkably consistent, but outcomes still vary by stage: - **Pre‑seed / formation:** Almost always full four‑year vesting for all founders. - **Seed:** Same standard, with limited flexibility around start dates or partial credit for prior work. - **Series A and beyond:** Investors scrutinize vesting more closely, especially if roles have shifted. - **M&A:** Buyers care deeply about who is staying post‑closing and how incentives align. Earlier is easier. Fixing vesting later is possible—but almost never painless. ## **What Happens When Things Go Sideways** Vesting matters most when things don’t go according to plan: - **Founder departure after conflict:** Vesting prevents a disgruntled former founder from blocking deals. - **Down rounds or soft exits:** Clean vesting makes renegotiations survivable. - **Late‑stage acquisition negotiations:** Buyers hate messy cap tables more than almost anything else. Legal terms behave differently under stress. Vesting is one of the few founder‑side protections that actually reduces risk rather than shifting it. ## **What Usually Doesn’t Matter Much** Founders often over‑focus on: - Minor variations in monthly vesting math - Symbolic ownership percentages early on - Perfect theoretical fairness between founders What matters is whether the company can reclaim equity when needed and whether future investors and acquirers view the structure as standard and sane. ## **Bottom Line** **What actually matters:** - Founder shares vest over time - The structure matches market norms - The company can reclaim unearned equity **What usually doesn’t:** - Perfect customization - Aggressive acceleration - Over‑lawyering early hypotheticals **What to do differently in your next deal:** - Put vesting in place at formation - Accept the four‑year / one‑year cliff standard unless you have a compelling reason not to - Focus negotiations on issues that actually move control, economics, or risk Founder vesting isn’t about pessimism. It’s about building a company that can survive change—and still get funded or acquired when it matters. ## **Common Founder Questions** **Can we skip vesting if we trust each other?** You can, but you’ll almost certainly be asked to fix it later—and you won’t have leverage then. **Can prior work count toward vesting?** Sometimes, in limited amounts. This is common at seed but rarely moves the overall structure. **Does vesting apply if I’m the sole founder?** Usually not at formation, but investors may still require re‑vesting in later rounds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** co-founders, common stock, vesting --- ### [Dealing with a Startup Creeper](https://startuplawyer.com/board-of-directors/dealing-with-a-startup-creeper) **Published:** August 30, 2010 **Author:** Ryan Roberts **Content:** Advisors are great for startups. They can provide your startup with guidance on a wide range of topics and typically take a seat on your [startup’s advisory board](https://startuplawyer.com/startup-law-glossary/advisory-board). But sometimes a person who gives your startup infrequent, casual advice will broadcast to the world that he or she is an advisor to your startup in an “official” capacity — which is (shocking) news to you and your co-founders. Awkward. How did this “advisor” turn into a creeper? **The Genesis of the Startup Creeper** Most startup founders do a tremendous amount of networking. Through this networking, a founder may become acquainted with someone willing to provide some expertise, advice and/or connections. Most of the time, startups and the “advisor” have no problem with this unofficial, undocumented relationship. The startup isn’t looking for routine advice or time from the advisor, and the advisor isn’t looking for anything from the startup (e.g., cash, equity, geek cred). But occasionally this “advisor” makes his or her role unilaterally public creating the awkward situation. A founder will typically find out when someone he or she knows in the startup ecosystem tells the founder, “Hey, \[Startup Creeper Name\] told me he was an advisor to your startup.” Or maybe news of the official relationship is on their Twitter or LinkedIn page. Regardless, this “official relationship” is news to you and your co-founders. The casual advisor relationship has now turned creepy. I got married before the Myspace/Facebook era, but I imagine this is something like going on a first date and coming home to find your date’s Facebook profile lists them as “in a relationship with” you. Creepy. **Don’t Lead Them On** You lead on a startup creeper by continuing to either solicit or accept their advice and connections. You may think they’ve been giving some decent advice, but you don’t really know why they are hanging around — or you are trying to figure out their angle. At this point, you have both failed to bring up the status of your startup-advisor relationship. **The Decision** No matter how you arrived at this point with your Startup Creeper, you have 2 choices: (1) ***Make it official and offer them a position on your advisory board*.** If the initial shock wears off and you are OK with it, immediately sign up the advisor to an advisory board agreement. Anyone providing more than casual advice should be signed up to an advisory board agreement — especially someone receiving confidential information regarding your startup and/or identifying themselves as an advisor. This is an important task because the advisory board agreement will most likely contain provisions such as a nondisclosure of confidential information, [inventions assignment](https://startuplawyer.com/startup-law-glossary/inventions-assignment), and a no conflicts rep & warranty. Your advisor will likely be privy to various inside info regarding your startup and it is to document that he or she cannot use it for someone else’s benefit, or more importantly, to the disadvantage of your startup. (2) ***Kick the Startup Creeper to the curb, in the most tactful way possible***. If you are still feeling slimy after the initial shock wears off, then you need to wrap up the relationship in an expeditious manner. Difficult conversations are a part of business and this type of situation presents a great time to tackle your (likely) first one. But do so without burning a bridge — no matter how creepy the advisory relationship is. Communicate in private, and opt for in-person over telephone conversations. If you cannot meet in person, choose telephone over email. Don’t forget to thank them, because they did share their expertise, time, and/or connections with your startup. And the situation would likely not have reached this level of awkwardness without leading them on in some capacity. Now, maybe they can shift their focus on another project or startup. **Conclusion** There are tons of great startup advisors out there ([although they are hard to find](https://startuplawyer.com/boards-advisors/startup-advisor-dating)). People want to help your startup and that’s a good thing. But you have to manage these relationships, before they turn into awkward situations like the Startup Creeper scenario. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Boards and Observers **Tags:** advisors, startup --- ### [Model Seed Funding Doc Myths](https://startuplawyer.com/seed-funding/model-seed-funding-doc-myths) **Published:** March 11, 2010 **Author:** Ryan Roberts **Content:** A variety of model startup seed funding docs have been released in the past year or so: TechStars Series AA Preferred, YCombinator Series AA Preferred, and TheFunded Founder Institute’s Plain Preferred. And [as I mentioned last week](https://startuplawyer.com/seed-rounds/model-series-seed-docs), Fenwick & West and Andreessen Horowitz released the [Series Seed](https://startuplawyer.com/seed-rounds/model-series-seed-docs) model documents. ***The standardized seed funding document movement is great and I fully support it.*** So now you have more docs to choose from, and maybe more to be confused by. I have and will continue to use these document sets when a client requests. But there are a few myths about standardized seed funding docs, both in terms of their use and their effect on the legal landscape: **Myth #1: Startup Lawyers Hate Standardized Seed Funding Documents Because it Reduces their own Payday.** The premise here is simple: complicated/long docs = $$$ for lawyers. But lawyers don’t make documents complicated to pad the bill. Legal documents can get “complicated” because of the potential issues that may arise pre- and post-transaction. If these issues didn’t actually happen, the documents wouldn’t be longer or more complicated. For example, a founder stock purchase agreement is 12+ pages long because founders can, have, and will fail and/or bail on startups (hence the vesting schedule & startup repurchase option). When an issue like this occurs at your startup, you’ll be glad your documents are “complicated.” Each time a new set of docs get released, I don’t cringe because it means I then have to remove the hockey stick from my revenue projections. I welcome these and future standardized seed funding docs because they provide entrepreneurs with the chance to take a look at financing terms. And since the model seed funding documents aren’t as cumbersome as those used in a typical Series A Round, I find that entrepreneurs tend to actually review them. Clients come better prepared now. An educated entrepreneur is a better entrepreneur. And better entrepreneurs build more successful startups. Startup lawyers (myself definitely included) take the long-term view and want to see our clients succeed. (Note: If you believe your lawyer is making documents complicated and long for the sake of his or her payday, ask your lawyer about the documents and the need for their complexity/length. If your lawyer’s answer isn’t good enough for you, then find a new lawyer. Of course, you can also ask for fixed-fee billing.) **Myth #2: Standardized Docs Reduce the Need for a Startup Lawyer** This myth is usually offered by someone who thinks lawyers are just gatekeepers of the legal document vault. There is no “[walled garden](http://en.wikipedia.org/wiki/Walled_garden_(technology))” when it comes to legal documents. You can easily get legal documents via Lexis, Westlaw, Edgar, or any relevant legal treatise. If you believe lawyers are simply document gatekeepers, you are missing the entire reason for hiring a lawyer — counsel. If you aren’t asking for counsel, you aren’t using your lawyer right. If your lawyer isn’t providing counsel, you have the wrong lawyer. No set of seed funding documents will replace counsel, either pre-financing or post-financing. But in the event one of you genius hackers does this, please consider me for a job at your startup. **Myth #3: Standardized Docs = Open Source Law.** “Open Source Law” is a buzz phrase thrown around frequently, but what the legal profession is experiencing is more of an automation of various parts of the law practice….not the entire practice of law. There will always be demand for good counsel. While the practice of startup law isn’t rocket science, it is nevertheless complex. In addition to understanding the provisions of your particular agreement, you have to know (i) what is missing from the agreement, and (ii) how the various provisions, situations, people, and investment amounts interact and may affect other off-document rules and issues. It’s difficult to do this unless you do this frequently. Law firms are no more immune to open sourcing than any developer, engineer, or pixel pusher. But it doesn’t mean we’ll all go away, we’ll just adapt by providing more value. Those that manage this feat will survive. **Myth #4: Standardized Seed Docs are Appropriate for My Startup’s Raise.** First, most if not all the model seed docs assume your startup is a Delaware corporation. Thus, you are going to have to either edit the docs or reincorporate your startup in Delaware to use them properly. (Next up: the model reincorporation merger kit) Second, the model seed docs tend to impress upon the entrepreneur that preferred equity is the best angel investment structure. That may be so, but [convertible debt](https://startuplawyer.com/seed-rounds/the-basics-of-convertible-debt-financing) can also be appropriate for your startup’s angel round. However, most (all?) sophisticated investors will not invest via a convertible note. And since the people & groups behind these model seed funding docs are some of the most sophisticated angel investors in the world, preferred equity investment model docs are being released. Since entrepreneurs trust groups like TechStars and YCombinator, there is the tendency for startups to blindly use these docs, without considering alternatives like convertible debt. To their credit, these groups have earned entrepreneurs’ trust and have altruistic reasons for their release. Nor do they push these docs as “must use” docs. Nevertheless, entrepreneurs should still consider whether a model seed funding document set (preferred equity) is prudent relative to their startup’s situation. **Conclusion** I support any effort to bring transparency to the law firm establishment and otherwise educate entrepreneurs (including model seed funding documents). That’s one of the reasons why I started this blog in 2006. You can’t be a startup lawyer and not want startups to have a better chance at succeeding. Model seed funding docs help entrepreneurs, but not to the detriment of startup lawyers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** legal documents, seed funding, startup, Startup Lawyer --- ### [I Got a Term Sheet, Now What?](https://startuplawyer.com/venture-capital/i-got-a-term-sheet-now-what) **Published:** November 11, 2008 **Author:** Ryan Roberts **Content:** Getting a term sheet from an investor is like getting an invitation to the Prom in January–you’ve got a long way to go before you dance. When you get a term sheet from a VC or angel investor, you need to decide whether the economics of the deal feel right. And you also have to understand that there’s more to a term sheet than economic terms like [pre-money valuation](https://startuplawyer.com/venture-capital/pre-money-and-post-money-valuation). There’s control, liquidity, and management terms to carefully consider. Do some background research on your prospective investor. Have they published a list of their portfolio companies? Finally, resist the temptation to use one submitted term sheet to obtain another term sheet with a better pre-money valuation. Even though you may not be prohibited from shopping the deal, remember that the investor community tends to be close-knit. You can shop deals simultaneously, but don’t try to leverage one venture firm against another. Remember that some deals are financed by more than one firm. And even if your deal is a one-firm deal, the serial entrepreneur in you will likely have you back in front of venture firms in the years ahead. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets **Tags:** Term Sheet --- ### [What is a Liquidation Preference?](https://startuplawyer.com/seed-funding/what-is-a-liquidation-preference) **Published:** May 1, 2009 **Author:** Ryan Roberts **Content:** The liquidation preference is the amount that must be paid to the preferred stock holders before distributions may be made to common stock holders. The liquidation preference is payable on either a liquidation of the company, asset sale, merger, consolidation or any other reorganization resulting in the change of control of the startup. It is usually expressed as a percentage of the original purchase price of the preferred, such as “2x.” Thus, if the purchase price of the preferred is $5 per share, a liquidation preference of 2x will be $10 per share. Alternatively, the liquidation preference can expressed as a per share amount, as seen in this generic liquidation preference clause: > The holders of the Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of the Common Stock by reason of their ownership thereof, the amount of $10 per share (as adjusted for any stock dividends, combinations or splits with respect to such shares) plus all declared or accumulated but unpaid dividends on such share for each share of Series A Preferred Stock then held by them. Let’s take a simple scenario to see how the math works: (1) Series A Price = $5 per share (2) Series A Shares = 500,000 (3) Series A Equity Stake = 33% (i.e., they are investing at a MM [pre-money valution](https://startuplawyer.com/venture-capital/pre-money-and-post-money-valuation)) (3) Series A Liquidation Preference = 2x (i.e., $10 per Series A share) = $5,000,000 (4) Startup Company is sold for $6,000,000 While the Series A investors paid $2,500,000 total for their shares for 33% of the startup company, the 2x liquidation preference will ensure that the Series A investors receive $5,000,000 of the $6,000,00 purchase price of the startup. Thus in this scenario, the 2x liquidation preference gives the Series A investors 83.3% of the total sales price of the startup (even though the Series A equity stake is 33%) and the common stock holders will receive the remaining 16.7% pro-rata in accordance with their common stock ownership. (This example assumes that the Series A preferred shares do not participate with the common in the remaining 16.7%. I’m also leaving out the possibility of conversion-to-common to simplify this example.) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Usually, a set of founders want to end up with a final equity percentage in the 25% – 51% range. I call this number founders (mentally) reserve for future issuance the “Issuance Pool.” While an [Option Pool](https://startuplawyer.com/seed-rounds/what-is-an-option-pool) is a key tool for a startup in order reaching the next level, creating an Issuance Pool is of no tangible benefit. First, the Issuance Pool creates the potential hazard that founders will operate and make equity issuance decisions, whether for a developer or angel investment, as though the Issuance Pool is pre-authorized like an Option Pool. A common mistake made by founders is acting as though they own the 25% to 51% they ***plan on owning*** instead of the 100% they actually own as a group after incorporation and before any other equity issuances. Thus, there is the tendency for founders at future issuances to think “This 10% issuance leaves us with 39% left for our (planned) future issuances.” Your startup could over-issue equity to consultants, advisors, employees, and investors simply because you believe there’s a large amount of equity left in your Issuance Pool. Alternatively, your startup could turn off new hires and investors if you attempt to under-issue equity because your Issuance Pool is running low. Second, the Issuance Pool should not be used as a barometer of success. Is your startup any more successful because it only issued 75% of your Issuance Pool? Maybe. But the goal should be that all equity issuances work to increase the value of the startup and generate great returns– not that your equity percentage is greater than what you planned months, if not years, ago. While the Issuance Pool doesn’t show up on your startup’s cap table, it can still be harmful to your startup. There’s nothing wrong with planning, but an Issuance Pool should be discarded quickly after incorporation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** equity split, founders, Option Pool, startup company --- ### [What Happens to the Option Pool if a Startup is Acquired?](https://startuplawyer.com/acquisitions/what-happens-to-the-option-pool-if-a-startup-is-acquired) **Published:** December 22, 2009 **Author:** Ryan Roberts **Content:** The [option pool](https://startuplawyer.com/seed-rounds/what-is-an-option-pool) is the amount of common stock a startup reserves (typically at each series of financing) for future issuances to employees, directors, advisors, and consultants. For example, if a startup has 5,000,000 shares of common stock outstanding immediately before the Series A round, a condition of the Series A round may will be the creation of an option pool, likely in the 10-20% range of the post-financing fully-diluted capitalization. At the Series A round, the option pool only dilutes the founders and not the new investors, since the option pool is put into the pre-money. The higher the percentage, the greater the dilutive effect for the founders. After the Series A round, as the startup develops and adds human capital, it will use the option pool reserve to provide equity compensation to such hires. ***If the startup gets acquired, what happens to the unissued amount left in the the startup’s option pool ?*** The answer is pretty intuitive — the unissued options get wiped out. But this is still probably a relief to some founders, since founders suffer a dilutive effect from the entire option pool when raising capital. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits **Tags:** acquisition, Option Pool, startup --- ### [How Many Shares of Authorized Stock Should a Startup Company have at Incorporation?](https://startuplawyer.com/incorporation/how-many-shares-authorized-stock-should-startup-company-incorporation) **Published:** October 10, 2008 **Author:** Ryan Roberts **Content:** An often overlooked aspect of filing a certificate of incorporation is determining how many shares of authorized stock should the new corporation authorize at incorporation. This decision doesn’t really matter to most businesses (I don’t have a clue how many shares I authorized when I incorporated my law firm), but startup companies aren’t like most businesses. Most businesses don’t grant stock options or seek venture capital. Thus, the organization and capitalization of your startup is important from the outset, and this all begins with how many shares of authorized stock your startup authorizes. ***The short answer: 10,000,000 shares of Common Stock*** The number of shares of authorized stock to authorize at incorporation is somewhat arbitrary, but my preference is to authorize 10,000,000 shares. And this type of stock is usually ‘plain vanilla’ Common Stock and not something like [dual class common stock for founders](https://startuplawyer.com/incorporation/dual-class-common-stock-structure-for-founders). ***Are these 10,000,000 shares issued at incorporation?*** Now, that doesn’t mean all 10,000,000 shares of authorized will be *issued* to the founders immediately upon incorporation. The startup must be careful and select an amount of authorized stock that will account for your startup’s short-term planned issuances and the reserved stock option pool — at least for the short term. Otherwise, your startup will have to incur additional filing and/or legal fees to increase the shares of authorized stock once you reach the maximum. It’s not going to break the bank, but it can be discouraging to incur another $250 in just filing fees because your startup used up all its authorized stock so quickly. For example, say you authorize 10,000,000 shares. You may want to keep a reserved option pool of 1,000,000 shares, thus you would only issue up to 9,000,000 shares to the founders. But we usually recommend that a [startup issue about 60% of its authorized shares at incorporation](https://startuplawyer.com/incorporation/how-many-shares-should-be-issued-to-founders-at-incorporation). ***Why 10,000,000 and not 100,000? Or 1,000,000?*** Of course, you could obtain the same result by authorizing 1,000,000 shares with an option pool of 100,000 and a 900,000 common stock issuance to the founders. But for some reason, people (and when I say people I mean the developers/consultants/directors getting the stock options) like to have a larger number of stock options even if the percentage of the company would be the same. I guess 50,000 stock options sounds better than 5,000 when you are up in the club. And vanity does play a part…sometimes. ***Note:*** Delaware calculates franchise taxes in two ways, either by the total amount of authorized shares or by the assumed par value capital method. Most startups (especially those that authorize 10,000,000 shares) should choose the later method — [and should not freak out when Delaware sends the annual franchise tax notice](https://startuplawyer.com/incorporation/the-delaware-franchise-taxes-freak-out). ***Pro and $$$ Saving Tip:*** [Set your par value low.](https://startuplawyer.com/incorporation/par-value-for-a-startup-companys-stock) ***Update:*** If you are looking for information about startup company incorporation, check out my [“If I Launched a Startup](https://startuplawyer.com/startup-issues/if-i-launched-a-startup)” article. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** common stock, incoporation, shares, startup --- ### [Delaware Franchise Taxes](https://startuplawyer.com/incorporation/delaware-franchise-taxes) **Published:** January 6, 2012 **Author:** Ryan Roberts **Content:** 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 tax bill stating “$75,075” as the amount owed. This total is computed based on your startup’s number of authorized shares. But it’s a good thing for your startup that Delaware offers an alternative way to compute your franchise tax bill: the “Assumed Par Value Capital Method.” This was the topic of a post I wrote 2 years ago titled “[The Delaware Freak-Out](https://startuplawyer.com/incorporation/the-delaware-franchise-taxes-freak-out).” If you have a startup that is incorporated in Delaware, it’s probably a good time to revisit that post. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Convertible Note Term Sheets](https://startuplawyer.com/seed-funding/convertible-note-term-sheets) **Published:** August 24, 2010 **Author:** Ryan Roberts **Content:** Just like the [preferred equity](https://startuplawyer.com/seed-rounds/what-is-preferred-stock) financing process, the [convertible debt](https://startuplawyer.com/startup-law-glossary/convertible-debt) financing process can start with a term sheet, rather than a full set of financing documents. A convertible note term sheet is beneficial because it postpones a lawyer from cranking out a full set of docs until consensus is reached regarding the convertible debt offering’s material terms. It also makes any potential back-and-forth negotiation on such terms easier to manage. On the other hand, if you are dealing strictly with friends and family on a convertible note transaction, adding this extra step in the process could be somewhat cumbersome. Thus, it’s usually prudent to go straight to the convertible note deal docs with friends and family. Here are terms that are typically found in a convertible note term sheet: **Amount of the Offering**: How much capital can the startup raise via the convertible debt offering? **Closing**: Is there a specific date that the convertible debt financing will close, or will there be an [open round of seed investment](https://startuplawyer.com/seed-rounds/keeping-a-seed-financing-round-open)? **Interest Rate**: What is the rate of interest on the convertible debt? Is the interest payable upon maturity or monthly/quarterly/yearly? **Term**: When is the maturity date of the convertible notes? **Prepayment**: Can the startup prepay the convertible notes without the consent of the convertible note holders? **Convertibility**: What amount of equity financing is required to trigger automatic conversion of the convertible notes to equity (i.e., the determination of [qualified financing](https://startuplawyer.com/startup-law-glossary/qualified-financing))? What is the [discount received by the convertible note holders](https://startuplawyer.com/seed-rounds/how-to-set-conversion-discounts-in-convertible-notes) relative to the price paid by the qualified financing investors? Is there a [convertible note discount price cap](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap)? Do the convertible notes convert to equity on the maturity date, and if so, at what [pre-money valuation]()? **Liquidity Event Payment**: How much (e.g., 2X/3X, etc.) do the convertible debt holders receive [if the startup gets acquired before a qualified financing and the maturity date](https://startuplawyer.com/seed-rounds/selling-your-startup-with-convertible-debt)? What is the definition of “Liquidity Event”? **Warrant Coverage**: Do the convertible debt holders receive warrants to purchase “Series A” shares, and if so, how much percent coverage? **Security Interest**: Will the convertible notes be secured by any or all assets of the startup? **Amendment**: What is the manner how the convertible notes can be amended? Majority of the principal amount of the notes? **Legal Fees**: Does each party pay for its own legal fees? ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** convertible note, Term Sheet --- ### [Is a Term Sheet Binding?](https://startuplawyer.com/seed-funding/is-a-term-sheet-binding) **Published:** December 14, 2009 **Author:** Ryan Roberts **Content:** A term sheet is an outline of the deal terms that helps frame the contemplated transaction for both parties. Term Sheets for financings and acquisitions are usually not binding. However, it is quite common to see various sections of the term sheet binding, including: –[No Shop](https://startuplawyer.com/acquisitions/using-a-no-shop-clause-in-a-letter-of-intent) or [Go Shop](https://startuplawyer.com/acquisitions/get-a-deal-done-with-a-go-shop-clause) Clauses: Can a party shop the deal to 3rd parties or is it prohibited? -Expenses: Determine which party pays for (legal) expenses and which party’s counsel drafts the transaction documents. -Confidentilaity: Keep the existence of the term sheet and contents confidential. ***If a term sheet is not binding, then why draft one?*** It’s a good starting point to help all parties involved define the deal, in addition to providing some safeguards if the contemplated transaction falls through during negotiation. Finally, if you can’t agree to a term sheet, it’s probably not worth proceeding with due diligence investigations along with drafting the transaction documents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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The main feature of the convertible note is that the debt investment made by the [angel investor](https://startuplawyer.com/startup-law-glossary/angel-investor) will typically later convert into equity. For this article, let’s assume this equity is the [Series A Preferred Stock](https://startuplawyer.com/startup-law-glossary/series-a-preferred-stock) purchased by a venture capital fund. **Convertible Note Discount** As a sweetener to the angel investor (i.e., compensate the angel for the early risk), the convertible promissory note will have an [automatic conversion](https://startuplawyer.com/startup-law-glossary/automatic-conversion) discount feature by which the angel investor will exchange the convertible debt for shares of the Series A Preferred Stock ***at a discount*** to the price per share paid by the venture capital fund at a [Qualified Financing](https://startuplawyer.com/startup-law-glossary/qualified-financing). For example, if a venture capital fund purchases Series A Preferred Stock at $1.00 per share, the discount may allow the angel investor to purchase the same Series A Preferred Stock at $0.75 per share. (For more background, check out [this post](https://startuplawyer.com/seed-rounds/how-convertible-debt-works) for an example of how convertible debt and the conversion discount works.) **Incentive Misalignment** Convertible notes have drawbacks — they aren’t perfect. The main drawback is the quirk that the lower your [pre-money](https://startuplawyer.com/startup-law-glossary/pre-money-valuation) at Series A, the more equity your angel investor gets. *EXAMPLE 1*: If a VC invests $2,000,000 at a $5,000,000 pre-money valuation and an angel investor has a $100,000 convertible note with a 25% discount, the angel investor will own 1.9% of the startup immediately after the Series A round. *EXAMPLE 2*: But if the VC invested at a $15,000,000 pre-money, the same angel investor would own 0.78% of the startup right after the Series A. Because of this quirk, an angel investor may not have much incentive to help increase your pre-money valuation before a Series A…***regardless of the conversion discount***. Meanwhile, you and your co-founders are doing everything possible to increase the startup’s valuation. **Convertible Note Price Cap** To provide upside protection, angel investors like to put a “price cap” on the convertible note discount. This price cap is expressed in terms of a pre-money valuation and effectively acts as a share price ceiling. Thus, an automatic conversion discount with a price cap might read something like this: *“The conversion discount shall be the lower of (i) a 25% discount to the Series A Preferred Stock share price, or (ii) the price per share if the Series A premoney valuation was set at $\[6,000,000\].”* Using the hypothetical in Example 2 above, an angel investor using this $6,000,000 pre money price cap would receive 1.45% instead of 0.78% as of right after the Series A. **Price Caps as a Weapon** The original idea was that price caps would provide upside protection for an angel investor. But occassionally I’ll see an angel throw in a really low price cap (<$400k) in the automatic conversion section. How many Qualified Financings are going to take place lower than $400k (and make the conversion discount percentage even a legit term)? Lowball price caps are essentially a “#$!@ you” to the startup. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** Angel Investors, convertible note, price cap --- ### [Price Cap Liquidation Preference Windfall Regulators](https://startuplawyer.com/seed-funding/price-cap-liquidation-preference-windfall-regulators) **Published:** January 22, 2013 **Author:** Ryan Roberts **Content:** Most convertible notes have a [price cap](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap) as a feature term. Depending on the delta between the price cap and the [pre-money valuation](https://startuplawyer.com/startup-law-glossary/pre-money-valuation) of the [qualified equity financing](https://startuplawyer.com/startup-law-glossary/qualified-financing), the convertible note investors could receive a windfall in terms of [liquidation preference](https://startuplawyer.com/startup-law-glossary/liquidation-preference). That is, the investor’s liquidation preference could exceed its original investment amount. **The Potential Problem** Let’s say Series A investors invest at a pre-money valuation that equates to a $1.50 per share purchase price of a startup’s Series A Preferred Stock. And due to a price cap, the convertible note investors get to use their debt to purchase the same Series A Preferred Stock at $0.50 per share. Assuming the Series A Preferred Stock comes with a 1X non-participating liquidation preference, and without a windfall regulator, the convertible note investors would receive a liquidation preference equal to 3X their investment since the liquidation preference of Series A Preferred would be drafted as “$1.50 per share of Series A Preferred Stock”. **The Multiple Series of Preferred Stock Approach** One approach to combat this potential windfall for the convertible note holders is to split the Series A Round into two different equity securities, such as Series A-1 Preferred Stock & Series A-2 Preferred Stock. The only difference between the Series A-1 Preferred Stock and the Series A-2 Preferred Stock would likely be the per share prices/amounts listed in the company’s amended and restated certificate of incorporation. For example, the liquidation preference could be drafted as “$0.50 per share of Series A-1 Preferred Stock; $1.50 per share of Series A-2 Preferred Stock.” However, if the term sheet calls for a specific dividend rate, then the dividend rate would also be different for the Series A-1 and the Series A-2. In most cases the Series A-1 and Series A-2 would vote together on all matters and not separately. **The Combination of Preferred Stock and Common Stock Approach** The other common way to regulate the liquidation preference windfall is to have only the Series A Preferred Stock (i.e., no A-1, A-2) with the convertible note holders and Series A investors purchasing Series A Preferred Stock at the same price. In order to give the convertible note holders the benefit of the price cap, the company would issue common stock to the convertible note holders in an amount that would get the average purchase price (when factoring in the total amount of Series A Preferred Stock and Common Stock issued to a convertible note investor) equal to the price cap per share price. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Control** “Control” of a startup can manifest itself in various forms such as equal (or investor-favorable) representation on the board of directors or a requirement of obtaining seed investor approval for new hires and/or budget matters. Whatever the form of control, seed investment is way too early to be even thinking about losing any amount of control of your startup. You need to figure out [why your potential angel investor wants to control your startup](https://startuplawyer.com/seed-rounds/angels-asking-for-control). **4. Dividend (that pays out)** By paying your investor a dividend (rather than having dividends accrue and be paid out at acquisition or other typical payable events), you are simply paying back the investor with his own money. What a deal — for the investor. This is something you might see in a late stage private equity financing with a company that has a history of generating revenue. It does not belong in any early stage deal. If your potential angel investor insists on getting dividends paid out quarterly, the angel investor should invest in [dividend aristocrats](http://www.fool.com/investing/dividends-income/2011/03/21/2011s-top-dividend-aristocrats.aspx) or [MLPs](http://en.wikipedia.org/wiki/Master_limited_partnership), rather than your startup. **3. Tranched Investment** Don’t agree to a [tranched](https://startuplawyer.com/startup-law-glossary/tranche) seed investment based on milestones. I don’t like tranched investments for 3 reasons. First, the benchmarks are typically difficult to come up with and negotiate and are often imperfect indicators of performance. Second, startups will tend to focus towards hitting these (imperfect) milestones and possibly ignore other projects or natural off-shoots that may pan out huge. Third, some angel investors like to make the additional investment at their option once your startup hits the milestone. Therefore, if you do agree on tranched investments, make sure they are at least automatic — if you hit, they wire. But even better for the startup would be to negotiate a tranched investment that was at the startup’s option upon hitting the milestone. **2. Non-Dilution** The investor wants non-dilution rights because they are either really greedy or [they don’t trust you to issue additional equity](https://startuplawyer.com/seed-rounds/non-dilution-rights-are-wrong). The angel investor’s best protection against “wasted dilution” is the fact that the founders are being diluted *pro rata* along with the angel investor — you have to get the angel investor to wrap their brain around this. Unfortunately, for some angel investors having the co-founders sit “side by side” with them is not enough protection. **1. Personal Guaranty** If the shit hits the fan and the company has to shut down, co-founders should only be out time…not additional cash to their investors. If your co-founders didn’t already have ulcers from taking the startup leap, they will soon after signing the personal guaranty. Thus, this is the worst seed round term of them all, as it involves potential physical harm. ***Conclusion*** While this list of the top 5 worst seed round terms are pretty horrible, there are several honorable mentions that fought hard to make this list. Hopefully when your startup goes to raise a seed round, it does not have to deal with any of these worst seed round terms…and certainly not more than one. (Hint, if you get more than one of the worst seed terms thrown at you by a potential investor, it’s probably a sign not to take his or her money). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** angel investor, seed financing, Term Sheet --- ### [Should Your Startup Lawyer Get a Finder's Fee?](https://startuplawyer.com/venture-capital/should-your-startup-lawyer-get-a-finders-fee) **Published:** April 17, 2009 **Author:** Ryan Roberts **Content:** Heck no. Your lawyer should not get a contingent finder’s fee for introducing you to investors or potential acquirers. I think taking a finder’s fee would be a greater conflict than sitting on your [startup’s board of directors](https://startuplawyer.com/boards-advisors/should-your-startup-lawyer-also-be-a-director). I’ve always felt introductions, whether to an accountant, potential co-founder, or investor is just part of the benefit of hiring a startup lawyer. And while I heart [FINRA](http://www.finra.org), I’m not sure I want to register with them or the [Texas State Securities Board](http://www.ssb.state.tx.us/). If you want to hook your lawyer up for an introduction, send him a box of your startup’s t-shirts. Even better, rave about him or her to your network. And if you are an investor (angel or VC) and happen to read this blog, reach out to me so I can increase my electronic rolodex and get more t-shirts. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [Selling Your Startup with Convertible Debt](https://startuplawyer.com/seed-funding/selling-your-startup-with-convertible-debt) **Published:** December 23, 2008 **Author:** Ryan Roberts **Content:** I previously mentioned that [convertible debt is a good way to raise capital for most startups](https://startuplawyer.com/seed-rounds/the-basics-of-convertible-debt-financing). The main reason why convertible debt is beneficial for startups is that it delays coming up with a valuation figure at the seed stage–the valuation conundrum is essentially punted to the Series A (or “qualified financing” stage). ***But what happens to the convertible debt if you sell rather than raise capital?*** In most situations, the investor will receive more than the interest due + principal balance of the loan. I’ve seen anywhere from 1.5X-3X the outstanding principal amount of the loan due the investor upon the closing of the “change of control” event. This 1.5X-3X payment is, of course, made in full satisfaction of the startup’s obligations to the convertible debt investor. In this unique situation, your startup essentially skips the “qualified financing” and goes straight to the exit. If the convertible debt investor wasn’t able to enjoy the upside in the event of an acquisition, such investors would be more reluctant to invest this way (and you’d be left to grapple with the valuation debate). Or worse, the investor would demand a higher interest rate. Or much worse, they would require their consent to prepay the convertible note before the qualified financing or maturity date of the loan. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** acquisition, Angel Investors, convertible note --- ### [Avoid Offensive Liquidation Preferences](https://startuplawyer.com/seed-funding/avoid-offensive-liquidation-preferences) **Published:** January 10, 2012 **Author:** Ryan Roberts **Content:** In most equity financing rounds, an investor will ask for (and get) a term called a liquidation preference. A [liquidation preference](https://startuplawyer.com/seed-rounds/what-is-a-liquidation-preference) is the amount that must be paid to a preferred stock holder before any sale proceeds may be paid to the holders of common stock (i.e., founders, option holders, etc.). The amount of the liquidation preference is usually expressed as a multiple, with the most common liquidation preference being “1X non-participating.” This means that in the event the investor elects to use the 1x non-participating preference, the investor will receive up to 1 times the amount of the investment, but the investor will not get to participate with the common stockholders pro rata in the remainder of any sale proceeds. (Liquidation preferences that “participate” get to participate with the common after payment of the X multiple preference.) Since an investor would only elect to use a 1x non-participating preference if the sale of the startup was for a “low” price, a liquidation preference typically is a defensive mechanism used to protect the investor’s downside. However, 1x (or greater) participating or non-participating preferences with a multiple greater than 1 are just price negotiations, and anything better than a 1x non-participating liquidation preference is an investor offensive maneuver. The investor is maneuvering to increase returns and/or potentially blind you with a high valuation (only to be offset with a high multiple liquidation preference) so that you’ll take his or her deal. Thus, if you see greater than a 1x preference and/or a ‘participating’ preference attached, know that your investor is just negotiating on price. If it were up to me, I’d rather have the startup and investor come to terms on the pre-money valuation rather than toying with anything other than a 1x non-participating liquidation preference. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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In the US, par value was created during the time of the great depression in order to ensure a shares could not be sold under a certain price. Today, that concept is somewhat archaic, but it still plays an important role and should be thoughtfully considered when forming a startup company by filing the certificate of incorporation. While I typically see either $1 or “no par value” common stock when looking at new client startups that have incorporated on their own or via an online service, I typically recommend that a startup corporation’s Common Stock par value be set at $0.00001 and no higher than $0.0001 per share. My recommendation is based on my belief that [startups should authorize 10,000,000 shares of common stock](https://startuplawyer.com/incorporation/how-many-shares-authorized-stock-should-startup-company-incorporation) upon filing the its charter. The startup will then typically issue about 6,000,000 to 8,000,000 shares to its initial set of founders (as there is a reserve usually kept for initial/short term issuances to people like employees, consultants and advisors). Therefore, if your startup issues 7,000,000 shares with a $0.0001 par value to its initial founders, the minimum the founders would have to collectively pay for those shares is $700. Alternatively, if your startup issued 7,000,000 shares of such common stock with a par value of $0.00001 to the initial founders, the minimum the founders would have to collectively pay would be $70. Whatever the setup, usually founders are not paying much out of pocket when it comes to purchasing their initial shares. It’s also very important to set par value low when you authorize many shares in Delaware because this will help keep your franchise taxes low. There can be drastic consequences, at least Delaware franchise tax bill wise, if you set your par value high and your authorized shares high. ***Update:*** If you are looking for more information about incorporation, check out my [“If I Launched a Startup](https://startuplawyer.com/startup-issues/if-i-launched-a-startup)” article. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** common stock, par value --- ### [Get a Deal Done with a Go Shop Clause](https://startuplawyer.com/acquisitions/get-a-deal-done-with-a-go-shop-clause) **Published:** October 29, 2007 **Author:** Ryan Roberts **Content:** When acquiring a company, you typically want to lock down your target and prevent it from seeking other potential buyers (see [no shop clause](https://startuplawyer.com/acquisitions/using-a-no-shop-clause-in-a-letter-of-intent)). But in some situations, allowing your target to shop the deal around, under the terms of a “go shop” clause, can actually facilitate the transaction and get the deal done. Typically, large acquisition targets like having a go shop provision because it allows their board of directors to fend off shareholder criticism for not obtaining maximum price for the buyout. For example, a go shop clause was used when Kohlberg Kravis Roberts & Co. bought First Data Corp., the world’s largest processor of credit-card payments, for about $25.6 billion in one of the largest [leveraged buyouts](https://startuplawyer.com/acquisitions/what-is-a-leveraged-buyout) ever. First Data had 50 days to seek out higher bidders under the go shop provision. However, the use of go shop provisions is not limited to these mega deals. Small acquisitions can also benefit by using go shop clauses. The small target company may not have a million shareholders to please, but there will likely be a valuation disagreement amongst the target’s co-founders. Inevitably, one co-founder with caviar dreams will come up with some sky-high valuation based upon another (dissimilar) deal or some (unscrupulous) business broker’s pitch. In reality, the valuation is what the market will actually pay for the company. The go shop clause ultimately accomplishes this task. After sufficient time on the market, the target’s co-founders should now understand what their company is really worth, and more importantly, they should all be on the same page. Therefore, when acquiring a company, allowing your target to shop around can actually increase the chances of an acquisition, depending on the circumstances. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits --- ### [Don't Be Coy With a Letter of Intent](https://startuplawyer.com/acquisitions/dont-be-coy-with-a-letter-of-intent) **Published:** January 21, 2008 **Author:** Ryan Roberts **Content:** I recently worked on a deal where the prospective seller over-strategized the [letter of intent](https://startuplawyer.com/acquisitions/the-deal-behind-letters-of-intent). The seller wanted my client to sign a non-binding LOI that contained about half of what should have been included in the letter. It was extremely frustrating and ultimately was a waste of time, because rather than acquiesce to the seller’s demands, my client walked away from the deal. While the LOI was “non-binding” in every way (and the seller kept repeating that), that wasn’t reason enough for my client to proceed. Basically, my client didn’t want to push forward without knowing more terms. And I can’t blame him. Why start the acquisition process without sufficient knowledge of basic terms? I assume the seller was either not that serious about selling or is trying to gauge a potential buyer’s interest, but either way you run the risk of alienating potential buyers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits **Tags:** LOI, Term Sheet --- ### [6 Traps To Avoid When Raising Capital](https://startuplawyer.com/venture-capital/6-traps-to-avoid-when-raising-capital) **Published:** September 28, 2007 **Author:** Ryan Roberts **Content:** Brad Sugars of Action International has published an article titled “6 Biggest Mistakes in Raising Startup Capital.” In the article, Brad lists the following as the 6 biggest mistakes you can make when raising capital for your startup: 1\. Half-baked business plans 2\. Focusing too much on the idea and too little on the management 3\. Not asking for enough money 4\. Having too many lenders or investors 5\. Failing to get the proper legal agreements 6\. Poor cash flow management So far on The Startup Lawyer, I’ve talked to you about [the benefits of keeping the number of your investors low](https://startuplawyer.com/venture-capital/why-your-startup-company-needs-to-keep-the-number-of-its-investors-low) (#4 above). And for the most part, this blog is dedicated to ensuring you conduct your startup company in the proper legal way (#5 above). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets **Tags:** investors, raise capital --- ### [What is Preferred Stock?](https://startuplawyer.com/seed-funding/what-is-preferred-stock) **Published:** July 14, 2008 **Author:** Ryan Roberts **Excerpt:** A definition of preferred stock and how it benefits startups and investors **Content:** Most startups issue only common stock. But sometimes a startup will encounter a situation, such as raising capital, where having more than one class of stock is beneficial (or required). When startup companies raise capital through the issuance of stock, they typically issue “preferred stock” to their investors. **Definition of Preferred Stock** Preferred stock is a class of stock that provides certain economic and control rights and protections not given to the holders of a startup’s common stock (the founders usually hold the common stock). Hence this class of stock is “preferred.” Typical economic rights of preferred stock include a liquidation preference, anti-dilution protection, and conversion rights. Control rights deal with a host of voting issues and electing the board of directors. **Which Investors Receive Preferred Stock?** Preferred stock is most commonly issued when a startup undergoes a large financing, such as one with a venture capital fund. Angel investors and [the friends & family round](https://startuplawyer.com/venture-capital/how-to-issue-weak-preferred-stock-to-friends-family) may sometimes receive preferred stock. Keep in mind there is no bright-line rule when it comes to angels and the f&f round. **Other than the Capital Raised, Does the Startup Benefit from the Issuance of Preferred Stock?** It sure does. Since preferred stock comes with economic and control rights and protections, common stock typically gets a lower valuation for the purposes of stock option grants or share issuances to the corporation’s employees. Employees can generally exercise their common stock options at a lower price than the price of the preferred stock. Thus, employees may feel as though they are receiving some sweat equity for their contribution to the corporation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes), Venture Capital & Term Sheets **Tags:** common stock, Preferred Stock --- ### [Why Customizing Your Startup Documents to Your Industry is a Mistake](https://startuplawyer.com/incorporation/why-customizing-your-startup-documents-to-your-industry-is-a-mistake) **Published:** September 10, 2007 **Author:** Ryan Roberts **Content:** You need to [customize ](https://startuplawyer.com/incorporation/why-bylaws-are-important-for-your-new-company)your articles of incorporation and corporate bylaws if you are serious about doing things the right way at your startup company. But be careful how you customize these important startup documents. Don’t fall into a common trap where you think you are customizing your startup documents, but in reality, you are only tinkering with things of nominal importance. To avoid this trap, customize your startup documents according to the relationships within your startup company rather than to your industry. For example, imagine you and a friend are launching a startup that will develop dashboard widgets for OS X. Both of you plan to put equal time and capital into the startup. While searching for corporate bylaws to help guide your drafting, you come across the following 2 documents: **Bylaws “A”**, from a startup company in Mountain View, California that develops similar widgets for Windows Vista with 2 co-founders, one the software developer and the other the pure “money” person, and **Bylaws “B”**, from a lemonade stand in Nome, Alaska with 2 co-founders, who put in equal time and capital to run the lemonade operations. Which set of bylaws will be the better guide for you to draft your dashboard widget startup’s documents? Bylaws “B” by a pretty good margin, even though the Alaskan lemonade entrepreneurs are a long, long way from Silicon Valley. While the Mountain View startup’s bylaws might at first seem like a great match, the relationship between the 2 co-founders, with one person contributing sweat equity and the other pure capital, makes this company’s bylaws practically irrelevant to your startup company. Sure, you both deal with tech stuff but your respective co-founder relationships drastically differ. On the other hand, the lemonade stand co-founders put in both equal time and money–just like your startup company. Since the lemonade stand co-founders (hopefully) framed their relationship issues in their bylaws, their bylaws will be a much better drafting guide for you. And your startup company will reap the rewards when something goes wrong and your startup’s bylaws are needed to help resolve a dispute between you and your co-founder. They will be on point and address issues likely to come up in your particular situation. Bylaws should be drafted according to the relationships between co-founders, shareholders, and officers. They should not be overly concerned with your product or service. Therefore, by customizing your startup documents according to relationships within your startup company rather than your industry, you will end up creating valuable documents for your startup company. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** documents, startup --- ### [How to Issue Weak Preferred Stock to Friends & Family](https://startuplawyer.com/seed-funding/how-to-issue-weak-preferred-stock-to-friends-family) **Published:** July 13, 2008 **Author:** Ryan Roberts **Excerpt:** How to issue preferred stock to friends and family without limiting future venture capital rounds. **Content:** Imagine that you are just getting settled at your startup and decide a little extra capital could help your startup set the world on fire. So you approach your friends and family about investing in your startup company. Everyone turns you down, except for your Uncle Steve who can’t wait to invest in the next Facebook. But little did you know that Uncle Steve subscribes via RSS to [VentureBlog](http://www.ventureblog.com/) and follows [Brad Feld’s tweets](https://x.com/bfeld). Thus, Uncle Steve doesn’t want mere *common stock* but rather desires to be issued preferred stock. You were prepared to issue preferred stock to venture capitalists, but what do you do with Uncle Steve? Issue Uncle Steve a diluted ‘Series A’ preferred shares. While you can oblige Uncle Steve’s risk tolerance through various economic, control, liquidity, and management terms with the preferred stock, **the most important thing to do is maintain the ability to raise future venture funds**. Limit shareholder rights (tag-along), keep a basic liquidation preference, think about a drag-along provision, etc. It’s OK to let Uncle Steve get some preferred provisions, but it can’t become an obstacle to future financings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Flipping Your International Startup for U.S. Venture Capital](https://startuplawyer.com/venture-capital/flipping-your-international-startup-for-us-venture-capital) **Published:** June 24, 2008 **Author:** Ryan Roberts **Excerpt:** The Benefits of Moving Your International Startup to America for Venture Capital and Acquisitions **Content:** While the venture capital market becomes increasingly global thanks in part to Europe, China, Israel, India, and Canada, the United States remains the leader in venture-backed financing. Although some American venture funds are willing to invest in foreign startups, the lion’s share of U.S. venture funds are not going overseas. Most U.S. venture capitalists believe ROI from domestic deals will be superior to foreign ones. Investing in a foreign company exposes the U.S. venture fund to a new set of legal rules, compliance issues, and risks, leading to increased uncertainty and transaction costs for the American venture fund. Additionally, trying to replicate typical American VC terms, such as anti-dilution and redemption provisions, can be difficult to accomplish in a foreign market. **Does this mean my international (i.e., Non-U.S.) startup will be shut out from a majority of U.S. venture capital funding or from being acquired by a U.S. company?** Potentially–unless your international startup performs a Delaware Flip Transaction. **What is a “Delaware Flip Transaction?”** A Delaware Flip Transaction is the process of creating an American holding company for an international company. The end result is that the international company will be owned entirely by the new American company. Thus, the U.S. venture fund will invest in the new American company. **What are the mechanics of a Delaware Flip Transaction?** The basic mechanics of a delaware flip transaction is to create a U.S. holding company and insert it above the international company. Next, the shareholders of the international company execute a share-for-share exchange by exchanging their shares of the international company for the shares of the U.S. holding company. (Note that this share-for-share exchange may require some additional legal maneuvering depending on the jurisdiction of the international company. For example, it will likely be necessary to use a “scheme of arrangement” or other court-approved process to accomplish the exchange in the UK and other jurisdictions.) **Why Flip to Delaware?** Delaware provides the most comprehensive set of corporate law in the United States. No matter which American state the venture fund is located in, such a fund will be comfortable with require Delaware law. Additionally, foreign companies are likely most comfortable with Delaware law, as Delaware provides a good neutral ground or “playing field.” I previously wrote a post about [why you should consider incorporating in Delaware here](https://startuplawyer.com/incorporation/top-5-reasons-to-incorporate-in-delaware). **Final thoughts on Delaware Flip Transactions** Even if an American venture fund is willing to invest in (or purchase) your international startup, it still may be beneficial to perform the Delaware flip transaction. The reduction of legal uncertainty and the ability to replicate typical U.S. venture capital terms should dictate an increase in valuation and could facilitate a NASDAQ or other listing (although IPO exits for venture-backed companies are not very common). Alternatively, Delaware may provide neutral ground for funding or acquisition by a non-U.S. company or fund. And finally, there are important tax implications that may result from performing a flip transaction, thus such a deal requires both U.S. and foreign accountants. Thus, the Delaware flip transaction may not be for every international startup looking to be funded or acquired, but it should at least be considered. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets **Tags:** delaware, startup --- ### [What is a Private Placement?](https://startuplawyer.com/seed-funding/what-is-a-private-placement) **Published:** July 15, 2008 **Author:** Ryan Roberts **Content:** While no true definition of a private placement exists, it is commonly used to refer to the raising of capital (i.e., “securities”) without making a registration with the [United States Securities and Exchange Commission (SEC)](http://www.sec.gov). Under the Securities Act of 1933, any offer to sell securities must either be registered with the SEC or meet an exemption. The most commonly used method to obtain an exemption when conducting a private placement is [Regulation D](http://www.sec.gov/answers/regd.htm), which contains one exemption in [Rule 504](http://www.sec.gov/answers/rule504.htm) and one safe harbor in [Rule 506](http://www.sec.gov/answers/rule506.htm). In order to conduct a private placement properly, the issuer must follow a multitude of requirements. Some of these requirements encompass: -How much capital can be raised -Who can be offered the securities -When can the securities be offered -Who can offer the securities -Advertising and soliciation -Information requirements -Where the securities are offered ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes), Venture Capital & Term Sheets **Tags:** private placements, Reg D --- ### [What is a Pre-money and Post-money Valuation?](https://startuplawyer.com/venture-capital/pre-money-and-post-money-valuation) **Published:** July 31, 2008 **Author:** Ryan Roberts **Content:** When a startup raises capital, valuation is main economic term that must be tackled. The two main ways valuation is expressed in venture capital financings are what’s known as the “pre-money valuation” and the “post-money valuation”. The startup’s valuation immediately *before* the venture capital investment is called “pre-money valuation” while the startup’s valuation immediately after the venture capital financing is closed is called the “post-money valuation.” Equation (1) below explains how to calculate the pre-money valuation. But sometimes a startup is not given the post-money valuation figure from an investor and therefore can’t make the easy pre-money valuation determination via Equation (1) below. Rather, the investor will tell the startup (a) how much they are investing and (b) what percentage they want — this is where Equation (2) below comes into play. Then after solving Equation (2) first, then the startup founders can solve Equation 1 and determine the pre-money valuation being offered. Let’s walk through the formulas first: **Pre-money Valuation and Post-money Valuation Equations** *(1) Pre-money Valuation = Post-money valuation – Venture Capital Investment* *(2) Post-money Valuation = Venture Capital Investment/Venture Capital Fund Ownership Percentage* Note that to you can determine share price by the following equation: *(3) Share Price = Pre-money Valuation/Number of Pre-money shares.* (Pre-money shares is the number of shares outstanding immediately prior to the new venture capital investment.) Next, you can also determine how many shares to issue the venture capital firm by this equation: *(4) New Shares Issued = Venture Capital Investment/Share Price* Now let’s walk through some examples: **Pre-money Valuation and Post-money Valuation Examples** *Example 1* Let’s say [Google’s new venture fund](https://startuplawyer.com/venture-capital/google-planning-to-launch-venture-capital-fund) comes to you and offers to invest MM into your startup for 30% of the company. Plugging the numbers into equation (2) above, we get: *Post-money valuation = $3MM/.30 = $10MM* Thus, to calculate pre-money valuation, we use equation (1) as we now know the post-money valuation and the investment amount: *Pre-money valuation = $10MM – $3MM = $7MM* *Example 2* Now let’s say a venture capital firm offers your startup company a $4MM investment at a $6MM pre-money. To determine how much your startup would give up in exchange for the $4MM, we use equation (1) and get: *$6MM = Post-money valuation – $4MM, and solving for Post-money valuation (Post-money = Pre-money + Investment) gives us $10MM* Next, we use equation (2) to find the Venture Capital firm’s percentage: $10MM = $4MM/Venture Capital Firm Ownership Percentage (VCFOP), solving for VCFOP (VCFOP = $4MM/$10MM) we get 40%. **Conclusion** The two main concepts of valuation for startups are related, but they are often mistakenly interchanged. If you bookmark this page, you can be sure to know what your pre-money and post-money valuation is when a prospective investor gives you the variables for the above equations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets **Tags:** valuation --- ### [When To Fire a Startup Company's Founder-CEO](https://startuplawyer.com/venture-capital/when-to-fire-a-startup-companys-founder-ceo) **Published:** August 20, 2008 **Author:** Ryan Roberts **Content:** When should a founder be replaced as CEO of a venture-backed company? The topic is obviously a touchy one for a startup founder that brought early success to a company. **But while a founder might have been successful leading the startup to a funding event, can the founder also lead the startup to a liquidity event?** Startup company founder and CEO are two completely different roles. And although founders can handle both roles, that seems to be the exception rather than the rule. Startup founders tend to be young and thus lack true CEO experience necessary to bring the company to a liquidity event. *So when is the right time to fire a startup company founder-CEO and transition to a more polished CEO?* [Fred Wilson](http://www.avc.com/a_vc/about.html), a venture capitalist and principal of [Union Square Ventures](http://usv.com/), recently gave the following advice on his “[A VC](http://www.avc.com)” blog concerning the optimal timing of the startup founder-CEO transition: > I’ve learned that nothing can replace the entrepreneur’s passion and vision for the product and the company. If you rip that out of the company too early, you’ll lose your investment. I think it’s best to wait until the initial product has succeeded in obtaining a critical mass of users and a business model has been developed that works and make sense for the business and is scaling. Then, if its warranted, you can sit down and have the conversation about bringing in experienced management. ([Read Fred Wilson’s “The Human Piece Of The Venture Equation” here.](http://www.avc.com/a_vc/2008/08/the-human-piece.html)) I also believe gaining traction with the startup’s user base and model should occur before replacing the founder CEO. If you replace the founder CEO before that happens, you probably removed the founder before the startup company fully-utilized the founder’s enthusiasm. Of course, a founder’s incarceration would warrant removal earlier than the startup’s enjoyment of a scalable model. But that’s a topic for another post. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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If a founder fails to make a 83(b) election, each vesting milestone will be a taxable event for the founder. “Income” will be calculated as the difference between the FMV of the portion of stock that vested and the original purchase price of the newly-vested portion. Thus, failure to make an 83(b) election could leave the founder with a tax bill without experiencing a liquidity event. The 83(b) election neutralizes this potential disastrous tax consequence, and the founder recognizes “income” upon the initial restricted stock purchase. This income is usually $0, as the initial restricted stock purchase price is usually made at FMV. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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My answer is always: (1) It Depends, and (2) Quickly. **(1) IT DEPENDS** If you’ve ever hired a lawyer, you will (unfortunately) hear the phrase “it depends” several times. In this situation, the “it depends” hinges on the respective past/current and future contributions of the founders: *Past/Current Contributions:* – The Idea – Business Plan – Intellectual Property – Cash (Consider structuring this separately from the founder split.) *Future Contributions:* – Time – Opportunity Cost (i.e., Is one founder making a larger sacrifice?) – Industry Expertise After taking the above items into consideration, a startup team will rarely end up with an equal split. And for what it’s worth, a startup team *should* rarely end up with an equal split. On the other hand, I don’t recommend the startup team create a complex methodology to come up with the solution. Save the fanciness for the code. **(2) QUICKLY** Rather than pushing forward with development & implementation, co-founders run the risk of spending too much time on the equity-split decision. In addition to multiple startup-wide meetings and emails about the split, the individual co-founders will spend time wrangling with the matter as well. However, it’s not going to “kill” the startup if this decision takes a bit of time. The main reason to have this determination done very quickly is that the startup team gets to have — and conclude — its first difficult conversation. There’s no avoiding difficult conversations at a startup. Don’t start with the first one. Regardless of how you decide to split the intial equity pie, seriously consider [vesting your founders shares](https://startuplawyer.com/incorporation/why-your-startups-founders-stock-should-vest-over-time). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** co-founder, equity split, founders, startup --- ### [Skip the LLC](https://startuplawyer.com/incorporation/skip-the-llc) **Published:** January 6, 2009 **Author:** Ryan Roberts **Content:** “My startup will start out as an LLC and then change to a corporation *when/if*…” This quote, or similar derivation, is a common fact pattern I hear from new clients or general inquiries. I think most entrepreneurs are attracted to the LLC because they hear it is “simple” or “easily-managed” or “flexible.” Sure, LLCs are all of those. But remember that the LLC was created for tax reasons, and not for typical startup company legal maneuvers like raising capital or employee incentive compensation. Thus, if there is *any* possibility that your startup will raise capital, **I would skip the LLC and proceed straight to the corporation.** Additionally, if you plan on giving your current or future employees incentive compensation, skip the LLC as well. Of course, you can convert your LLC to a corporation when it is time to raise capital or grant stock options. Just keep in mind that converting from an LLC to a corporation later will be another round of filing fees with the secretary of state and legal fees (if you hire counsel). If you really want pass-through taxation, file form 2553 with the IRS and elect to be a S-Corporation. And if you still want to be an LLC, check out my [article on LLCs](https://startuplawyer.com/incorporation/a-primer-on-llcs). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** LLC, S Corporation, startup --- ### [25102(f) Notice: Only in California](https://startuplawyer.com/incorporation/25102f-notice-only-in-california) **Published:** January 7, 2010 **Author:** Ryan Roberts **Content:** Founders must pay special attention when their startup issues securities–even when those securities are issued to themselves at incorporation. Whether or not founders realize it, they are issued their founders stock via an exemption from registration at both the federal and state level. The federal exemption most likely available for founders is Section 4(2) of the Securities Act of 1933, while the state exemption is determined by the particular state’s law. In California, founders typically use the registration exemption found in Section 25102(f) of California’s Corporations Code (see the next section for the full text). Section 25102(f) grants the issuer (the startup) an exemption from securities qualification for certain limited securities offerings. As part of the exemption, founders in California must file a 25102(f) notice, also called a “Limited Offering Exemption Notice.” **California Corporations Code section 25102(f)** California Corporations Code section 25102(f) exempts from the provisions of section 25110: “*Any offer or sale of any security in a transaction (other than an offer or sale to a pension or profit-sharing trust of the issuer) that meets each of the following criteria:* 1\. Sales of the security are not made to more than 35 persons, including persons not in this state. 2\. All purchasers either have a preexisting personal or business relationship with the offeror or any of its partners, officers, directors or controlling persons, or managers (as appointed or elected by the members) if the offeror is a limited liability company, or by reason of their business or financial experience or the business or financial experience of their professional advisors who are unaffiliated with and who are not compensated by the issuer or any affiliate or selling agent of the issuer, directly or indirectly, could be reasonably assumed to have the capacity to protect their own interests in connection with the transaction. 3\. Each purchaser represents that the purchaser is purchasing for the purchaser’s own account (or a trust account if the purchaser is a trustee) and not with a view to or for sale in connection with any distribution of the security. 4\. The offer and sale of the security is not accomplished by the publication of any advertisement. The number of purchasers referred to above is exclusive of any described in subdivision (i), any officer, director, or affiliate of the issuer, or manager (as appointed or elected by the members) if the issuer is a limited liability company, and any other purchaser who the commissioner designates by rule. For purposes of this section, a husband and wife (together with any custodian or trustee acting for the account of their minor children) are counted as one person and a partnership, corporation, or other organization that was not specifically formed for the purpose of purchasing the security offered in reliance upon this exemption, is counted as one person. **The commissioner may by rule require the issuer to file a notice of transactions under this subdivision.** However, the failure to file the notice or the failure to file the notice within the time specified by the rule of the commissioner shall not affect the availability of this exemption. An issuer who fails to file the notice as provided by rule of the commissioner shall, within 15 business days after demand by the commissioner, file the notice and pay to the commissioner a fee equal to the fee payable had the transaction been qualified under Section 25110.” California set forth the requirement of the 25102(f) notice via California Code of Regulations (CCR)Section 260.102.14, since section 25102(f) only “allows” California to require the notice (see the bold language above). **When to File the 25102(f) Notice** The 25102(f) notice must be filed with, or mailed to, the Commissioner within 15 calendar days after the first sale of a security in the transaction in California. The “first sale” in California occurs when the startup has obtained a contractual commitment in California to purchase securities the startup intends to sell in connection with the transaction. No subsequent 25102(f) notices are required for sales in connection with the same transaction. **How to File the 25102(f) Notice** As of July 2005, startups must file the 25102(f) Limited Offering Exemption Notice electronically, via the California Department of Corporations website here. Startups can file the 25102(f) notice in person or by mail only if they can prove hardship. Hardship is essentially if the startup can’t use a computer without unreasonable burden or expense or you can’t provide information requested on California’s website without unreasonable burden or expense. **25102(f) Notice Filing Fees** Filing Fees are calculated based on the value of securities proposed to be sold: $25,000 or less — $25.00 $25,001 to $100,000 — $35.00 $100,001 to $500,000 — $50.00 $500,001 to $1,000,00 — $150.00 Over $1,000,000 — $300.00 Here’s a link to a 25102(f) Notice in PDF form. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** 25102, california, founders stock --- ### [Never Ever Ever Ever Pay to Pitch](https://startuplawyer.com/seed-funding/never-ever-ever-ever-pay-to-pitch) **Published:** February 3, 2010 **Author:** Ryan Roberts **Content:** Your startup should never have to pay $$$ to pitch to potential investors. Period. Jason Calacanis authored an epic post on the topic of paying to pitch as well. It’s a great read. Just remember that no matter how hard it is to source funds, your startup should never have to cough up its own funds. Nominal fees that cover cost of attendance are somewhat ok, but if the fees seem like they could pay overhead for the whole year for a potential angel investor group, then I would pass. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** investors, paying to pitch, raising capital --- ### [Should Your Startup Hire a Finder?](https://startuplawyer.com/seed-funding/should-your-startup-hire-a-finder-or-broker) **Published:** October 2, 2009 **Author:** Ryan Roberts **Content:** Raising capital is not easy. While startup entrepreneurs usually have a strong network of people within their own industry, many entrepreneurs lack contacts at venture capital firms and other angel groups. And even if the entrepreneur knows about such funding sources, it’s difficult to get solid intros to such people. Sometimes startups will run into a person who offers them assistance raising capital. This person is called a “finder.” The finder offers to help the startup find investors in exchange for a cash commission (usually in the 5-7% range) based on the amount raised through the finder. However, I’ve seen some pretty appalling finder commission structures, such as a 10% cash commission plus 10% warrant coverage. My advice to your startup: Don’t hire a finder or broker for your startup, unless you have a *compelling* reason to do so. And “We can’t find investors on our own” is not a compelling reason. But if your startup is still considering using a finder to help raise capital, I strongly advise you to vet this person or group: **(1) How successful has the finder been raising capital for emerging companies like yours?** A lot of finders may have experience raising capital for companies with a much longer track record and developed balance sheet (and of course, revenue & profit). These types of capital raises usually involve different investment structures and investors with different risk-tolerances when compared to your startup’s capital raise. For example, your finder’s network of investors may prefer investing in secured-debt deals rather than in unsecured securities of a startup. Thus, make sure the finder — and the finder’s investor syndicate — are both a match to your startup. **(2) Is the finder registered with FINRA and your state’s securities board?** Most likely, the finder offering to raise capital for your startup SHOULD be registered with [FINRA](http://www.finra.org/) (Financial Industry Regulatory Authority) and your state’s securities board. But the reality is, a tremendous amount of unregistered “brokers” (as [defined by the SEC](http://www.sec.gov/divisions/marketreg/bdguide.htm)) are out there offering to raise capital for companies. FINRA offers an online broker check and so do most states. Capital raising is hard, but finders are usually not life-savers for startups. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** broker, finders, raising capital --- ### [You Can't Spell Corporation Without "IP"](https://startuplawyer.com/incorporation/you-cant-spell-corporation-without-ip) **Published:** September 1, 2009 **Author:** Ryan Roberts **Content:** I watch “Shark Tank” on ABC. I hope one day they get pre-money and post-money right. A segment on Sunday’s episode did manage to highlight a key point for startups: **TRANSFER THE INTELLECTUAL PROPERTY TO YOUR STARTUP COMPANY** In the episode, Coverplay Inc., was looking to raise about 350k from the show’s angel investors. A few investors made proposals and one particular investor offered Coverplay’s 2 founders 350k in exchange for 40% of their company. Coverplay countered with 350k in exchange for 30% of the company…***and 10% of the patent***. The show went to commercial and I said to my wife “Uh oh, their corporation doesn’t own the patent.” After the break, all the investors pulled their deals off the table. Without the intellectual property, there was no business. The investors (rightfully) assumed the patent was owned by the company. In essence, Coverplay was asking for investment in something they didn’t own. (Side: This is happening often on the show. Many entrepreneurs are claiming they own the IP when they really don’t.) Coverplay explained that Allison Costa, one of Coverplay’s founders, owned the patent. Then Allison further explained that her ex-husband also owned part of it as well. I can only assume that Costa had some type of patent license deal with Coverplay. When starting a company involving intellectual property, you must transfer the IP to your startup. For example, if the intellectual property is developed prior to incorporation, you can transfer the IP via the founder’s stock purchase and tech transfer agreement. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** intellectual property, IP, startup, tech transfer --- ### [What is an Option Pool?](https://startuplawyer.com/seed-funding/what-is-an-option-pool) **Published:** September 28, 2009 **Author:** Ryan Roberts **Content:** An option pool is an amount of a startup’s common stock reserved for future issuances to employees, directors, advisors, and consultants. The option pool is created pursuant to a written plan in order to satisfy Rule 701 which provides a registration exemption from Section 5 the 1933 Securities Act. Via the written plan, a startup pre-authorizes a certain amount of the company’s common stock which will be issued by the plan’s administrator (usually the startup’s board of directors or a committee selected by the board). For example, if the startup has 5,000,000 shares of common stock outstanding, it may elect to authorize 1,000,000 shares to be issued pursuant to the plan. A potentially confusing aspect of the option pool is how the option pool’s unissued portion is treated for financings relative to acquisitions. The unissued portion of the option pool is included in the fully-diluted capitalization of the startup, but the same unissued portion is not included in the outstanding share count upon an acquisition (or distribution). In other words, the entire option pool is included in a startup’s total share count at financings, but only the issued portion of the option pool is included in a startup’s total share count at acquisition. Keep in mind that a startup’s original option pool will likely not be the last option pool the startup creates. The size of the option pool is typically negotiated at each round of financing, since at that time, the startup will likely need additional equity options to attract and motivate future hires. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes), Venture Capital & Term Sheets **Tags:** Option Pool, Rule 701 --- ### [Is Your Startup's Name Available in Delaware?](https://startuplawyer.com/incorporation/is-your-startups-name-available-in-delaware) **Published:** October 13, 2009 **Author:** Ryan Roberts **Content:** Delaware has a pretty sweet Name Availability Search Tool via their [Division of Corporations](http://corp.delaware.gov/). If your desired entity name isn’t available to reserve, then that name isn’t available for a new corporate entity filing in Delaware. If your startup name is available, you can reserve the name online for $75. Finding out whether you can reserve your desired corporate name in Delaware isn’t as exciting as landing a 5-letter domain with a domain registrar, but at least you don’t have to pay to search like other states. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** delaware, startup company --- ### [Series A Startup CEO Salary](https://startuplawyer.com/venture-capital/series-a-startup-ceo-salary) **Published:** June 9, 2010 **Author:** Ryan Roberts **Content:** A startup’s CEO’s $500,000 Salary Burns Startup Into Fire Sale. **The Importance of Startup CEO Salary** The startup community focuses most of the term sheet discussion on [liquidation preferences](https://startuplawyer.com/startup-law-glossary/liquidation-preference) and [anti-dilution](https://startuplawyer.com/startup-law-glossary/anti-dilution), but startup CEO salary is nonetheless an important issue. According to Peter Theil, [Startup CEO salary is a predictor of a startup’s success](http://techcrunch.com/2008/09/08/peter-thiel-best-predictor-of-startup-success-is-low-ceo-pay/): *“The lower the CEO salary, the more likely it is to succeed.* The CEO’s salary sets a cap for everyone else. If it is set at a high level, you end up burning a whole lot more money. It aligns his interest with the equity holders. But \[beyond that\], it goes to whether the mission of the company is to build something new or just collect paychecks. In practice we have found that if you only ask one question, ask that.” If a startup CEO’s post-Series A salary is too high, he or she may not have a true sense of urgency to implement and/or create shareholder wealth. This doesn’t mean a startup CEO must continue to make Costco runs for ramen noodles. But if the startup’s CEO gets a huge salary, the startup CEO could likely view his or her equity stake as “house money” (i.e., even if the startup fails, the CEO won’t feel too bad because he still received got a hefty salary). Furthermore, a demand for a high startup salary can signal that you don’t believe all those things in your investor pitch. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets **Tags:** salary, series a, startup, Venture Capital --- ### [Outsourcing Software Development: Riding the Elephant](https://startuplawyer.com/hiring/outsourcing-software-development-startup) **Published:** March 18, 2012 **Author:** Ryan Roberts **Content:** “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 your lack of agility will prevent you from winning. ***Dev Shops are Hoarding all the Technical Co-Founders…and Large Companies are Paying them Huge Amounts!*** There’s likely two culprits why technical co-founders are hard to find: (1) With the surge in startups, it follows that there’s demand for technical co-founders. There’s many non-technical co-founders who have joined the startup scene in the recent couple years making technical co-founders the true “unicorns” of the startup world. (2) The rise in “Dev Shops” has also been removing potential technical co-founders from the startup ecosystem. We’ve represented quite a few entrepreneurs-turned-dev-shop-groups who have done quite well for themselves in the past couple years. Larger companies are realizing that they are at least “part tech company” and are soaking up this talent with various tech projects. Therefore, many startups have no choice but to contract with these dev shops to build their idea. Most of these early “partnerships” never work, regardless of how the startup compensates the dev shop. And if you pay close attention, you’ll notice that these dev shops begin working with startups but all pivot out to the larger companies. ***There is no optimal structure of dev shop compensation that involves equity.*** Even if a startup compensates the dev shop with equity or cash + equity, the amount of equity will not likely be enough to get the dev shop to devote the time, effort, and TLC that a true technical co-founder would. A dev shop is simply not a substitute for a technical co-founder. Around the time the dev shop delivers the product (if the dev shop delivers the product), the startup usually figures out their product is actually their prototype as the startup now desires additional features. Alternatively, the startup mistakenly believes that the dev shop will deliver a turn-key product that will not require additional development through the customer development process. Either way, the startup will require additional technical development, but may lack the resources to continue compensating the dev shop. Dev shops aren’t cheap and they can’t work for equity forever…they actually have to pay some of those developers, you know! And big companies are willing to pay $$$ for their services. ***Conclusion*** If your startup chooses to “ride the elephant” (i.e., outsourcing software development), it must realize that the dev shop is only a short-term solution. *Therefore, be sure that equity compensation in exchange for dev shop services is somewhat “small” and vests according to a milestone schedule*. Just to be clear, my intent in writing this article is not to be critical of dev shops or the startups that seek their services. Incentives are difficult to align completely, and the startup-dev shop partnership is an ultra-difficult case and frankly, never works that well once a startup looks back on it. I just want startups to think twice about outsourcing software development. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring --- ### [How I Launched My Startup (Law Firm) 2016 Update](https://startuplawyer.com/startup-lawyer/how-i-launched-my-startup-law-firm) **Published:** September 18, 2008 **Author:** Ryan Roberts **Content:** I’m often contacted by lawyers for advice about going solo or how to start a law firm. In the legal world, going solo is the equivalent of quitting your day job and launching your startup full-time. So I’m dedicating this blog post to provide some background about how I launched my startup law firm. I received quite a bit of good advice when I started and this is my way of paying back/forward, etc. I know many of you aren’t lawyers but hopefully some of the advice might otherwise be helpful. **Background** I launched my startup in 2006. I refer to my law firm as a startup because I run it like one, except for the fact I can’t raise capital (it’s basically illegal in the US for a law firm to have non-lawyer shareholders). The concept of bootstrapping and working in a startup wasn’t new to me–I had just left a startup company. (Long story for another day) **How did you choose your law firm’s location?** I selected my law firm’s location based on what I’ve dubbed the “Cheesecake Factory Principle.” Growing up in California, I noticed that the Cheesecake Factory always opened their restaurants in thriving business areas. Thus, I decided to open my law firm in Southlake, Texas, a suburb of Dallas and also home to a new Cheesecake Factory. I figured I would just borrow the Cheesecake Factory’s R&D on Southlake and move on to other decisions. The point is–don’t pay for or waste time on finding answers to questions that have already been answered for you by others. And to be honest, after living in downtown Los Angeles while at [USC](http://www.usc.edu/) and after going to law school in SF, I was more than happy to live and work in the suburbs. And for what it was worth, while I was at the startup, we had an office in downtown Dallas and it was quite depressing down there. **What type of office do you have?** I started out in a mid-range executive suite and have since moved to one with a better location and conference room (now we are in a pretty nice suite next to the apple store). I have intentionally avoided signing any type of long term lease (12+ months) because I feel flexibility is key in your first 2-3 years as solo. You might need 3 offices next year, or what you thought was a great location might not be that great 6 months later. **How do you market your law firm?** Before I started out, I was warned by an older attorney that I wouldn’t be able to go out on my own because I couldn’t afford the overhead expenses like yellow page advertising. *Yellow pages?* The last time I saw one of those books it was being torn in half by [The Power Team](http://www.thepowerteam.com) in my high school’s auditorium. Forget about large marketing expenses and bootstrap your law firm’s marketing. If you are going to spend, do it on your business cards and website (and when I say “website” I mean blog used as a website) **How important is technology?** Use technology to your advantage. Afraid of technology? Then rethink going solo. Technology is that critical to a solo’s success. If you know how to do 2/3 of the phrases in [Daft Punk’s “Technologic”](http://www.youtube.com/watch?v=SN1qVWpO-t8) you are tech savvy enough to go solo. As lawyers, we are about 6 years behind the tech curve and that may be generous. For example, law firms are not currently interested in search engine optimization (SEO) and you can level the marketing playing field via blogs and practice area websites. For example, Wilson Sonsini Goodrich & Rosati, a fantastic law firm with a killer venture capital practice states on its website: > We have more experienced attorneys focused on representing start-up companies seeking venture capital financing than any other law firm Well Google doesn’t think so. I googled “venture capital lawyers” and stopped looking for a Wilson Sonsini URL after the 10th page. **How did I select practice areas?** I’m a big believer in focusing in on one or two (if both are related) areas of law. If your practice areas look like a laundry list of legal areas, you run the risk of becoming a jack of all trades, master of none. While difficult, resist the urge to cast a wide net for potential clients. The more I have reduced my areas of practice, the better the practice has done in terms of both revenue and clientele. So, I pretty much started a startup law practice that catered towards entrepreneurs. **What did I do right?** If you are a new solo, there’s likely a fear of getting in front of people, practicing your ‘pitch’, etc. Ironically, this is the same thing that startups have to do. Well, one of the first things I did was join the local chamber of commerce, because I knew that was a good avenue to ‘pitch’ to various other business owners what I did. I didn’t really expect any clients, but after about the 100th visit, I was comfortable meeting with anybody. *The other thing, which is by far the most important, is that you have to be absolutely passionate about the type of law you want to practice. You have to stick with it, and allow all your efforts proper time to start working for you. Nothing happened overnight. Why would anything that’s worth anything happen overnight? he only way you stick with it is if you actually like what you are doing.* **What would I do different?** React quicker. I saw a t-shirt at the mall recently that said “Procrastinators Unite Tomorrow.” I felt like buying one just to tack to my wall. As a solo, you can change every part of your law firm quicker than any larger firm. Use this to your advantage when you start a law firm. ***2010 Update:*** I realize having a web presence is vital to starting a law firm. But don’t get suckered into (over)paying Lexis, Westlaw, or Findlaw for a bad template website and/or blog. Find a web developer/designer who actually understands web design and social media. I used [Dave Onkels](http://daveonkels.com) for this site and proudly recommend him. ***2016 Update:*** Wow. What a journey (which is still going). Well, along the way, I partnered up and have taken on an associate. I’m still really worried that I’ll create the firm I never wanted to work at. There’s nothing wrong with working at a large firm (other than I wouldn’t be allowed to wear my [monochromatic Nike Air Epics](http://www.kicksonfire.com/monochromatic-shades-on-the-latest-nike-air-epic/) to the office). Sort of ironic that I work with high growth companies, but I’m not that into growing. Since 2010, I’ve certainly had chances to increase the headcount, merge or ‘get acquired’ by larger firms, but as a very wise and well-respected venture lawyer at a prominent firm once told me “the grass is always greener” and “there’s a lot of partners in Biglaw who would trade with you in a second”. Man that was some good advice. I feel like I also got similar advice years earlier from the Fresh Prince when he said “[if it ain’t broke, then don’t try to fix it](https://www.youtube.com/watch?v=VEvVs0_l3Gs).” So, I’m just adjusting the bass and letting the Alpine blast. Best of luck to you! ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Startup Lawyer (Choosing Counsel & Legal Ops) **Tags:** bootstrapping, law firm, startup --- ### [Convertible Note Interest: What is the Range?](https://startuplawyer.com/seed-funding/convertible-note-interest) **Published:** February 13, 2012 **Author:** Ryan Roberts **Content:** While most startups and investors focus on convertible note terms like the [discount](https://startuplawyer.com/seed-rounds/how-convertible-debt-works) and [price cap](https://startuplawyer.com/seed-rounds/the-convertible-note-discount-price-cap), one important but overlooked term is convertible note interest. Since a convertible note is in fact a debt interest, it follows that the convertible note investment should accrue interest. However, startups should be mindful that but the rate of convertible note interest should actually be lower than a typical non-convertible loan from an investor. ***The Range of Convertible Note Interest Varies*** The range of convertible note interest is usually 2% to 8%, and most often 5% or 6%. Geography tends to play a role in the range of convertible note interest: lower rates of interest are seen on the coasts and internationally, higher rates in the middle of the country. ***When Convertible Note Interest Becomes a Factor*** If a potential investor plays hardball and insists on a high interest rate (i.e., 9% or more), then you might have the wrong potential investor. Or at a minimum, a startup should view this as a yellow flag and your startup should pay attention to the other economic terms like price cap and the discount more closely. Although, if your startup is raising a small convertible note round (sub $100k), a couple extra interest points may not be that material. But if your convertible note round goes towards the $1 million dollar range or above, interest becomes a material term in the aggregate. ***What happens to Convertible Note Interest? Does it get paid out?*** The convertible note interest should also accrue until the note converts into equity or is paid out at the sale of the company. When the convertible note converts into equity, the interest also typically converts into the preferred stock, rather than being paid out. In fact, I don’t think we’ve ever seen a deal where the convertible note interest gets paid on a schedule or upon a preferred stock conversion (and we’ve done 100s of convertible note deals for both startups and investors). ***Conclusion*** Frankly, if your potential investor wants a very high rate of convertible note interest and/or quarterly payment for the convertible note interest then he or she should invest in blue chip dividend stocks or bonds. The purpose of interest in a convertible note is to technically qualify the note as a debt instrument, and less about appreciating the time value of money — and definitely not about paying the investor interest with his or her investment money. If an investor gets too cute with trying to jack up the interest rate, I would attempt to push for a lower discount or price cap. You never know…it might work. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [How Convertible Debt Works](https://startuplawyer.com/seed-funding/how-convertible-debt-works) **Published:** December 17, 2009 **Author:** Ryan Roberts **Content:** Convertible debt is a type of security frequently issued by startups when raising capital in their seed round. With convertible debt, the startup issues the seed investor a promissory note, for the investment amount, that contains a conversion feature. The conversion feature is the mechanism by which the debt (the promissory note) will convert to equity (new shares for the investor) upon various future events. ***The Qualified Financing*** Most (if not all) convertible promissory notes contain an Automatic Conversion clause that dictates the automatic conversion of the convertible debt upon a “Qualified Financing.” The Qualified Financing is typically defined as an equity financing by the startup, for the purpose of raising capital, in which the aggregate of $1,000,000 (this amount can vary per deal) is purchased by investors. Thus, the Qualified Financing event is the trigger by which the convertible debt will automatically convert to equity. The conversion is considered “automatic” because it does not require the vote of either the startup or the investor. ***The Qualified Securities*** The equity raised in the Qualified Financing (the $1,000,000 above) is typically termed “Qualified Securities.” Think of this as the Series A round. The convertible debt held by the investor will convert to the Qualified Securities. The amount of shares of the Qualified Securities issued to the convertible debt investor is dependent on the conversion discount per the terms of the convertible promissory note. ***The Conversion Discount or Price Cap*** As a sweetener to the convertible debt investor, convertible promissory notes have a conversion discount feature by which the convertible debt holder will exchange the debt for Qualified Securities at a price per share equal to 80% (this amount can very per deal) of the price per share paid by the Qualified Financing investors (the investors with the new $1,000,000 above). Additionally, many convertible notes offer the seed investor a “Price Cap” which is the maximum pre-money valuation that their investment will convert into the next round’s shares (i.e., the Qualified Securities). [Note that if you offer a price cap or even a discount to your investors, you should also be mindful and include language about creating a parallel series of “Qualified Securities” so that things like liquidation preferences of the seed investors don’t get out of whack](https://startuplawyer.com/seed-rounds/price-cap-liquidation-preference-windfall-regulators). It is good to note that the conversion discount and the price cap are not both applied upon conversion — only one of the two mechanisms. ***Convertible Debt Conversion Example (Discount)*** Here’s the basic outline of how convertible debt works: (1) Joe Angel invests $100,000 in Startup. (2) Startup issues Joe Angel a convertible promissory note for $100,000. The convertible promissory note has an automatic conversion feature at $1,000,000 (the “Qualified Financing”) with a conversion discount equal to 20%. (3) Startup closes $1,000,000 Series A Preferred Stock round (the “Qualified Securities”) by a VC at a Series A Preferred Stock price of $1.00 per share. (4) Since the Automatic Conversion feature in Joe Angel’s convertible promissory note is triggered by the Series A round, Joe Angel’s convertible debt will be converted to Series A shares at a per share price of $0.80. (5) The Startup issues Joe Angel 125,000 shares ($100,000/$0.80 per share) of its Series A Preferred Stock. The convertible promissory note is cancelled. Note that the example above excludes interest assumes that a parallel series of Series A Stock is not being issued here and that a price cap has not come into play. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** convertible note, qualified financing, seed capital --- ### [Top 5 Reasons to Incorporate in Delaware](https://startuplawyer.com/incorporation/top-5-reasons-to-incorporate-in-delaware) **Published:** August 22, 2007 **Author:** Ryan Roberts **Excerpt:** Corporation-friendly law is just one reason your startup should incorporate in Delaware **Content:** When you incorporate your startup company, two main decisions arise. First, what type of entity should your startup company be? Second, where should you incorporate? Of the two, entrepreneurs focus primarily on choice of entity–LLC, Corporation, etc.–and usually just incorporate in their home state. And home state incorporation may make sense for most. But for the startup companies looking to close venture capital rounds, ithe better decision would be to incorporate in Delaware. Delaware’s division of corporations lists 4 reasons to incorporate in Delaware on [its website](http://corp.delaware.gov/): > **Why Choose Delaware as Your Corporate Home?** > > More than half a million business entities have their legal home in Delaware including more than 50% of all U.S. publicly-traded companies and 60% of the Fortune 500. Businesses choose Delaware because we provide a complete package of incorporation services including modern and flexible corporate laws, our highly-respected Court of Chancery, a business-friendly State Government, and the customer service oriented Staff of the Delaware Division of Corporations. Talk about selling your state short. I’ll see their four reasons and raise them one. Thus, the following are my top five reasons to incorporate in Delaware: 1\. **Flexible Laws**. Delaware’s General Corporation Law is the most advanced and flexible business formation statute in the United States. It is designed to provide maximum flexibility in the structuring of business entities and the allocation of rights and duties among founders and shareholders. 2\. **No Wildcard Juries**. If you do end up going to court to settle a dispute, Delaware’s Court of Chancery uses judges instead of juries. I don’t know about you, but I’d rather place my startup company’s legal fate in the hands of a well-trained expert than people whose legal experience consists of The People’s Court and Law and Order re-runs. 3\. **Precedence = Less Litigation**. Since judges are used, decisions are issued as written opinions that your startup company can rely on. Thus, most Delaware corporations do not end up litigating disputes because their professional advisers examine these published opinions and construct deals to avoid lawsuits. 4\. **It’s Free! (Well, almost)**. Delaware charges $89 to incorporate. A little bit cheaper than California ($100..but they nail you for $800 every year in franchise fees), New York ($125), and a lot cheaper than Texas ($300). \[note: Even if you incorporate in a foreign state like Delaware, your startup company may still be subject to registration as a “foreign entity” and compliance with the laws of states you transact business in.\] 5\. **Privacy**. In a world where personal privacy is constantly eroding (the Google 3D Mapping truck should be driving by my house anyday now), Delaware does not require director or officer names to be listed in the formation documents. Thus, Delaware provides a level of anonymity from snoopers. Even though this post makes a big push for incorporating in Delaware, you shouldn’t assume Delaware is the default choice for your startup company. The fact so many large, public companies choose Delaware should demonstrate that large, public companies tend to benefit the most from incorporating in Delaware. So think about it and discuss whether you should incorporate in Delaware with your co-founders and professional advisers. But note that if you are planning to work with an investment bank or venture capital fund, you will likely have no choice but to become a Delaware entity and thus incorporate in Delaware. And for the five reasons above, that may not be such a bad thing. ***Update:*** If you are looking for information about startup company incorporation, check out my [“If I Launched a Startup](https://startuplawyer.com/startup-issues/if-i-launched-a-startup)” article. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Flip Flops. Free donuts and pizza. Hours of “unauthorized” advice from the angel investor, venture capital, and journalism communities. It sure beat the heck out of any legal conference I’ve ever attended. At Pitch Camp, a fund’s partner told the crowd that he turned down a startup simply because the startup’s capital structure was ridiculous. Think several classes of stock with several valuations. Basically, the fund didn’t want to spend time chasing down all the shareholders and otherwise untangle the mess. I can’t blame them. Keep in mind that even the best legal documents won’t get you funding. It is all about your product, your team, and your pitch. But a poorly-structured seed investment (or a series of them) can help ensure your startup company won’t get funding. Seed funding (friends & family and angels) should be conducted in a manner that will facilitate a later financing, not prevent one. And that’s even if you don’t anticipate needing venture capital. Personally, I like the convertible note approach to a seed round. Your startup can get capital without having to deal with the valuation issue. If your startup decides to give equity in exchange for seed capital, I suggest limiting the equity investment to your startup’s common stock. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** Angel Investors --- ### [Drug Testing Your Employees](https://startuplawyer.com/hiring/drug-testing-your-employees) **Published:** March 4, 2007 **Author:** Ryan Roberts **Content:** According to the United States Department of Labor, reasons employers implement drug testing are to: - Deter employees from abusing drugs and alcohol; - Prevent hiring individuals who use illegal drugs; - Provide early identification and referral of employees who have drug and/or alcohol problems; - Provide a safe workplace for other employees; - Ensure general public safety and instill consumer confidence that employees are working safely. Private sector employers most likely have the right to test their employees, but it’s a very good idea to check up on local and state laws so that you can customize a program that can withstand legal challenges. Also, keep in mind that ensuring your drug testing program is legal is only half of the battle. The other half deals with the employee education side–which should be constructed to alleviate employee concerns. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring --- ### [When to Use an Anti-raiding Provision](https://startuplawyer.com/hiring/when-to-use-an-anti-raiding-provision) **Published:** August 13, 2007 **Author:** Ryan Roberts **Content:** As an employer, you make countless investments in your employees. Whether your employees realize it or not, you commit major financial resources, time and training to make your staff a company asset. How do you protect your asset from being looted by a former employee? Consider adding an “anti-raiding” clause to your employment agreements. An anti-raiding provision intends to provide protection to an employer by prohibiting a former employee from soliciting his or her former co-workers to join a new enterprise. It is possible to add language that restricts such recruiting while your employee is employed by your company. The last thing you want is a current employee staging a mass exodus while on your payroll. Thus, an anti-raiding provision is a recruitment covenant that protects your contractual relationships with your employees. Your former employee is still free (barring other restrictive covenants such as a non-compete) to practice his or her trade. Before you start adding anti-raiding clauses to your employment agreements, remember that the legality of this provision, like all restrictive covenants, varies from state to state. Thus, anti-raiding provisions should typically be judged by the same reasonableness standards applying to non-compete covenants. Employees are understandably hesitant to sign any type of restrictive covenant. But I have found that employees are more likely to sign one when the restrictive covenant is presented as protecting both the company and the employee. Your employee should be able to comprehend that his or her job will be affected if another employee starts a new company with 3 other company employees. Thus, explain to your employee that the restrictive covenants found in ***his or her co-worker’s*** employment agreements work to protect his or her own job. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring --- ### [Why Your Startup Company Needs to Keep the Number of its Investors Low](https://startuplawyer.com/seed-funding/why-your-startup-company-needs-to-keep-the-number-of-its-investors-low) **Published:** September 5, 2007 **Author:** Ryan Roberts **Content:** If you can’t self-fund your startup company and must take on investors, keep the number of your investors as low as possible. A low number of investors will reduce your startup company’s transaction costs and headaches associated with raising funds. I’d rather my client raise $90k from one investor than $100k collectively from ten based upon the transaction costs my client would suffer both during the fundraising process and in the future. My client might have to cut back on Aerons, but it’s much easier to keep one person happy than ten. If you have no choice but to take on a large number of investors, request that your investors form their own LLC. Have the LLC be your startup company’s investor and therefore you only have to deal directly with one investor. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** investors, startup --- ### [Why Giving Your Employees Phantom Stock Can Boost Your Company](https://startuplawyer.com/hiring/why-giving-your-employees-phantom-stock-can-boost-your-company) **Published:** September 17, 2007 **Author:** Ryan Roberts **Content:** 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. Additionally, these key employees would be able to hold the company responsible for a breach of fiduciary duties. Thus, phantom stock is a great way to share the economic value of your company without the hassle of giving up company stock. Phantom stock plans are contracts between the company and key employees designed to parallel actual ownership of company stock. Under a phantom stock plan, the company grants a certain amount of stock units to key employees. Each unit equals the value of a current share of the company’s common stock. In the typical phantom stock agreement, the benefit provided to the key employee equals the appreciation in the value of the stock between the date the employee was credited with the phantom stock and the date the benefit is paid. Other phantom stock plans can be based on company sales or profits. You can implement a vesting schedule for phantom stock so that your key employees receive their phantom stock over time instead of all at once. Payment of the phantom stock benefit usually occurs upon termination of employment as a result of retirement, death, or disability. The benefit can be paid out in installments and in either cash or actual common stock of the company. Generally, benefits are paid in cash because the company does not want to give away ownership of the company. When implemented along with other incentive plans, phantom stock can be a useful tool to retain key employees without the hassle of making them shareholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring **Tags:** phantom stock --- ### [Your Advisor's Invention Agreements: A Potential Startup Killer](https://startuplawyer.com/board-of-directors/your-advisors-invention-agreements-a-potential-startup-killer) **Published:** November 14, 2007 **Author:** Ryan Roberts **Content:** “Get advisors” is a common recommendation given to a startup company entrepreneur. However, entrepreneurs should use caution when selecting advisors for his or her startup company. Your advisors may come pre-packaged with restrictive covenants that have the potential to kill your startup. One such restrictive covenant that could darken any startup’s day is an invention assignment agreement. An invention agreement assigns all inventions produced by the employee (i.e., your advisor) to the employer (i.e., the advisor’s day job). A watered-down invention assignment agreement reads like this: > Mr. X agrees that any inventions, designs, improvements, and discoveries made by Mr. X during the term of Mr. X’s employment, solely or jointly with others, which are made with the employer’s equipment, supplies, facilities, trade secrets, or time, or which relate to the business of the employer or the employer’s actual or anticipated research or development, or which result from any work performed by the Mr. X for the Employer, are the exclusive property of the employer. There have been instances where a startup company’s advisor is this Mr. X. And Mr. X is also a university professor subject to an invention assignment agreement with the university. The university then tries to claim rights to the startup company’s intellectual property since Mr. X worked on the startup company’s design or application. Not good news for the startup company. So, get advisors, but be sure to ask if they are subject to any restrictive covenants like an invention assignment agreement. If not, you may end up killing your startup. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Boards and Observers --- ### [You Can't Polish a Sneaker](https://startuplawyer.com/hiring/you-cant-polish-a-sneaker) **Published:** July 23, 2008 **Author:** Ryan Roberts **Excerpt:** Why your startup may have the right employee incentive plan but the wrong employee **Content:** Have you ever tried to polish your sneakers? I have. And no matter what method or device I used to refurbish my sneakers, they remained unrefurbished sneakers. The problem wasn’t my washing machine, detergent, or shoe polish–it was that my sneakers just weren’t worth the attempt. Unlike other forms of footwear, sneakers just aren’t made to be polished. ***This can be a valuable lesson for startups attempting to incentivize their employees: not all employees have the ability to be incentivized.*** A startup can choose from a variety of carrot-and-the-stick incentive options to get the most out of their employees (capital-willing, of course). These options include salary, commission, bonus, stock, vacation, health insurance, retirement accounts, stock options, warrants, phantom stock, and other deferred compensation plans. But a startup must realize that some employees will not respond to any combination of incentives. Thus, your startup may have the *right* incentive plan but the *wrong* employee. In Economics, the problem of motivating an employee to act on behalf–and in the best interest of–the startup company is known as “the principal-agent problem.” This problem arises when a principal compensates an agent for performing certain acts that are useful to the principal and costly to the agent, when it’s costly for the principal to supervise the agent. (Sound like your startup?) Basically, you solve the principal-agent problem by finding the right combination of incentives for the employee. However, the difficulty of selecting the optimal structure is reflected by the multitude of carrot-and-the-stick compensation mechanisms. Economics assumes a lot of things, and the biggest assumption Economics makes is that people will act in a rational manner. But as we all know, people don’t always act in a rational manner. Thus, you should not assume that your employee will respond in a rational way to your startup’s incentive offering. It may not matter what or how many carrots you dangle in front of your employee. Not all employees are made to be incentivized, just like not all footwear is made to be polished. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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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 founders stock issuance. Upon the one-year anniversary, the founders will each vest 25% of their total shares. Vesting will usually occur monthly after the cliff expires. Here’s what a “**4 Years with a One Year Cliff**” vesting schedule looks like in a legal document: “*…25% of the total number of Founder1’s Shares shall be released from the Repurchase Option on the one-year anniversary of this Agreement, and an additional 1/48th of the total number of Shares shall be released from the Repurchase Option on the corresponding day of each month thereafter, until all of Founder1’s Shares have been released on the fourth anniversary of this Agreement.*” The “Repurchase Option” is simply the company’s option to repurchase Founder1’s unvested shares upon Founder1’s departure from the startup company. Also, you should note that vesting schedules trigger other complex issues such as tax, so please don’t simply copy the above text and paste it into a stock purchase agreement. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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The founders may feel that their lawyer is a prime candidate for a board seat since their lawyer (a) is familiar with their startup, and (2) has dealt with a myriad of startup company issues through the lawyer’s representation of such companies. In most states (I haven’t done a survey all 50), a startup lawyer can simultaneously represent a corporation and serve on the corporation’s board of directors. In order to do so, the lawyer must take careful steps to prevent ethical dilemmas from arising when acting as a lawyer-director. Regardless, the startup lawyer’s duties to the corporation can, and likely will on many occasions, conflict with the lawyer’s duties as a board member. Your startup lawyer represents your startup company (board of directors). If your startup lawyer joins your board, he or she ends up indirectly advising himself or herself. It is difficult for the startup lawyer-director to provide impartial advice if he or she is both advisor and advisee. Another negative of having your startup lawyer on your board of directors is that communications between the startup company and a lawyer who is a director may not be entitled to the attorney-client privileged communications rule. Is your lawyer providing legal or business management advice? Thus, I recommend that founders and startup companies do not have their startup lawyer (or any other lawyer that provides counsel to the startup) sit on their board of directors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Boards and Observers **Tags:** board of directors --- ### [Angels Asking For Control](https://startuplawyer.com/seed-funding/angels-asking-for-control) **Published:** August 12, 2010 **Author:** Ryan Roberts **Content:** Occassionally, a startup will get a term sheet from an angel with a pre-money valuation less than the investment amount (i.e., the angel wants control of the startup). And “control” isn’t just defined as a majority of the shares of the company — if the angel asks for approval of all budgets & hires or for a board seat (and they would represent 1/2 of the board) they are still asking for control. When this occurs, you need to determine the reason why your potential angel investor wants control. Is it based out of fear or corporate narcissism? That is, you have to figure out whether your angel wants control because he or she doesn’t know any other way to protect the investment in your startup or because he or she believes they can run the startup better. If the request for control is based on fear, the investor needs to either (a) not invest in your startup, or (b) get educated on various terms of an investment that could help protect their investment. This education could come from you or your lawyer, but preferably from the angel’s lawyer. If the request for control is based on corporate narcissism, you probably need to find a new investor. Most angels have the ability to make an angel investment in your startup because they successfully managed/owned/exited a company or ten. And they probably started this when you were busy collecting Garbage Pail Kids. Thus, they likely you view as “not ready from primetime” and their future employee. If the corporate narcissist angel’s background involves tech (or at least something similar to what your startup is implementing), then the control aspect can be somewhat tolerable…in the short run. But you never want to end up with an angel controlling your tech startup during the day, then calling you at night because he can’t get his iPad to work on his wifi network. Investor fear is workable, but corporate narcissism is a deal breaker. At the end of the day, don’t give up control to any angel. And from my experience, the good angels don’t want it. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** Angel Investors, startup --- ### [Non-Dilution Rights are Wrong](https://startuplawyer.com/seed-funding/non-dilution-rights-are-wrong) **Published:** March 1, 2011 **Author:** Ryan Roberts **Content:** I hate non-dilution rights and if you are an entrepreneur you should, too. I’m not talking about price-based anti-dilution protection that is typical in an angel or VC round. What I’m referring to is a right given to a particular stockholder so that such stockholder’s equity in the company is not diluted by any future issuance of stock — regardless of the price. Investors will say this “protects” their investment from issuances of equity that do not benefit the startup. But the fact that the startup’s founders are being diluted by such an issuance should provide enough protection. Unfortunately, for some investors having the founding team sit “side by side” with them is not enough protection. My advice to those investors requesting non-dilution is: if you don’t trust the founding team from issuing stock in the hopes of increasing the startup’s value — don’t invest in the startup. My advice to entrepreneurs is, if you have an investor asking for non-dilution, it likely means that the investor doesn’t think you’re good enough to run the company. The investor is likely in love with your startup’s idea, but not in love with you. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** non-dilution, startup --- ### [How to Protect Directors on Your Startup's Board](https://startuplawyer.com/board-of-directors/how-to-protect-directors-on-your-board) **Published:** January 8, 2010 **Author:** Ryan Roberts **Content:** Startups often desire to shield members of their board of directors from personal liability in connection with their duties on the board. And sometimes potential board members are hesitant to join a startup’s board without sufficient personal liability protection. Therefore, startups can protect their directors in a few ways: **(1) Indemnification** The startup can include language in both its charter and bylaws that indemnifies directors for expenses and losses incurred as a result of the director’s position. Indemnification is available only if permitted by the laws of the startup’s state of incorporation. Thus, language requiring the Company to indemnify its directors “to the fullest extent permitted by \[State\] law” is frequently incorporated into charters and bylaws. **(2) Indemnity Agreements** In addition to the indemnification provisions in the startup’s charter and bylaws, a startup may choose to sign a separate indemnity agreement with each member of the board of directors. Indemnity agreements will often contain terms that supplement the indemnification provisions found in the startup’s charters and bylaws. A board member may also desire this additional contract because the startup can’t change the indemnification contract terms without the director’s consent. **(3) Directors’ Insurance** A startup can purchase directors’ insurance (also known as a “D&O Policy”) to protect the directors. The D&O Policy doesn’t increase the directors’ personal liability protection. Rather, it helps to ensure that the director will be able to enjoy the indemnification benefits provided by the startup’s indemnification provisions and optional indemnification agreement. That is, the D&O policy’s proceeds will help supplement a startup’s likely lack the financial resources to sufficiently indemnify the directors. **But what if a director goes Patrick Bateman on my startup?** Keep in mind that the indemnity protections for directors (and the D&O policy) will include carve-outs for things like director intentional misconduct and bad faith. Thus, a director who commits intentional acts to harm the startup or acts strictly for his own personal enrichment would likely not be protected. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Two distinct but related exemptions, Rules 505 and 506 of Regulation D, provide that a company can sell its own securities to an unlimited amount of “accredited investors.” (*Please keep in mind there are several other requirements your startup company must follow to properly obtain an exemption from registration under the securities laws*.) The definition of an accredited investor is found in Regulation D’s Rule 501 of the federal securities laws. An accredited investor is: > - a bank, insurance company, registered investment company, business development company, or small business investment company; > - an employee benefit plan, within the meaning of the Employee Retirement Income Security Act, if a bank, insurance company, or registered investment adviser makes the investment decisions, or if the plan has total assets in excess of $5 million; > - a charitable organization, corporation, or partnership with assets exceeding $5 million; > - a director, executive officer, or general partner of the company selling the securities; > - a business in which all the equity owners are accredited investors; > - a natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase; > - a natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year; or > - a trust with assets in excess of $5 million, not formed to acquire the securities offered, whose purchases a sophisticated person makes. In addition to accredited investors, Rule 505 and 506 permit raising capital from up to 35 *non-accredited investors* (i.e., anyone that does not fit the accredited investor definition above). But that doesn’t mean your company *should* raise capital from non-accredited investors, and for a good few reasons: (1) **Non-Accredited Investors Trigger a Larger Disclosure of Information** – If you raise capital from non-accredited investors in a Rule 505 or Rule 506 registration-exempted financing, you must provide a huge amount of information about your startup company. Think IPO-registration huge, thereby leading to larger legal and accounting costs. Such additional costs may not be prudent if your startup company is tight on capital. (2) **Non-Accredited Investors Tend to be More Hostile Than Accredited Investors** – Implied by the definition of a non-accredited investor, the investment a non-accredited investor makes to your startup company will mean much more to him or her than an investment an accredited investor makes. A non-accredited investor will be much more emotional. Thus, non-accredited investors are much more likely to sue your company if things don’t go according to plan. (3) **Non-Accredited Investors can Hinder an Acquisition** – It may be difficult for your startup company to be acquired after it has completed a registration-exempted financing with non-accredited investors. Non-accredited investors trigger additional rules in the context of an acquisition (e.g., a purchaser’s representative). Sometimes the acquiring entity will require a startup company to perform a buyout the non-accredited investors pre-acquisition. Therefore, if at all possible, your startup company should refrain from raising money from non-accredited investors. They simply create too many problems during and after your financing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** accredited investors, private placements, Securities --- ### [Series FF Stock: How Some Founders Get Liquid at Funding](https://startuplawyer.com/incorporation/series-ff-stock-how-some-founders-get-liquid-at-funding) **Published:** July 2, 2008 **Author:** Ryan Roberts **Excerpt:** How Series FF Stock Provides Startup Company Founders with Cash at Funding **Content:** Founder stock sales are becoming more prevalent as part of a venture financing. Of course, getting paid has always been a priority for the entrepreneur, but founder liquidity is becoming an increasing trend in the venture world. Enter Series FF Stock. Series FF was created for those founders desiring to cash out a small part of their overall stake in their startup company at a funding (rather than waiting to go public or get acquired). Thus, the FF class provides founders with the opportunity for a more immediate return on their investment of cash, blood, sweat, and tears. The mechanics of Series FF Stock work like this: At a very early stage in the startup company’s life, the founders are issued a very weak class of preferred stock. The issued FF shares typically come attached with the right to convert into a future round of preferred (such as a Series B) and then sell the converted shares to investors. This conversion and sale can only take place at a financing. The issue of early founder liquidity can lead to tension between investors and founders. The investors want to keep the founders properly incentivized. In theory, letting founders cash out any of their stake may make the founders disinterested in growing the newly-funded company. My belief is that a little bit of liquidity for founders at funding may actually benefit the venture backed company. The founders may have maxed out credit cards or have other bills they incurred in order to get to their startup to the point of funding. Even if the founders are debt-free, I don’t think founders will lose focus over a (relatively) small payday compared to an acquisition or IPO exit. Keep in mind that if a founder converts and sells Series FF shares, the founder’s equity in the company is reduced. Therefore, if an IPO or M&A exit is in the startup’s future, selling shares early will likely be a costly move for the founder. For more [background about the origin of Series FF stock, click here](http://venturebeat.com/2006/12/15/the-ff-class-of-stock-for-founders-who-want-cash-early/). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [What are ISOs?](https://startuplawyer.com/hiring/what-are-isos) **Published:** January 19, 2010 **Author:** Ryan Roberts **Content:** A stock option grants you the right to purchase a certain number of shares of stock at a pre-established price. An incentive stock option (ISO) is a type of stock option that allows favorable tax treatment to the stock option holder. The main tax benefits of incentive stock options are that the option holder can: (1) delay his or her personal taxable event until the stock is actually sold by the holder (instead of at the exercise of the option), and (2) receive long-term capital gains treatment for taxable gain at the stock sale (instead of ordinary income tax rates). In order to receive the tax benefits of ISOs, the startup and stock option holder must comply with various rules. The main requirements are: **ISO Recipient** Only employees of the startup can receive ISOs. **Continuous Employment** The employee must remain continuously employed with the startup for the period from the date of the ISO grant until 3 months before the date of an ISO stock option exercise. **Stock Option Plan** The ISO must be granted pursuant to a written stock option plan. Additionally, the grant must take place within 10 years from the date the stock plan is either adopted or approved by the startup’s shareholders. **ISO Option Length** An ISO cannot be exercised more than 10 years after its grant. (See “Special Rules” below) **ISO Exercise Price** The exercise price for an ISO must be set at FMV (or higher) of the startup’s stock subject to the ISO grant. (See “Special Rules” below) **Nontransferable ISO** ISOs must be nontransferable and can only be exercised by the employee. However, if the employee dies, the employee’s heirs or beneficiaries can exercise the ISOs. **ISO Holding Period** The ISO holder can not dispose the startup’s shares within (i) 1 year from the ISO exercise, or (ii) 2 years from the ISO grant. Thus, the earliest the ISO shares can be sold (and receive favorable tax treatment) is 2 years from the ISO grant (not 3 years). ***Special Rules for Founder ISO Grants (i.e. to large shareholders)*** A ISO grant to a shareholder with more than 10% of the startup’s voting stock must (i) be set at an exercise price at least equal to 110% of the FMV of the stock subject to the option, and (ii) the ISO option may not be exercised more than 5 years after its grant. Please note that the above list is not exhaustive regarding ISO requirements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Employee and Contractor Equity and Hiring **Tags:** iso, Stock Options --- ### [Convertible Note Transaction Documents](https://startuplawyer.com/seed-funding/convertible-note-transaction-documents) **Published:** July 17, 2012 **Author:** Ryan Roberts **Content:** It’s a common misconception that the ‘convertible note’ is the only legal document used in a [convertible debt](https://startuplawyer.com/startup-law-glossary/convertible-debt) financing. I often receive emails from entrepreneurs asking for a ‘sample convertible note’ which I assume they are planning to use on their own. In addition to the convertible note, a startup will also need to draft a convertible note purchase agreement…especially if the startup plans to close the convertible debt round with more than 1 investor. Sometimes a startup will include the provisions typically located in a convertible note purchase agreement in the convertible note, but this is only feasible if the startup closes the round with 1 investor. Finally, the most often overlooked document is the consent of the startup’s board of directors with respect to the convertible debt round. In a typical convertible note purchase agreement, the startup will represent and warrant that all corporate action necessary to authorize and deliver the convertible note purchase agreement and the convertible note(s) have taken place prior to closing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) --- ### [Keeping a Seed Financing Round Open](https://startuplawyer.com/seed-funding/keeping-a-seed-financing-round-open) **Published:** August 23, 2010 **Author:** Ryan Roberts **Content:** Startups don’t want to wait until every investor is ready before closing on a seed financing round. First, the roster of investors will not be identified and/or cutting checks on the same day. Second, what startup wants to wait on cash? Therefore, most seed financings allow for an initial close (i.e., that first investor check) with an extension period for future investors. But in order to properly accomplish this, your startup will have to keep the round “open” via the deal documents. Here’s what an open round mechanism might look like in a convertible note financing document: *The initial closing of the sale and purchase of the Notes (the “**Initial Closing**”) shall occur on \[DATE\], or such other date as is agreed upon by the Company and the Purchasers (the “**Closing Date**”). The Company may sell all or part of the remaining Notes in one or more subsequent Closings to be held on or before \[X\] days after the Initial Closing (each a “**Subsequent Closing Date**”). Each Purchaser at such Subsequent Closing Date shall become a party to this Agreement and shall have the rights of, and be subject to limitations applicable to “Purchasers” hereunder.* From the investor’s perspective, they don’t want the round to extend forever and let subsequent investors get in on the same terms several years from now. Thus, 60-90 days is a fairly common “final close date” and anything beyond that you probably need strong justification. But remember that while a lot of these deal structures are standard — each individual deal is unique. Additionally, there is a push to keep seed financing rounds open for longer than the “normal” open period. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** convertible note, open round, raising capital --- ### [The When to Incorporate Decision-Matrix](https://startuplawyer.com/incorporation/the-when-to-incorporate-decision-matrix) **Published:** April 12, 2010 **Author:** Ryan Roberts **Content:** In a recent post, I detailed some incorporation-related points of interest if[ I launched my own startup](https://startuplawyer.com/startup-issues/if-i-launched-a-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 on this topic. Most lawyers will say you should have incorporated “Yesterday!” while some non-lawyers will say that you can wait until your first round of funding because “Google did it.” There’s no right or wrong answer on this one, but you probably did not need to incorporate yesterday nor should you wait until your first round to do so. My advice to you is simply: *Don’t incorporate a hobby*. *Incorporate when you are serious about making your startup a business.* But for those of you who prefer the quantitative, I put together the following decision matrix: **When to Incorporate Decision-Matrix** Answer the following questions and tally up your total score. (1) Does your startup have more than 1 founder? Yes –> 10 points No –> 0 points (2) Are you (and/or one of your co-founders) working on your startup full-time? Yes –> 5 points No –> 0 points (3) Will your startup take longer than one year to exit? Yes –> 5 points No –> 0 points Maybe –> 3 points (4) Is your startup hiring developers or designers? Yes –> 7 points No –> 0 points (5) Is your startup granting stock options or other equity compensation? Yes –> 7 points No –> 0 points (6) Is your startup high-risk for a lawsuit? Yes –> 10 points No –> 2 points Maybe –> 7 points (7) Is your startup seeking seed or venture capital? Yes –> 6 points No –> 0 points Maybe –> 3 points (8) Is your startup signing contracts with third-party companies for business services (not for IP creation or development)? Yes –> 4 points No –> 0 points The Results: *24 points or less*: Save your $$$ on incorporation and spend it on an iPad. *25 points or more*: Incorporate now (iPad version 2 will be better, anyways) Feel free to suggest a revised/additional questions or weight to the matrix. Of course, this is meant to be more of a “fun” exercise for entrepreneurs rather than an absolute guide. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** Incorporation, startup --- ### [The 5-Second Guide to Choosing Your Startup's Legal Entity](https://startuplawyer.com/incorporation/the-5-second-guide-to-choosing-your-startups-legal-entity) **Published:** February 2, 2010 **Author:** Ryan Roberts **Content:** Corporation. Because if you can log on to the Internet, you can handle the complexity of a corporation. Don’t be scurred. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** corporation, Incorporation, LLC --- ### [Should a Founder License IP to a Startup?](https://startuplawyer.com/incorporation/should-a-founder-license-ip-to-a-startup) **Published:** January 28, 2010 **Author:** Ryan Roberts **Content:** Often a startup founder will desire to license his or her intellectual property to a new startup venture, rather than transfer ownership to the startup at incorporation via a technology assignment agreement. This is a bad idea. **Founder IP License Problem** Even if the founder offers the startup a completely startup-favorable license, the founder IP license scenario should be a non-starter for most startups. The problem is that even a free and exclusive license to the startup falls short of vesting IP ownership with the startup. If the intellectual property to be licensed by a founder is a big piece of the startup’s technology, the founder license problem is amplified. If the startup doesn’t work out, and must be sold in a liquidation, the license agreement may be terminated. Quite simply, the startup will be without its only asset of value. If the startup is without an important and valuable asset, why would someone invest in the startup? **Founder IP Should Become Startup IP** Founders should transfer their IP ownership to the startup. Founders create wealth through the ownership of their startup’s equity, and withholding the outright transfer of IP runs contrary to this principle. Even worse, the founder may be hedging his bet regarding the success of the startup. If a founder is hesitant to transfer ownership of his IP at incorporation, a possible solution is to increase the founder’s equity share. This may be a “fair” thing to do, since [how a startup should split equity between founders ](https://startuplawyer.com/incorporation/how-to-split-the-startup-founder-equity-pie)depends on various factors that include founder IP contributions. **Conclusion** A founder license of IP will greatly reduce–and likely eliminate–the chances an investor will consider your startup worthy of investment dollars. Thus, if you are a potential co-founder of a startup where another founder will only license his or her IP to the startup, I would think twice about joining the startup. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** intellectual property, license, startup --- ### [Lockdown Lost-Founder IP](https://startuplawyer.com/incorporation/lockdown-lost-founder-ip) **Published:** January 26, 2010 **Author:** Ryan Roberts **Content:** If you won the lottery today, how many long lost relatives (that you don’t recall) would come out of the shadows of your family tree to test the generosity of their favorite relative? I’m willing to bet a few. Now if your startup received a $5MM Series A investment from a venture capital firm, how many developers (that you can recall) would come out of the shadows of the internet and claim to be your startup’s long lost founder? The answer to this question depends on how well your startup secures its intellectual property. **Lost Founders** You may not consider a developer that worked 1 day on your startup 2 months before you incorporated a “founder.” But if your startup becomes a wild success, the developer will. Even worse, this lost founder will have more leverage now with your startup than if you had acquired his intellectual property at the outset. Even if you aren’t worried about long lost founders laying claim to your startup’s intellectual property, your potential investors are. The status of your startup’s intellectual property, including whether you have signed agreements with all developers, is typically among the first set of questions your startup will receive from a potential investor. Thus, it’s wise to lock down your startup’s IP early to prevent the lost founder problem. **How to Lock Down the IP** One of the most important aspects of a startup incorporation is the ability to transfer intellectual property ownership from the founders to the startup. Each founder is issued shares in the startup in exchange for the founder’s intellectual property (and usually a small amount cash). In other words, the startup issues shares to the founder as consideration for the founder’s intellectual property and small check. This element of consideration is required for the formation of a valid, binding contract. The exchange is typically handled via a “Technology Assignment Agreement.” *But what about developers who work for the startup that aren’t founders?* Consideration for services rendered should be given to all developers and consultants that work on anything IP-related at your startup. This includes whether the developer or consultant worked prior to your startup’s incorporation or afterwards. Like the incorporation, the intellectual property transfer will be executed pursuant to a Technology Assignment Agreement. The consideration given to developers and consultants does not have to include your startup’s equity. Consideration can also be cash. But since cash tends to be a scarce resource at startups, such consideration typically takes the form of restricted stock or stock options. **Conclusion** Like the lost-relative problem occurs only upon a winning lottery ticket, the lost-founder problem only occurs if your startup is successful. To avoid lost founders from showing up on your startup’s doorstep, take proactive measures to lock down your startup’s intellectual property. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** founders, Incorporation, intellectual property --- ### [What is a Fully-Diluted Basis?](https://startuplawyer.com/venture-capital/what-is-a-fully-diluted-basis) **Published:** December 22, 2009 **Author:** Ryan Roberts **Content:** The concept of a fully-diluted basis is not difficult. A fully-diluted basis just means the assumption of the highest potential amount of common stock a startup will have outstanding, regardless of vesting provisions and assuming all options and other securities like convertible notes are converted into common stock. That is, assume the highest share count possible. I’ve seen it defined in legal documents in the following way: “***Fully-Diluted Basis***” shall mean the assumption that all options, warrants or other convertible securities or instruments or other rights to acquire Common Stock or any other existing or future classes of capital stock have been exercised or converted, as applicable, in full, regardless of whether any such options, warrants, convertible securities or instruments or other rights are then vested or exercisable or convertible in accordance with their terms. The definition of fully-diluted basis matters especially for founders in financings. Typical VC financing deals will calculate the Series A share price on a fully-diluted basis, and the investors have an incentive to capture as much shares as possible in the definition of fully-diluted basis. The larger the amount of shares calculated by the definition of fully-diluted basis, the lesser the Series A share price. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Even though I heart corporations, I still believe the LLC can be an appropriate legal entity for some companies and ventures. But when it comes to a startup looking to (i) raise capital, and/or (ii) issue incentive equity compensation, the corporation is the proper choice. LLCs are great because they are “simple.” But eventually the startup will have complex legal needs and the startup LLC will end up having to draft corporation-like provisions into its documents. It ends up being much easier to convert to a corporation at that point rather than adapting the LLC to operate like a corporation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Service of process is how a third party gives your company notice of a pending legal matter, which allows your company to respond accordingly. A corporation’s registered agent must be located within the relevant state. For example, if your Texas company is incorporated in Delaware, your company will need to hire a registered agent in Delaware. If your Texas company is incorporated in Texas, you or another shareholder or officer could be the Texas registered agent (assuming each resides in Texas). The registered agent must be available during normal business hours and supply a physical address in the relevant state–no P.O. boxes or private mailboxes. Since this address is public record, some people opt to hire registered agents to maintain privacy. The most common mistake startup companies make is failure to update the name and/or the address of the startup’s registered agent. For example, if you fail to update registered agent information with the secretary of state, your company could be sued–and lose–without your knowledge. In Texas, the secretary of state becomes the registered agent on behalf of your startup if your startup fails to maintain a registered agent, or the registered agent listed with the secretary of state cannot be found with “reasonable diligence.” Rates for registered agents tend to range between $50 to $360 per year. Finally, here’s a link to the [Delaware General Corporation Law regarding registered agents](http://delcode.delaware.gov/title8/c001/sc03/index.shtml). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** registered agent --- ### [Don't Hate On Your VC For Exercising Anti-Dilution Provisions](https://startuplawyer.com/venture-capital/dont-hate-on-your-vc-for-exercising-anti-dilution-provisions) **Published:** December 23, 2008 **Author:** Ryan Roberts **Content:** There’s a lot of talk about down rounds now in the venture capital industry since valuations are down. So I suspect a lot of venture-backed companies are dusting off their Series A Preferred Share Agreements and taking a look at the anti-dilution provisions held by their investor(s). But should your founding team be offended if your venture capital firm exercises its dilution protection provisions when your startup goes through a down round? In a word: No. But many times founders are upset with their VC when their VC exercises anti-dilution provisions. Of course, dilution is an understandably upsetting event for founders. They worked extremely hard and risked everything to get that $5,000,000 pre-money in the Series A round, but now due to various factors, they need more cash and will get lower valuation in the Series B than they got in the Series A. After the initial investor exercises its anti-dilution provisions, the common stockholders will be left with even less equity in the startup. *But being upset about the dilution doesn’t mean you should be upset at your VC.* First, the anti-dilution provision was part of your funding. You accepted it and to some extent you should be accountable. Even if your late round financing would only be nominally dilutive to your investor, such anti-dilution protection was a material term in getting funded in the first place. Sure, anti-dilution protection can seem like a huge equity squeeze to the common stockholders, but no one forced the startup to take the investor’s cash. Second, keep in mind that the venture capital firm (through its fund) has limited partners (and fiduciary responsibilities thereto). Venture capital firms are in the business to provide great investment returns for their limited partners. By exercising the anti-dilution provision, the venture capital firm is hoping that the larger amount of shares will help the venture fund improve its return to THEIR investors. (And if they can’t improve their return to investors, the investors will stop investing with such a firm.) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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When clients ask me for my recommendation, I find myself recommending the convertible debt financing route more often than traditional equity financing (i.e., I’ll give you $100k for 20% of your company’s stock). **So what is convertible debt?** Convertible debt financing is basically an investor loan to your startup that has a future conversion-to-equity feature. That is, your startup’s investor gives your startup a loan like a bank would, but the outstanding balance of this loan will convert to shares in your corporation at a future date. **When does convertible debt convert to equity?** Convertible debt typically converts to equity the next time your startup raises capital (think venture capital or similar large investor). Technically, this large raise is called a “qualified financing” per the convertible debt agreements (note and note purchase agreement). **How does convertible debt convert to equity?** Convertible debt converts to equity based on the valuation your startup receives from the venture capital firm in the “qualified financing.” For example, if your venture capital investor ends up paying $1 per share for your startup’s preferred stock and you have $800,000 of convertible debt, the investor will receive 800,000 shares of preferred stock. The loan will then be cancelled. (Note: Convertible debt often converts to preferred stock at a discount than what the venture capital investor pays for the preferred shares.) **So why do I recommend convertible debt so much?** Simple: It delays the valuation discussion. I see many founders struggle with their investors over a valuation to do a straight up cash-for-shares equity investment. And this struggle can last for months and eat up development time. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Seed Funding (SAFEs and Convertible Notes) **Tags:** angel investor, convertible note --- ### [Shouldn't the Standardization of Venture Capital Documents Lead to Reduced Legal Fees?](https://startuplawyer.com/venture-capital/shouldnt-the-standardization-of-venture-capital-documents-lead-to-reduced-legal-fees) **Published:** August 7, 2008 **Author:** Ryan Roberts **Content:** As an industry, venture capital is relatively young. Yet it has been around long enough–through busts and booms–that it will not simply go away as some might have you think. Venture capital is a legitimate industry which is now being enhanced through standards and patterns. Documentation is one area that is trending towards consistency in venture capital. In the past, a startup company’s lawyer and the venture fund’s counsel might have haggled over terms that are now perceived as boilerplate. The [National Venture Capital Association (NVCA)](http://www.nvca.org/) working groups have done an outstanding job creating model Series A documents. ***But if venture capital documents are becoming standardized, why are law firms charging more for venture financings?*** I hear more and more remarks about how high legal fees have been for their Series A financings, from $50k, $75k, $100k and upwards. And I’ve heard from both entrepreneurs and attorneys. Of course, each venture capital transaction is a unique deal and document drafting/negotiation is not the only legal work to be completed in a venture financing. Also, I’m not implying that the legal industry should start commoditizing its practice. But you would think that legal document standardization would lead to a reduced need for negotiation…and therefore reduced legal bills. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [A Primer on LLCs](https://startuplawyer.com/incorporation/a-primer-on-llcs) **Published:** July 20, 2008 **Author:** Ryan Roberts **Content:** The limited liability company (LLC) is a relatively new legal entity which got its start in the late 1980s. As the name implies, an LLC provides limited liability to its participants called “members” while containing the assets and operations of the business enterprise. Please keep in mind that LLCs are regulated at the state level, therefore management and formation matters may vary from state to state. **How to Form an LLC** LLCs are formed by filing an articles of organization (or other similarly titled document) and submitting a filing fee with the Secretary of State. You’ll have to make sure the LLC’s name complies with applicable state rules or else the Secretary of State will reject the filing. The most common reason a name is rejected is that the proposed LLC’s name is too similar to that of an existing entity, whether the existing entity is an LLC, corporation, limited partnership, etc. Some states can be very laid back with regards what constitutes a similar name, while others are hyper-sensitive sticklers (hello Texas!). You will also have to appoint a registered agent for your LLC. A registered agent is a business or individual designated to get served when your LLC is a party to a legal action such as a lawsuit or summons. Failure to maintain a registered agent or keep your registered agent’s address updated can produce undesirable effects for your LLC. **The Management and Operations of an LLC** An operating agreement typically determines the management and operational functions of the LLC. This agreement is made between the LLC’s members (the owners of the LLC) and the LLC. The operating agreement will also determine the allocation of income and tax liabilities. These documents can be extremely short or extremely long. In the typical default management structure, the management of the LLC is vested in the members in proportion to their ownership interest in the LLC. However, the members can agree, either in the articles of organization or operating agreement, to vest management in a “manager” rather than each of the members. **Tax Basics** Thanks to a 1998 Internal Revenue Service ruling, LLCs are a hybrid vehicle which provides the liability protection of a corporation with the pass through taxation benefits of a partnership or S corporation. Pass through taxation means that the members of the LLC pay the taxes of the LLC on their individual 1040 tax return via a Schedule K-1. Thus, the income (or loss) is “passed through” to the members. This allows for the avoidance of double taxation on the LLC’s income. I highly recommend seeking guidance from your CPA, as there will be tax issues–both personal and for the entity–that may influence your entity decision. **When is the LLC the best choice of legal entity?** Unfortunately, I don’t have a bright-line rule for when to be an LLC. The LLC is a very flexible legal entity combining the advantages of corporations such as limited liability and continuity of life with the advantages of partnerships such as pass through taxation and corporate informality. Thus, if you are looking for a simple way to enjoy limited liability and you are not too concerned with raising capital or establishing a more traditional management system, the LLC is probably for you. But if you are looking to use various corporate-like methods, whether options or raising capital, the LLC may not be your best option. You can still create some corporate-like incentives for your employees, but I find that most employees have a hard time comprehending what a “membership unit” is as opposed to a share of stock. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** LLC --- ### [How to Incorporate Your Sole Proprietorship](https://startuplawyer.com/incorporation/how-to-incorporate-your-sole-proprietorship) **Published:** July 15, 2008 **Author:** Ryan Roberts **Content:** Many entrepreneurs begin their startup as a sole proprietorship. Eventually, some sole proprietors desire to incorporate so they can reduce their personal liability and protect their personal assets. But the act of incorporating a going business does not, by itself, transfer the current business being conducted as a sole proprietorship to the new corporation. **The 2 main issues when incorporating a sole proprietorship** The 2 main issues involve the transfer of assets from the going business to the new corporation and the tax consequences from such transfer. \[This article will address the transfer and not the tax issues.\] Since the assets of the sole proprietorship will need to be transferred, formal conveyances of such property must be made from the sole proprietorship to the new corporation. **The process** The first step is to incorporate the new legal entity. The next step is to execute various transfer documents by the sole proprietorship, by the new company, and some by both the sole proprietorship and the new company. In return for the conveyance of property to the new corporation, the owner of the sole proprietorship usually receives corporate shares of the new corporation. **You’re not done yet** While the transfer is now complete, additional administrative steps may need to be completed depending on the nature of the business: -Transfer assumed name -Handle workforce commission issues -Close sole proprietor bank account and open account in new corporation’s name -Make necessary changes to insurance policies -Transfer permits and licenses -Contractual obligations -Apply for new federal tax ID number -Make appropriate revisions in estate planning documents Furthermore, while there’s no requirement to publish notices of the intent to incorporate, creditors should be notified of the sole proprietorship’s termination and the existence of the new corporation. This will help prevent liability if creditors continue to believe the business is operating as a sole proprietorship. While incorporating a sole proprietorship may seem like a large and painful task, I believe the benefits such as reduced personal liability outweigh any headache from completing the transaction. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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If the acquirer fails to close the acquisition because it can’t obtain financing, the reverse breakup fee provision is triggered. (Traditionally, acquirers insisted on including “financing out” clauses allowing them to decline to close acquisitions–without penalty–if they couldn’t obtain the necessary financing.) **What’s the reasoning behind reverse breakup fees?** Target companies believed that acquirers should share the risk that the proposed (and public) deal did not go through. These risks for target companies include: (1) securities class action lawsuits; (2) disruption of business operations; and (3) the potential for an unstable set of management/employees. Therefore, as acquisition targets gained bargaining power relative to their acquirers over the past few years, reverse breakup fees were increasingly inserted into acquisition documents to re-allocate such risks. According to [Factset MergerMetrics](https://www.factset.com/files/mergers/index.htm), 76 percent of all going private deals involving U.S. target companies included a reverse breakup fee provision. **How much are typical reverse breakup fees?** Reverse breakup fees usually range between 1 to 3 percent of the acquisition price. That may seem like a nominal amount, but keep in mind 3 percent can be a massive dollar amount for private equity deals. **Do reverse breakup fees have any place in smaller acquisition deals?** While reverse breakup fees are found in private equity/leveraged buyout deals, they have a place in smaller deals. At a minimum, small targets also risk that a proposed acquisition will disrupt business operations and negatively affect management/employees (2 and 3 above). And one could argue that a smaller target would suffer more on the operations and personnel side compared to a larger company. Additionally, its inclusion could help entice smaller targets to enter into a proposed acquisition. The tradeoff is that increased language in acquisition documents may scare off the buyer or seller. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits **Tags:** LBO --- ### [What Venture Capital Investors Want in a Term Sheet](https://startuplawyer.com/venture-capital/what-venture-capital-investors-want-in-a-term-sheet) **Published:** June 4, 2008 **Author:** Ryan Roberts **Content:** \[youtube:http://www.youtube.com/watch?v=JF-7nRnpJfQ&hl 285 234\] ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [How To Handle Intellectual Property When Buying A Business](https://startuplawyer.com/acquisitions/how-to-handle-intellecutal-property-when-buying-a-business) **Published:** December 25, 2007 **Author:** Ryan Roberts **Content:** The business purchaser needs to ascertain if intellectual property rights are needed for the continued operation of the business. Intellectual property rights that are important include trademarks, copyrights, service marks, and trade names. All of these IP rights are assignable. For example, the ownership of a copyright may be transferred in whole or in part by any means of conveyance. In addition, any of the exclusive rights included in a copyright may be transferred and owned separately. The owner of a trademark, service mark, or trade name may assign the mark or name or may license or franchise another to use the mark or name. An intellectual property assignment vests title and all right in the mark or name in the assignee, in contrast to a license or franchise that transfers only limited rights of use of the mark or name without transferring title. Some intellectual property rights will obviously be needed to continue business operations. But it’s always a great idea to determine the intellectual property issues and obstacles during the due diligence period rather than post-close. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits **Tags:** acquisition, IP --- ### [The Deal Behind Letters of Intent](https://startuplawyer.com/acquisitions/the-deal-behind-letters-of-intent) **Published:** December 9, 2007 **Author:** Ryan Roberts **Content:** A letter of intent is a pre-acquisition agreement that shapes the preliminary understandings of the parties. Although usually non-binding (for the most part), it serves as the bridge between initial negotiations and the purchase agreement. And that’s important because the letter of intent should facilitate the deal. The letter of intent will set forth the proposed deal structure, price, payment terms, and other general terms–a transaction summary. But more importantly, the letter of intent spells out the preconditions to closing the deal, such as due diligence process issues, purchase agreement construction, and any nondisclosure requirements. Most of the time, the letter of intent does not create a binding obligation for the parties to do the acquisition. But that doesn’t mean a non-binding letter of intent is a document without a purpose. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits --- ### [Why a VC Will Take a Lighter to Your NDA](https://startuplawyer.com/venture-capital/why-a-vc-will-take-a-lighter-to-your-nda) **Published:** October 17, 2007 **Author:** Ryan Roberts **Excerpt:** Why Venture Capitalists Won't Sign Your Non-Disclosure Agreement **Content:** Non-disclosure agreements (NDAs) can be important legal documents for the startup entrepreneur. If drafted carefully, the NDA can protect your confidential idea from being highjacked by employees and other parties. (Well, the NDA won’t *actually* stop the disclosure of confidential information, but it will make for a nice “EXHIBIT A” in your lawsuit against the leak.) Just don’t make the rookie mistake of asking a VC to sign your NDA. Asking a VC to sign a NDA is tantamount to splitting 10’s at the blackjack table. You just don’t do it. In the least, it will show that you do not understand the mechanics of how VCs operate. At worst, the VC will burn your NDA and dump your submission in the trash. If VCs maintained the practice of signing NDAs for each submission they received, only two groups would benefit: lawyers and paper companies. Lawyers would benefit because they would get to draft, edit, and negotiate each NDA. Additionally, the VCs would have to retain a team of lawyers to keep track of all the NDAs they’ve signed with the fund-seeking entrepreneurs that have come before you. Therefore, NDAs would increase a VC’s transaction costs and potentially prevent a VC from even hearing your pitch. Both reduce the already slim chances you will get funding. So what do you do if you have “the next greatest thing” that no one else can know about? Don’t tell anybody about it. Or at least be careful and selective of what you reveal. You may not have to disclose the entire schematic to pique the interest of a VC. And if you do get some interest, a VC *may* be a little more willing to sign your NDA at that point. Finally, remember that “first to market” doesn’t always make you the winner. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Venture Capital & Term Sheets --- ### [How to Make a Late Election for S-Corporation Status](https://startuplawyer.com/incorporation/how-to-make-a-late-election-for-s-corporation-status) **Published:** August 28, 2007 **Author:** Ryan Roberts **Content:** Filing for S-corporation status with the IRS requires compliance with strict time guidelines. Form 2553 must be filed by the 15th day of the third month after your corporation’s fiscal year. For most corporations, that means you must file by March 15 for the S-Corporation election to be effective for the current fiscal year. If you file Form 2553 late, your election to be an S-corporation becomes effective the ***next*** fiscal year. However, if you qualify, you can file late and make your S-corporation election retroactive using IRS Revenue Procedure 2003-43. Your corporation will qualify to file Form 2553 late if: **1.** Your corporation intended to be an S-corporation as of the intended effective date on your Form 2553; **2.** Your corporation failed to obtain S-Corporation status solely because it did not file Form 2553 on time; **3.** The original due date of your Form 2553 was less than 2 years ago; **4.** Your corporation had reasonable cause or inadvertently failed to file form 2553 on time; **5.** Your corporation has not filed tax returns for the year(s) it intends to be an S-Corporation (or your corporation filed tax returns as an S-Corporation using Form 1120S); **6.** You file Form 2553 within 6 months after the original due date (no extensions) of the first tax return for which your corporation intended to be an S-Corporation; and **7.** All of your corporation’s shareholders have not reported income in a manner inconsistent with your corporation’s intention to be an S-Corporation. If you meet these requirements and wish to file a late election for S-Corporation status, write the following language at the very top of your Form 2553: “FILED PURSUANT TO REV. PROC 2003-43” and include a statement, on a separate sheet, addressing requirement #4 above. And make sure all shareholders sign both documents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation **Tags:** S Corporation --- ### [What is a Leveraged Buyout?](https://startuplawyer.com/acquisitions/what-is-a-leveraged-buyout) **Published:** March 14, 2007 **Author:** Ryan Roberts **Content:** A leveraged buyout (“LBO”) is a strategy where someone acquires an existing company using a significant amount of borrowed funds. Typically, the assets of the company being purchased are used as collateral for the borrowed funds. This allows someone to acquire a company without having to outlay a lot of personal or business capital. Then, the purchased company’s cash flow is typically used to repay the debt. It may not seem natural to include LBO talk in this Startup Lawyer Blog, but I believe every entrepreneur should be aware of such a strategy. LBO transactions can be a way to grow your companies–or sell them. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits **Tags:** LBO --- ### [Negotiate the Basket](https://startuplawyer.com/acquisitions/negotiate-the-basket) **Published:** March 7, 2007 **Author:** Ryan Roberts **Content:** In the world of mergers and acquisitions, a “basket” is the amount of damages that must be suffered by the acquiring entity before it can recover from the seller under the [indemnity](http://en.wikipedia.org/wiki/Indemnity) provisions of the acquisition agreement. Three main issues arise in drafting the basket clause: (1) Size–Typical basket amounts are in the 1 to 2 percent range of the purchase price, but amounts up to 5 percent are not out of the ordinary. (2) Which party absorbs the amount below the basket amount? (For example, if a basket amount is $300,000 and the damage is $500,000, is the seller responsible for the entire claim or just the amount in excess of the basket, i.e., $200,000?) Typically the acquiring entity absorbs the amount up to the basket amount. (3) Are individual claims aggregated to satisfy the basket amount? (For example, let’s say the basket amount is again $300,000, but in this case four different claims add up to the $500,000 amount. Is the basket amount satisfied?) If you are the seller, you do not want any small claims aggregated and quite the opposite if you are the purchaser. All of these issues should be contemplated, negotiated and then drafted into your acquisition agreement’s indemnity clause. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits --- ### [Using a No Shop Clause in a Letter of Intent](https://startuplawyer.com/acquisitions/using-a-no-shop-clause-in-a-letter-of-intent) **Published:** February 24, 2007 **Author:** Ryan Roberts **Content:** If you are buying a business, the process becomes expensive and tedious once the letter of intent is signed. For this reason, I recommend all buyers include a “No Shop” provision in their LOI. This provision prevents the seller from going behind your back and finding other suitors while you are busy with due diligence and financing. Sellers should find this clause acceptable, but be prepared for them to counter with a time limit for the no shop. The seller doesn’t want to be tied up forever and will hope the time constraint gets you going faster so that the deal won’t fizzle. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** M&A and Exits **Tags:** LOI, no shop --- ### [Call Your First Organizational Meeting Sooner than Later](https://startuplawyer.com/incorporation/call-your-first-organizational-meeting-sooner-than-later) **Published:** December 22, 2006 **Author:** Ryan Roberts **Content:** Running a startup, you have a billion things to do. Don’t forget to add “First Organizational Meeting” to your to-do list. This meeting should take place after the issuance (or effective date) of your certificate of incorporation. But don’t wait too long, as you have some important business to handle, such as: adopting share certificates, choosing a bank, adopting a fiscal year, and arranging for necessary permits. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ### [Where to Incorporate](https://startuplawyer.com/incorporation/where-to-incorporate) **Published:** December 22, 2006 **Author:** Ryan Roberts **Content:** After you have made the decision to incorporate, the next question is “where to incoporate?” You can incorporate in your own state and be considered a domestic corporation, or you can incorporate elsewhere and do business in your own state as a foreign corporation. Generally, if most of your business will be conducted in your own state, you will likely benefit more from incorporating in your own state. However, your decision should also consider each state’s relative: (a) incorporation expenses; (b) taxes; (c) jurisdictional issues; (d) rights, powers, and liabilities of directors; and (e) the extent of the corporation’s regulation. For some, choosing where to incorporate may be a real easy decision. But for others, it may necessiate some serious thought. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) **Categories:** Incorporation & Formation --- ## Pages ### [Dallas Startup Lawyer](https://startuplawyer.com/dallas-startup-lawyer) **Published:** April 13, 2026 **Author:** Ryan Roberts **Content:** If you are looking for a **Dallas startup lawyer**, I advise founders, startups, and growth-stage companies in Dallas on formation, founder equity, startup financing, commercial contracts, and acquisitions. I’m [Ryan Roberts](https://startuplawyer.com/author), a startup-focused lawyer with more than 20 years in practice and experience handling transactions totaling more than $1 billion. My work is practical and transaction-oriented: helping companies get the legal foundation right, handle financings and contracts efficiently, and avoid problems that can create issues later in diligence, fundraising, or a sale process. I work with startups in Dallas and across the broader DFW market, including companies at the formation stage, companies raising seed or venture capital, and founder-led businesses that need practical outside legal counsel as they grow. If your company is forming, fundraising, negotiating a key contract, or preparing for diligence, you can [contact me here](https://startuplawyer.com/contact). - **Startup formation and founder setup** (entity formation, founder equity, vesting, governance) - **Startup financing** (angel financings, SAFEs, convertible notes, priced rounds, venture capital transactions) - **Startup acquisitions** (LOIs, diligence, purchase agreements, closing support) - **General corporate and commercial contracts** (option plans, employment and contractor documents, customer and vendor agreements) ## Dallas Startup Lawyer for Formation, Financing, Contracts, and Acquisitions Founders usually do not need unnecessary complexity. They need practical legal advice that helps the company keep moving. A Dallas startup attorney should be able to help with formation, founder documentation, financing terms, commercial contracts, and the legal issues that come up as a startup grows. I advise Dallas startups on matters including formation, founder equity, SAFEs, convertible notes, venture capital financings, customer contracts, SaaS agreements, contractor and employee documentation, legal cleanup ahead of diligence, and acquisition transactions. If you want a broader overview of the legal issues startups face as they grow, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). If you want to discuss a specific matter, [contact me here](https://startuplawyer.com/contact). ## Why Founders in Dallas Work With a Dallas Startup Lawyer Dallas founders often need legal counsel that can keep pace with company-building. The recurring issues are familiar: forming the company before a first major contract or outside financing, documenting founder equity correctly, putting hiring and IP paperwork in place, negotiating customer agreements, and cleaning up records before diligence begins. The objective is not to overcomplicate ordinary business decisions. It is to help keep the company organized, investable, and easier to diligence when financing or acquisition opportunities arise. That is especially important for startups that are growing quickly but do not yet have in-house legal support. Many startups in Dallas and across DFW are dealing with contracts, hiring, fundraising preparation, investor conversations, and broader growth issues at the same time. Practical startup counsel can help address those issues in the right sequence rather than after they become more expensive to fix. ## Dallas Startups and the Broader DFW Market Dallas is part of a broader DFW business market with a substantial concentration of major corporate headquarters, including 24 Fortune 500 headquarters across the region as of 2026. North Texas has also continued to attract corporate relocations and expansions, and [the Texas Stock Exchange](https://www.txse.com/) is based in Dallas. That broader business environment supports a wide range of founder-led and growth-stage companies. Some of those companies are software and SaaS businesses. Others are services, healthcare, real estate, logistics, e-commerce, or other businesses building with a mix of technology, contracts, hiring, and outside capital. For many founders in Dallas, the legal issues overlap. A company may be working through formation and founder equity issues while also negotiating customer contracts, putting hiring documents in place, preparing for a financing, or cleaning up records ahead of diligence. That is one reason practical startup counsel can be helpful early, before those issues begin to affect a financing, major contract, or sale process. ## What a Dallas Startup Lawyer Helps With ### Startup Formation and Founder Documentation Getting the company structured correctly at the outset can save time, cost, and distraction later. I help Dallas founders choose an appropriate entity structure, document founder relationships, address vesting and governance issues, and put the company on a cleaner footing for hiring, contracting, and raising capital. - entity formation and related startup formation documents - founder stock, vesting, and equity allocation issues - governance basics and early approvals - option plan and equity incentive setup where appropriate - contractor and employee paperwork - IP assignment and confidentiality basics For a more detailed overview, see [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer), [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide), and [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting). **If you are forming a startup, issuing founder equity, or cleaning up early documentation, [contact me here](https://startuplawyer.com/contact).** ### Startup Financing: SAFEs, Notes, Seed Rounds, and Venture Capital If your company is raising outside capital, the legal work should help you move efficiently while understanding what matters economically, structurally, and from a control perspective. I help Dallas startups review and negotiate financing documents, identify the important issues, and close financings with fewer surprises. - SAFE financings - convertible note financings - angel and seed-stage financings - priced equity rounds - venture capital term sheets - investor rights and closing documents - cap table and post-close cleanup For related pages, see [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer), [SAFE Lawyer](https://startuplawyer.com/safe-lawyer), [Convertible Note Lawyer](https://startuplawyer.com/convertible-note-lawyer), [Seed Funding Lawyer](https://startuplawyer.com/seed-funding-lawyer), and [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer). For more educational background, see [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) and [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide). **If you are reviewing a SAFE, convertible note, or term sheet, [contact me here](https://startuplawyer.com/contact).** ### Customer Contracts, SaaS Agreements, and Day-to-Day Commercial Work As a startup grows, contract work becomes a regular part of the business. Customer agreements, SaaS terms, MSAs, SOWs, vendor contracts, contractor arrangements, and routine commercial negotiations can have a meaningful effect on both revenue and risk. - customer agreements, MSAs, and SOWs - SaaS terms and related product agreements - vendor and partner agreements - NDAs and confidentiality agreements - contractor and consulting agreements - contract process support for repeatable negotiation For more, see [Startup Contracts Lawyer](https://startuplawyer.com/startup-contracts-lawyer) and [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide). **If your startup needs help with customer contracts, SaaS terms, or vendor agreements, [contact me here](https://startuplawyer.com/contact).** ### Ongoing Outside Counsel for Dallas Startups Some companies need help with more than one transaction. They need practical legal support across governance, hiring, equity incentives, commercial agreements, financing preparation, and broader strategic decisions as the business grows. For companies that need ongoing outside legal support, see [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) and [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). ### Startup Acquisitions and Exit Transactions An acquisition is often one of the most important transactions in a startup’s lifecycle. I support founders and companies through letters of intent, diligence, purchase agreement negotiation, closing support, and related transition issues. - LOIs and early deal-stage negotiation - acquisition diligence and diligence response support - purchase agreements and ancillary documents - closing support - pre-sale legal cleanup and exit readiness For more, see [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) and [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide). **If you received an LOI or want to prepare for acquisition diligence, [contact me here](https://startuplawyer.com/contact).** ## When Dallas Founders Usually Reach Out A lot of startup legal work is easier, faster, and less expensive when handled before the pressure increases. Dallas founders often reach out when: - they are forming the company or deciding between Texas and Delaware - founder equity or vesting has not been documented clearly - a SAFE, convertible note, or term sheet needs review - the company is signing a major customer contract - hiring is accelerating and employment or contractor paperwork needs to be tightened up - IP assignments, cap table issues, or document gaps need cleanup before fundraising - the company receives an acquisition inquiry or LOI - the founders want ongoing outside counsel as the business grows That timing matters. A startup lawyer can often add the most value before the company is reacting under investor, buyer, or customer deadlines. ## Serving Startups in Dallas and Across DFW I work with startups in **Dallas** and across the broader **DFW** market, including founders and companies in Plano, Frisco, Richardson, Irving, Addison, Arlington, Fort Worth, Southlake, and nearby areas. Many matters can be handled efficiently by phone and video, while some clients prefer in-person meetings for selected planning sessions, negotiations, or transaction milestones. If you are looking more broadly, you can also visit [Texas Startup Lawyer](https://startuplawyer.com/texas-startup-lawyer). ## Why Work With Me I’m a startup-focused lawyer with more than **20 years in practice**, and over the course of my career I have handled transactions totaling more than **$1 billion**. My practice focuses on startup legal work involving formation, founder equity, financings, commercial contracts, governance, and acquisitions. Founders generally hire me because they want practical advice, clear documents, efficient execution, and experience with the issues startups actually face. If you want to learn more about my background, visit my [Author page](https://startuplawyer.com/author). ## Dallas Startup Lawyer Frequently Asked Questions ### What does a Dallas startup lawyer do? A Dallas startup lawyer typically helps founders and startup companies with company formation, founder equity, governance, financing documents, customer and vendor contracts, hiring-related paperwork, IP assignment issues, and acquisition transactions. ### When should I hire a Dallas startup lawyer? Common trigger points include forming the company, issuing founder equity, signing a major customer agreement, raising outside capital, granting equity incentives, or receiving an LOI in a possible sale process. ### Can you help with Delaware C-Corp formation if I’m based in Texas? Yes. Many venture-backed startups form as Delaware C-Corps even when the founders or operations are in Texas. The right choice depends on the company’s fundraising goals, ownership structure, operational plans, and investor expectations. ### Do you help Dallas startups with SAFE financings? Yes. I assist startups with drafting or reviewing SAFEs, understanding valuation caps and related terms, coordinating closing mechanics, and keeping post-close records organized for later rounds. ### Can you review a startup term sheet? Yes. A focused term sheet review can help founders understand the economic terms, control terms, and negotiation points that may carry through to the full financing documents. ### Do you help with SaaS contracts and customer agreements? Yes. I help startups draft, review, and negotiate customer contracts, SaaS terms, MSAs, SOWs, vendor agreements, NDAs, and other recurring commercial contracts. ### Can you help clean up founder equity or IP issues before fundraising? Yes. Pre-financing legal cleanup often includes founder equity documentation, vesting issues, IP assignment gaps, cap table problems, and missing approvals or agreements. ### Do you handle acquisitions for Dallas startups? Yes. I support startups and founders through LOIs, diligence, purchase agreement negotiation, closing, and selected post-closing issues. ### Is there a difference between a startup lawyer and a startup attorney in Dallas? Not in any meaningful way. The more important question is whether the lawyer regularly handles startup-specific issues such as formation, financing, commercial contracts, governance, and acquisitions. ## Related Resources If you want more detailed guidance, these pages are a good next step: **Service pages** - [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) - [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) - [Startup Contracts Lawyer](https://startuplawyer.com/startup-contracts-lawyer) - [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) - [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) **Guides** - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) ## Talk to a Dallas Startup Lawyer If your Dallas startup is forming, fundraising, negotiating key contracts, cleaning up issues before diligence, or preparing for an acquisition, I would be glad to discuss the matter with you. [Contact me here](https://startuplawyer.com/contact) to discuss scope, timing, and next steps. To learn more about my background and experience advising startups, visit my [Author page](https://startuplawyer.com/author). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Contact](https://startuplawyer.com/contact) **Published:** February 12, 2019 **Author:** Ryan Roberts **Content:** If you are interested in working together, please use the form below to share a brief note about your inquiry. Please do not include confidential information. Please enable JavaScript in your browser to complete this form. Name \*First Last Name Message Email Email \* Message \* Submit![Loading](https://startuplawyer.com/wp-content/plugins/wpforms/assets/images/submit-spin.svg) ## If you’re reaching out about legal work These are usually the most relevant places to start: - [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) if you are forming the company, choosing an entity, or working through founder stock and formation documents - [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) if you are preparing to raise money or negotiating financing terms - [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) if your company needs broader ongoing legal support as it grows - [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) if you are preparing for a sale, merger, or other strategic transaction ## Other inquiries For media, speaking, podcast, or writing inquiries, you are also very welcome to reach out. ## Learn more If you are still exploring, these pages may be helpful next: - [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) for a broader overview of the startup legal journey - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) if you are deciding when it makes sense to involve counsel - [Author](https://startuplawyer.com/author) to learn more about Ryan Roberts - [About](https://startuplawyer.com/about) to learn more about Startup Lawyer - [Law firm bio](https://robertszimmerman.com/ryan-roberts/) for more background on Ryan’s practice ## Before you send anything confidential Please do not send confidential information through this site or by email before an attorney-client relationship has been formally established. Reaching out does not create an attorney-client relationship, and legal advice can be provided only after a formal engagement is in place. Thank you for visiting Startup Lawyer. If you are still deciding where to begin, the Startup Legal Roadmap and the pages above are a good place to start before you reach out. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Law Glossary](https://startuplawyer.com/startup-law-glossary) **Published:** August 28, 2009 **Author:** Ryan Roberts **Content:** This startup law glossary is a practical starting point for founders, investors, and startup teams who want a clearer understanding of startup legal terms and how they show up in formation, financing, governance, negotiations, and acquisitions. The goal is not just to define the terms, but to help readers understand how they matter in real startup decisions. Some of these terms appear directly in legal documents. Others come up more often in investor conversations, diligence calls, board discussions, and negotiations. Together, they make up much of the vocabulary founders need to follow what is happening, ask better questions, and make better sense of deals and company decisions as they move forward. These definitions are not meant to be rigid rules. Context matters. Leverage matters. Timing matters. Market practice matters. The point is to help readers get oriented faster, make better sense of what they are hearing, and make better decisions when these concepts become live. You can use this glossary to get oriented quickly, then follow the linked guides in the relevant definitions whenever you want a fuller explanation. If you want a broader overview of the startup legal journey, start with the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). ### -#- [1X](/startup-law-glossary/1x) [25102(f)](/startup-law-glossary/25102f) [25102(o)](/startup-law-glossary/25102o) [280G](/startup-law-glossary/280g) [409A](/startup-law-glossary/409a) [409A Report](/startup-law-glossary/409a-report) [4 Years with a One Year Cliff](/startup-law-glossary/4-years-with-a-one-year-cliff) [83b Election](/startup-law-glossary/83b-election) ### -A- [Accelerated Vesting](/startup-law-glossary/accelerated-vesting) [Acceleration Clause](/startup-law-glossary/acceleration-clause) [Accelerator](/startup-law-glossary/accelerator) [Accredited Investor](/startup-law-glossary/accredited-investor) [Acqui-hire](/startup-law-glossary/acqui-hire) [Acquisition](/startup-law-glossary/acquisition) [Administrator](/startup-law-glossary/administrator) [Advisory Board](/startup-law-glossary/advisory-board) [Alternative Minimum Tax (AMT)](/startup-law-glossary/alternative-minimum-tax) [Amended and Restated Certificate of Incorporation](/startup-law-glossary/amended-and-restated-certificate-of-incorporation) [Amortization](/startup-law-glossary/amortization) [Analyst](/startup-law-glossary/analyst) [Angel Financing](/startup-law-glossary/angel-financing) [Angel Group](/startup-law-glossary/angel-group) [Angel Investor](/startup-law-glossary/angel-investor) [Annual Meeting](/startup-law-glossary/annual-meeting) [Anti-Dilution](/startup-law-glossary/anti-dilution) [Arbitrage](/startup-law-glossary/arbitrage) [Articles of Incorporation](/startup-law-glossary/articles-of-incorporation) [As-Converted Basis](/startup-law-glossary/as-converted-basis) [Asset Acquisition](/startup-law-glossary/asset-acquisition) [Assignment](/startup-law-glossary/assignment) [Associate](/startup-law-glossary/associate) [At-Will Employee](/startup-law-glossary/at-will-employee) [Authorized Shares](/startup-law-glossary/authorized-shares) [Automatic Conversion](/startup-law-glossary/automatic-conversion) ### -B- [Back-Up Certificate](/startup-law-glossary/back-up-certificate) [Balance Sheet](/startup-law-glossary/balance-sheet) [Bankruptcy](/startup-law-glossary/bankruptcy) [Basis Point](/startup-law-glossary/basis-point) [Basket](/startup-law-glossary/basket) [Benchmark](/startup-law-glossary/benchmark) [Best Efforts Offering](/startup-law-glossary/best-efforts-offering) [Black-Scholes Option Pricing Model](/startup-law-glossary/black-scholes-option-pricing-model) [Blanket Lien](/startup-law-glossary/blanket-lien) [Blended Preferences](/startup-law-glossary/blended-preferences) [Blue Sky Law](/startup-law-glossary/blue-sky-law) [Board Consent](/startup-law-glossary/board-consent) [Board Observer](/startup-law-glossary/board-observer) [Board of Directors](/startup-law-glossary/board-of-directors) [Boilerplate](/startup-law-glossary/boilerplate) [Bond](/startup-law-glossary/bond) [Book Value](/startup-law-glossary/book-value) [Bootstrapping](/startup-law-glossary/bootstrapping) [Break-up Fee](/startup-law-glossary/break-up-fee) [Bridge Financing](/startup-law-glossary/bridge-financing) [Broad-based Weighted Average](/startup-law-glossary/broad-based-weighted-average) [Broker-Dealer](/startup-law-glossary/broker-dealer) [Burn Rate](/startup-law-glossary/burn-rate) [Business Plan](/startup-law-glossary/business-plan) [Buy-Sell Agreement](/startup-law-glossary/buy-sell-agreement) [Buyer Optionality](https://startuplawyer.com/startup-law-glossary/buyer-optionality) [Bylaws](/startup-law-glossary/bylaws) ### -C- [Call Right](/startup-law-glossary/call-right) [Capital Account](/startup-law-glossary/capital-account) [Capital Call](/startup-law-glossary/capital-call) [Capital Commitment](/startup-law-glossary/capital-commitment) [Capital Gains](/startup-law-glossary/capital-gains) [Capital Gains Tax](/startup-law-glossary/capital-gains-tax) [Capital Interest](/startup-law-glossary/capital-interest) [Capitalization Table](/startup-law-glossary/capitalization-table) [Capital Stock](/startup-law-glossary/capital-stock) [Cap Table Overhang](https://startuplawyer.com/startup-law-glossary/cap-table-overhang) [Carried Interest (Carry)](https://startuplawyer.com/startup-law-glossary/carried-interest-carry) [Carveout](/startup-law-glossary/carveout) [C Corporation](/startup-law-glossary/c-corporation) [Certificate of Incorporation](/startup-law-glossary/certificate-of-incorporation) [Certificate of Incumbency](/startup-law-glossary/certificate-of-incumbency) [CFIUS](https://startuplawyer.com/startup-law-glossary/cfius) [Change of Control](/startup-law-glossary/change-of-control) [Chapter 7](/startup-law-glossary/chapter-7) [Chapter 11](/startup-law-glossary/chapter-11) [Charter](/startup-law-glossary/charter) [Chief Executive Officer (CEO)](/startup-law-glossary/chief-executive-officer-ceo) [Class F Common Stock](/startup-law-glossary/class-f-common-stock) [Clawback](/startup-law-glossary/clawback) [Clean Cap Table](https://startuplawyer.com/startup-law-glossary/clean-cap-table) [Cliff](/startup-law-glossary/cliff) [Closing](/startup-law-glossary/closing) [Collateral](/startup-law-glossary/collateral) [Commercially Reasonable Efforts](https://startuplawyer.com/startup-law-glossary/commercially-reasonable-efforts) [Common Stock](/startup-law-glossary/common-stock) [Conditions Precedent](/startup-law-glossary/conditions-precedent) [Conditions Subsequent](/startup-law-glossary/conditions-subsequent) [Confidential Information](/startup-law-glossary/confidential-information) [Consideration](/startup-law-glossary/consideration) [Contingent Liability](/startup-law-glossary/contingent-liability) [Control](/startup-law-glossary/control) [Control Anxiety](https://startuplawyer.com/startup-law-glossary/control-anxiety) [Control Rights](https://startuplawyer.com/startup-law-glossary/control-rights) [Control Terms](/startup-law-glossary/control-terms) [Conversion Discount](/startup-law-glossary/conversion-discount) [Conversion Price Adjustment](/startup-law-glossary/conversion-price-adjustment) [Conversion Rights](/startup-law-glossary/conversion-rights) [Convertible Debt](/startup-law-glossary/convertible-debt) [Convertible Equity](/startup-law-glossary/convertible-equity) [Convertible Note](/startup-law-glossary/convertible-note) [Convertible Security](/startup-law-glossary/convertible-security) [Convertible Stock](/startup-law-glossary/convertible-stock) [Corporate Governance](/startup-law-glossary/corporate-governance) [Corporate Resolution](/startup-law-glossary/corporate-resolution) [Corporate VC](/startup-law-glossary/corporate-vc) [Co-Sale](/startup-law-glossary/co-sale) [Covenants](/startup-law-glossary/covenants) [Cram Down Round](/startup-law-glossary/cram-down-round) [Creditor](/startup-law-glossary/creditor) [Cross-Default](/startup-law-glossary/cross-default) [Cross-Fund Investment](/startup-law-glossary/cross-fund-investment) [Crowdfunding](https://startuplawyer.com/startup-law-glossary/crowdfunding) [Cumulative Dividend](/startup-law-glossary/cumulative-dividend) [Cumulative Voting](https://startuplawyer.com/startup-law-glossary/cumulative-voting) [Customary](https://startuplawyer.com/startup-law-glossary/customary) ### ### -D- [Data Room](/startup-law-glossary/data-room) [Date of Issue](/startup-law-glossary/date-of-issue) [Deal Certainty](https://startuplawyer.com/startup-law-glossary/deal-certainty) [Deal Fatigue](https://startuplawyer.com/startup-law-glossary/deal-fatigue) [Deal Flow](/startup-law-glossary/deal-flow) [Deal Momentum](https://startuplawyer.com/startup-law-glossary/deal-momentum) [Debenture](/startup-law-glossary/debenture) [Debt Financing](/startup-law-glossary/debt-financing) [Debt-to-Equity Ratio](/startup-law-glossary/debt-to-equity-ratio) [Deck](https://startuplawyer.com/startup-law-glossary/deck) [Default](/startup-law-glossary/default) [Delaware General Corporation Law](https://startuplawyer.com/startup-law-glossary/delaware-general-corporation-law) [Demand Registration Rights](/startup-law-glossary/demand-registration-rights) [Depreciation](/startup-law-glossary/depreciation) [Director](/startup-law-glossary/director) [Directors’ and Officers’ (D&O) Insurance](/startup-law-glossary/directors-and-officers-do-insurance) [Disclosure](/startup-law-glossary/disclosure) [Disclosure Documents](/startup-law-glossary/disclosure-documents) [Distressed Debt](/startup-law-glossary/distressed-debt) [Distribution](/startup-law-glossary/distribution) [Dividends](/startup-law-glossary/dividends) [Dodd-Frank](/startup-law-glossary/dodd-frank) [Domestic Corporation](/startup-law-glossary/domestic-corporation) [Double Trigger Acceleration](/startup-law-glossary/double-trigger-acceleration) [Down Round](/startup-law-glossary/down-round) [Drag Along Rights](/startup-law-glossary/drag-along-rights) [Drawdown](/startup-law-glossary/drawdown) [Drive-By VC](/startup-law-glossary/drive-by-vc) [Dry Powder](/startup-law-glossary/dry-powder) [Due Diligence](/startup-law-glossary/due-diligence) [Duty of Care](/startup-law-glossary/duty-of-care) [Duty of Loyalty](/startup-law-glossary/duty-of-loyalty) ### ### -E- [Early-Stage Financing](/startup-law-glossary/early-stage-financing) [Earnout](/startup-law-glossary/earnout) [EBITDA](/startup-law-glossary/ebitda) [Economic Terms](/startup-law-glossary/economic-terms) [Economics vs. Control](https://startuplawyer.com/startup-law-glossary/economics-vs-control) [Economies of Scale](/startup-law-glossary/economies-of-scale) [Effective Pre-Money](/startup-law-glossary/effective-pre-money) [EIN](/startup-law-glossary/ein) [Elevator Pitch](/startup-law-glossary/elevator-pitch) [Employee Stock Option Plan](/startup-law-glossary/employee-stock-option-plan) [Employment Agreement](/startup-law-glossary/employment-agreement) [Engagement Letter](/startup-law-glossary/engagement-letter) [Entrepreneur in Residence (EIR)](/startup-law-glossary/entrepreneur-in-residence-eir) [Equity](/startup-law-glossary/equity) [Equity Financing](/startup-law-glossary/equity-financing) [ERISA](/startup-law-glossary/erisa) [Escrow](/startup-law-glossary/escrow) [Evergreen Fund](/startup-law-glossary/evergreen-fund) [Exercise](/startup-law-glossary/exercise) [Exercise Price](/startup-law-glossary/exercise-price) [Exit Event](/startup-law-glossary/exit-event) [Exit Strategy](/startup-law-glossary/exit-strategy) ### -F- [Face Value](/startup-law-glossary/face-value) [Fair Market Value](https://startuplawyer.com/startup-law-glossary/fair-market-value) [Fairness Opinion](/startup-law-glossary/fairness-opinion) [Family Office](/startup-law-glossary/family-office) [Federal Funds Rate](/startup-law-glossary/federal-funds-rate) [Federal Reserve Act](/startup-law-glossary/federal-reserve-act) [Fiduciary Duties](/startup-law-glossary/fiduciary-duties) [Financial Accounting Standards Board](/startup-law-glossary/financial-accounting-standards-board) [Financing Out Clause](/startup-law-glossary/financing-out-clause) [Financing Window](https://startuplawyer.com/startup-law-glossary/financing-window) [Finder](/startup-law-glossary/finder) [Finder’s Fee](/startup-law-glossary/finders-fee) [FINRA](/startup-law-glossary/finra) [First Time Fund](/startup-law-glossary/first-time-fund) [Flat Round](/startup-law-glossary/flat-round) [Float](/startup-law-glossary/float) [Floatation](/startup-law-glossary/floatation) [Follow-on Financing](/startup-law-glossary/follow-on-financing) [Follow‑On Strategy](https://startuplawyer.com/startup-law-glossary/follow-on-strategy) [Foreign Corrupt Practices Act](/startup-law-glossary/foreign-corrupt-practices-act) [Foreign Qualification](/startup-law-glossary/foreign-qualification) [Form 8-K](/startup-law-glossary/form-8-k) [Form 10-K](/startup-law-glossary/form-10-k) [Form 2553](/startup-law-glossary/form-2553) [Form S-1](/startup-law-glossary/form-s-1) [Form S-2](/startup-law-glossary/form-s-2) [Form S-3](/startup-law-glossary/form-s-3) [Form S-4](/startup-law-glossary/form-s-4) [Forward Stock Split](https://startuplawyer.com/startup-law-glossary/forward-stock-split) [Founder](/startup-law-glossary/founder) [Founder Fatigue](https://startuplawyer.com/startup-law-glossary/founder-fatigue) [Founder‑Friendly](https://startuplawyer.com/startup-law-glossary/founder-friendly) [Founder Misalignment](https://startuplawyer.com/startup-law-glossary/founder-misalignment) [Founder Overhang](https://startuplawyer.com/startup-law-glossary/founder-overhang) [Founder’s Stock](/startup-law-glossary/founders-stock) [Franchise Tax](/startup-law-glossary/franchise-tax) [Free Cash Flow](/startup-law-glossary/free-cash-flow) [Freedom To Operate Opinion](/startup-law-glossary/freedom-to-operate-opinion) [Freeze Out](/startup-law-glossary/freeze-out) [Friends and Family Round](/startup-law-glossary/friends-and-family-round) [Full Ratchet](/startup-law-glossary/full-ratchet) [Fully-Diluted Basis](/startup-law-glossary/fully-diluted-basis) [Fund](/startup-law-glossary/fund) [Fund Economics](https://startuplawyer.com/startup-law-glossary/fund-economics) [Fund of Funds](/startup-law-glossary/fund-of-funds) [Funds Flow Memo](/startup-law-glossary/funds-flow-memo) ### -G- [GAAP](/startup-law-glossary/gaap) [Game Theory](/startup-law-glossary/game-theory) [GDPR](/startup-law-glossary/gdpr) [General Partner](/startup-law-glossary/general-partner) [General Solicitation](/startup-law-glossary/general-solicitation) [Going Private](/startup-law-glossary/going-private) [Golden Parachute](/startup-law-glossary/golden-parachute) [Go-Shop](/startup-law-glossary/go-shop) [Grossing Up](/startup-law-glossary/grossing-up) [Growth Stage](/startup-law-glossary/growth-stage) ### ### -H- [Haircut](/startup-law-glossary/haircut) [Hedge Fund](/startup-law-glossary/hedge-fund) [High Resolution Financing](/startup-law-glossary/high-resolution-financing) [Hockey Stick](/startup-law-glossary/hockey-stick) [Holdback](/startup-law-glossary/holdback) [Holdback Escrow](/startup-law-glossary/holdback-escrow) [Holding Company](/startup-law-glossary/holding-company) [Holding Period](/startup-law-glossary/holding-period) [Hostile Takeover](/startup-law-glossary/hostile-takeover) [Hurdle Rate](/startup-law-glossary/hurdle-rate) ### ### -I- [Illiquid](/startup-law-glossary/illiquid) [Incentive Misalignment](https://startuplawyer.com/startup-law-glossary/incentive-misalignment) [Incentive Stock Option (ISO)](/startup-law-glossary/incentive-stock-option-iso) [Incorporation](/startup-law-glossary/incorporation) [Incubator](/startup-law-glossary/incubator) [Indemnification](/startup-law-glossary/indemnification) [Indemnification Cap](/startup-law-glossary/indemnification-cap) [Indemnity](/startup-law-glossary/indemnity) [Independent Contractor](/startup-law-glossary/independent-contractor) [Independent Director](/startup-law-glossary/independent-director) [Information Rights](/startup-law-glossary/information-rights) [Initial Coin Offering (ICO)](/startup-law-glossary/initial-coin-offering) [Initial Public Offering (IPO)](/startup-law-glossary/initial-public-offering) [In-Kind Distribution](/startup-law-glossary/in-kind-distribution) [Inside Round](/startup-law-glossary/inside-round) [Insolvency](/startup-law-glossary/insolvency) [Institutional Investor](/startup-law-glossary/institutional-investor) [Integration](/startup-law-glossary/integration) [Integration Risk](https://startuplawyer.com/startup-law-glossary/integration-risk) [Intellectual Property](/startup-law-glossary/intellectual-property) [Intercreditor Agreement](https://startuplawyer.com/startup-law-glossary/intercreditor-agreement) [Interest](/startup-law-glossary/interest) [Internal Rate of Return (IRR)](/startup-law-glossary/internal-rate-of-return) [Inventions Assignment](/startup-law-glossary/inventions-assignment) [Investment Adviser](/startup-law-glossary/investment-advisor) [Investment Banker](/startup-law-glossary/investment-banker) [Investment Company Act of 1940](https://startuplawyer.com/startup-law-glossary/the-investment-company-act-of-1940) [Investor‑Friendly](https://startuplawyer.com/startup-law-glossary/investor-friendly) [Investor Rights Agreement](/startup-law-glossary/investor-rights-agreement) [Issued Shares](/startup-law-glossary/issued-shares) [Issue Price](/startup-law-glossary/issue-price) [Issuer](/startup-law-glossary/issuer) ### ### -J- [J Curve](/startup-law-glossary/j-curve) [JOBS Act](/startup-law-glossary/jobs-act) [Joinder Page](/startup-law-glossary/joinder-page) [Joint Venture](/startup-law-glossary/joint-venture) [Junior Debt](/startup-law-glossary/junior-debt) [Junk Bond](/startup-law-glossary/junk-bond) ### ### -K- [Key Employee](/startup-law-glossary/key-employee) [Key Person Clause](/startup-law-glossary/key-person-clause) [Key Person Insurance](/startup-law-glossary/key-person-insurance) [KISS](/startup-law-glossary/kiss) ### ### -L- [Lapsed Option](/startup-law-glossary/lapsed-option) [Last In, First Out (LIFO)](/startup-law-glossary/last-in-first-out-lifo) [Later Stage Financing](/startup-law-glossary/later-stage-financing) [Lead Investor](/startup-law-glossary/lead-investor) [Legal Opinion](/startup-law-glossary/legal-opinion) [Letter of Intent](/startup-law-glossary/letter-of-intent) [Leverage (Ability)](https://startuplawyer.com/startup-law-glossary/leverage-ability) [Leverage (Debt)](https://startuplawyer.com/startup-law-glossary/leverage-debt) [Leveraged Buyout (LBO)](/startup-law-glossary/leveraged-buyout) [License](/startup-law-glossary/license) [Lifestyle Company](/startup-law-glossary/lifestyle-company) [Lifting A Leg](/startup-law-glossary/lifting-a-leg) [Light Preferred](/startup-law-glossary/light-preferred) [Limited Liability Company (LLC)](/startup-law-glossary/limited-liability-company) [Limited Liability Partnership (LLP)](/startup-law-glossary/limited-liability-partnership) [Limited Partners](/startup-law-glossary/limited-partners) [Limited Partnership](/startup-law-glossary/limited-partnership) [Liquidation](/startup-law-glossary/liquidation) [Liquidation Event](/startup-law-glossary/liquidation-event) [Liquidation Preference](/startup-law-glossary/liquidation-preference) [Liquidity Event](/startup-law-glossary/liquidity-event) [Lock-up Period](/startup-law-glossary/lock-up-period) ### ### -M- [Major Investor](/startup-law-glossary/major-investor) [Majority Shareholder](/startup-law-glossary/majority-shareholder) [Management Buyout](/startup-law-glossary/management-buyout) [Management Carveout Plan](/startup-law-glossary/management-carveout-plan) [Management Fee](/startup-law-glossary/management-fee) [Management Rights](/startup-law-glossary/management-rights) [Mandatory Redemption](/startup-law-glossary/mandatory-redemption) [Marked to Market](https://startuplawyer.com/startup-law-glossary/marked-to-market) [Market (as used by VCs)](https://startuplawyer.com/startup-law-glossary/market-as-used-by-vcs) [Market Standard](https://startuplawyer.com/startup-law-glossary/market-standard) [Market Terms](/startup-law-glossary/market-terms) [Material Adverse Change Clause](/startup-law-glossary/material-adverse-change-clause) [Materiality Qualifier](/startup-law-glossary/materiality-qualifiers) [Materiality Scrape](/startup-law-glossary/materiality-scrape) [Mentors](/startup-law-glossary/mentors) [Merger](/startup-law-glossary/merger) [Mergers and Acquisitions (M&A)](/startup-law-glossary/mergers-and-acquisitions) [Mezzanine Financing](/startup-law-glossary/mezzanine-financing) [Mezzanine Level](/startup-law-glossary/mezzanine-level) [Micro VC](/startup-law-glossary/micro-vc) [Milestones](/startup-law-glossary/milestones) [Most Favored Nation Clause](https://startuplawyer.com/startup-law-glossary/most-favored-nation-clause) ### ### -N- [Narrow-Based Weighted Average](/startup-law-glossary/narrow-based-weighted-average) [National Venture Capital Association](/startup-law-glossary/national-venture-capital-association) [NDA](/startup-law-glossary/nda) [Negative Control](https://startuplawyer.com/startup-law-glossary/negative-control) [Negotiation Leverage](https://startuplawyer.com/startup-law-glossary/negotiation-leverage) [Newco](/startup-law-glossary/newco) [No-Action Letter](/startup-law-glossary/no-action-letter) [No-Par Value Stock](/startup-law-glossary/no-par-value-stock) [No-Shop Clause](/startup-law-glossary/no-shop-clause) [Non-Accredited Investor](/startup-law-glossary/non-accredited-investor) [Non-Compete](/startup-law-glossary/non-compete) [Non-Cumulative Dividends](/startup-law-glossary/non-cumulative-dividends) [Non-Participating](/startup-law-glossary/non-participating) [Non-Qualified Stock Option (NSO)](/startup-law-glossary/non-qualified-stock-option) [Non-Solicitation](/startup-law-glossary/non-solicitation) [Non-Voting Stock](/startup-law-glossary/non-voting-stock) [NVCA Docs](https://startuplawyer.com/startup-law-glossary/nvca-docs) ### ### -O- [Offering Documents](/startup-law-glossary/offering-documents) [Officer](/startup-law-glossary/officer) [Operating Agreement](https://startuplawyer.com/startup-law-glossary/operating-agreement) [Operating Expenses](/startup-law-glossary/operating-expenses) [Optics](/startup-law-glossary/optics) [Option Pool](/startup-law-glossary/option-pool) [Option Pool Overhang](https://startuplawyer.com/startup-law-glossary/option-pool-overhang) [Ordinary Income Tax](/startup-law-glossary/ordinary-income-tax) [Outstanding Shares](/startup-law-glossary/outstanding-shares) [Overhang](/startup-law-glossary/overhang) [Oversubscription](/startup-law-glossary/oversubscription) [Oversubscription Privilege](/startup-law-glossary/oversubscription-privilege) ### ### -P- [Paid-In Capital](/startup-law-glossary/paid-in-capital) [Par Value](/startup-law-glossary/par-value) [Parachute Payment](/startup-law-glossary/parachute-payment) [Pari Passu](/startup-law-glossary/pari-passu) [Participating Preferred Stock](/startup-law-glossary/participating-preferred-stock) [Participation Rights](/startup-law-glossary/participation-rights) [Partnership](/startup-law-glossary/partnership) [Pass Through Entity](/startup-law-glossary/pass-through-entity) [Patent](/startup-law-glossary/patent) [Pay to Play](/startup-law-glossary/pay-to-play) [Payment in Kind (PIK)](/startup-law-glossary/payment-in-kind) [Penny Warrant](https://startuplawyer.com/startup-law-glossary/penny-warrant) [Perpetual Warrant](/startup-law-glossary/perpetual-warrant) [Personal Guaranty](https://startuplawyer.com/startup-law-glossary/personal-guaranty) [Piggy-Back Rights](/startup-law-glossary/piggy-back-rights) [Placement Agent](/startup-law-glossary/placement-agent) [Poison Pill](/startup-law-glossary/poison-pill) [Portfolio Company](/startup-law-glossary/portfolio-company) [Portfolio Construction](https://startuplawyer.com/startup-law-glossary/portfolio-construction) [Post-Money Valuation](/startup-law-glossary/post-money-valuation) [Pre-Money Shares](/startup-law-glossary/pre-money-shares) [Pre-Money Valuation](/startup-law-glossary/pre-money-valuation) [Preemptive Rights](/startup-law-glossary/preemptive-rights) [Preferred Return](/startup-law-glossary/preferred-return) [Preferred Stock](/startup-law-glossary/preferred-stock) [Prepayment](/startup-law-glossary/prepayment) [Price Cap](/startup-law-glossary/price-cap) [Price Per Share](/startup-law-glossary/price-per-share) [Privacy Policy](/startup-law-glossary/privacy-policy) [Private Company](/startup-law-glossary/private-company) [Private Equity](/startup-law-glossary/private-equity) [Private Investment in Public Equities](/startup-law-glossary/private-investment-in-public-equities) [Private Offering](/startup-law-glossary/private-offering) [Private Placement](/startup-law-glossary/private-placement) [Private Placement Memorandum](/startup-law-glossary/private-placement-memorandum) [Process Risk](https://startuplawyer.com/startup-law-glossary/process-risk) [Pro Forma](/startup-law-glossary/pro-forma) [Pro Rata](/startup-law-glossary/pro-rata) [Profits Interest](/startup-law-glossary/profits-interest) [Promissory Note](/startup-law-glossary/promissory-note) [Promote](/startup-law-glossary/promote) [Proprietary Rights](/startup-law-glossary/proprietary-rights) [Prospectus](/startup-law-glossary/prospectus) [Protective Provisions](/startup-law-glossary/protective-provisions) [Proxy Voting](/startup-law-glossary/proxy-voting) [Public Benefit Corporation](/startup-law-glossary/public-benefit-corporation) [Public Benefit LLC](/startup-law-glossary/public-benefit-llc) [Public Company](/startup-law-glossary/public-company) [Public Offering](/startup-law-glossary/public-offering) [Pump and Dump](/startup-law-glossary/pump-and-dump) [Purchase Agreement](/startup-law-glossary/purchase-agreement) [Put Right](/startup-law-glossary/put-right) ### ### -Q- [Qualified Financing](/startup-law-glossary/qualified-financing) [Qualified Small Business Stock (QSBS)](https://startuplawyer.com/startup-law-glossary/qualified-small-business-stock) [Quasi-Public Corporation](/startup-law-glossary/quasi-public-corporation) [Quiet Period](/startup-law-glossary/quiet-period) [Quorum](/startup-law-glossary/quorum) ### ### -R- [Ratchet](/startup-law-glossary/ratchet) [Reasonable (Deal Context)](https://startuplawyer.com/startup-law-glossary/reasonable-deal-context) [Recapitalization](/startup-law-glossary/recapitalization) [Redemption Right](/startup-law-glossary/redemption-right) [Redline](/startup-law-glossary/redline) [Registered Agent](/startup-law-glossary/registered-agent) [Registered Offering](/startup-law-glossary/registered-offering) [Registrable Securities](/startup-law-glossary/registrable-securities) [Registration](/startup-law-glossary/registration) [Registration Rights](/startup-law-glossary/registration-rights) [Regulation A](/startup-law-glossary/regulation-a) [Regulation A+](/startup-law-glossary/regulation-a-2) [Regulation Crowdfunding](/startup-law-glossary/regulation-crowdfunding) [Regulation D](/startup-law-glossary/regulation-d) [Regulation S](/startup-law-glossary/regulation-s) [Reincorporation Merger](/startup-law-glossary/reincorporation-merger) [Representations and Warranties](/startup-law-glossary/representations-and-warranties) [Repurchase Option](/startup-law-glossary/repurchase-option) [Reserved Shares](/startup-law-glossary/reserved-shares) [Reserves](https://startuplawyer.com/startup-law-glossary/reserves) [Residuals Clause](/startup-law-glossary/residuals-clause) [Restricted Stock](/startup-law-glossary/restricted-stock) [Restricted Stock Purchase Agreement](/startup-law-glossary/restricted-stock-purchase-agreement) [Restriction on Sales](/startup-law-glossary/restriction-on-sales) [Return on Investment](/startup-law-glossary/return-on-investment) [Reverse Break Up Fee](/startup-law-glossary/reverse-break-up-fee) [Reverse Dilution](/startup-law-glossary/reverse-dilution) [Reverse Engineer](/startup-law-glossary/reverse-engineer) [Reverse Stock Split](/startup-law-glossary/reverse-stock-split) [Reverse Vesting](/startup-law-glossary/reverse-vesting) [Revlon Duties](/startup-law-glossary/revlon-duties) [Right of First Offer](/startup-law-glossary/right-of-first-offer) [Right of First Refusal](/startup-law-glossary/right-of-first-refusal) [Right of First Refusal and Co-Sale Agreement](/startup-law-glossary/right-of-first-refusal-and-co-sale-agreement) [Right of Rescission](/startup-law-glossary/right-of-rescission) [Rights Offering](/startup-law-glossary/rights-offering) [Risk Tolerance](/startup-law-glossary/risk-tolerance) [Road Show](/startup-law-glossary/road-show) [Rolling Close](/startup-law-glossary/rolling-close) [Rollup](/startup-law-glossary/rollup) [Round](/startup-law-glossary/round) [Royalties](/startup-law-glossary/royalties) [Rule 144](/startup-law-glossary/rule-144) [Rule 145](/startup-law-glossary/rule-145) [Rule 501](/startup-law-glossary/rule-501) [Rule 502](/startup-law-glossary/rule-502) [Rule 503](/startup-law-glossary/rule-503) [Rule 504](/startup-law-glossary/rule-504) [Rule 505](/startup-law-glossary/rule-505) [Rule 506](/startup-law-glossary/rule-506) [Rule 701](/startup-law-glossary/rule-701) [Runway](/startup-law-glossary/runway) [Runway vs. Leverage](https://startuplawyer.com/startup-law-glossary/runway-vs-leverage) ### ### -S- [S-Corporation](/startup-law-glossary/s-corporation) [SAFE](/startup-law-glossary/safe) [Safe Harbor](/startup-law-glossary/safe-harbor) [SAFT](/startup-law-glossary/saft) [Sarbanes-Oxley Act of 2002](/startup-law-glossary/sarbanes-oxley-act-of-2002) [Scalability](/startup-law-glossary/scalability) [Scale Up](/startup-law-glossary/scale-up) [Search Fund](/startup-law-glossary/search-fund) [Second Bite of the Apple](https://startuplawyer.com/startup-law-glossary/second-bite-of-the-apple) [Secondary Buy-Out](/startup-law-glossary/secondary-buy-out) [Secondary Market](/startup-law-glossary/secondary-market) [Secondary Sale](/startup-law-glossary/secondary-sale) [Secured Debt](/startup-law-glossary/secured-debt) [Securities Act of 1933](/startup-law-glossary/securities-act-of-1933) [Securities and Exchange Commission (SEC)](/startup-law-glossary/securities-and-exchange-commission) [Securities Exchange Act of 1934](/startup-law-glossary/securities-exchange-act-of-1934) [Security](/startup-law-glossary/security) [Security Interest](/startup-law-glossary/security-interest) [Seed Capital](/startup-law-glossary/seed-capital) [Seed Preferred](/startup-law-glossary/seed-preferred) [Seed Stage](/startup-law-glossary/seed-stage) [Senior Debt](/startup-law-glossary/senior-debt) [Senior Securities](/startup-law-glossary/senior-securities) [Series A Preferred Stock](/startup-law-glossary/series-a-preferred-stock) [Series A Round](/startup-law-glossary/series-a-round) [Series AA Round](/startup-law-glossary/series-aa-round) [Series B Round](/startup-law-glossary/series-b-round) [Series FF Stock](/startup-law-glossary/series-ff-stock) [Series Pre-Seed](https://startuplawyer.com/startup-law-glossary/series-pre-seed) [Series Seed Financing](/startup-law-glossary/series-seed-financing) [Shareholders’ Agreement](/startup-law-glossary/shareholders-agreement) [Shell Corporation](/startup-law-glossary/shell-corporation) [Side Letters](/startup-law-glossary/side-letters) [Signaling Risk](https://startuplawyer.com/startup-law-glossary/signaling-risk) [Single Trigger Acceleration](/startup-law-glossary/single-trigger-acceleration) [Sliding Fee Scale](/startup-law-glossary/sliding-fee-scale) [Small Business Administration](/startup-law-glossary/small-business-administration) [Small Business Innovation Research Program](/startup-law-glossary/small-business-innovation-research-program) [Small Business Investment Company](/startup-law-glossary/small-business-investment-company) [Soft Control vs. Hard Control](https://startuplawyer.com/startup-law-glossary/soft-control-vs-hard-control) [Sole Proprietor](/startup-law-glossary/sole-proprietor) [Special Purpose Acquisition Company](/startup-law-glossary/special-purpose-acquisition-company) [Special Purpose Vehicle](/startup-law-glossary/special-purpose-vehicle) [Spinoff](/startup-law-glossary/spinoff) [Stacked Preference](/startup-law-glossary/stacked-preference) [Staggered Board](/startup-law-glossary/staggered-board) [Stalking Horse](/startup-law-glossary/stalking-horse) [Startup](/startup-law-glossary/startup) [Startup Lawyer](https://startuplawyer.com/startup-law-glossary/startup-lawyer) [Stock Options](/startup-law-glossary/stock-options) [Stock Plan](/startup-law-glossary/stock-plan) [Stock Purchase Agreement](/startup-law-glossary/stock-purchase-agreement) [Stock Split](/startup-law-glossary/stock-split) [Stockholders](/startup-law-glossary/stockholders) [Stockholders’ Consent](/startup-law-glossary/stockholders-consent) [Strategic Investment](/startup-law-glossary/strategic-investment) [Strike Price](/startup-law-glossary/strike-price) [Subordinated Debt](/startup-law-glossary/subordinated-debt) [Subscription Agreement](/startup-law-glossary/subscription-agreement) [Subsidiary](/startup-law-glossary/subsidiary) [Super Angel](/startup-law-glossary/super-angel) [Super Pro Rata Rights](/startup-law-glossary/super-pro-rata-rights) [Supermajority Voting](/startup-law-glossary/supermajority-voting) [Sweat Equity](/startup-law-glossary/sweat-equity) [Syndication](/startup-law-glossary/syndication) ### ### -T- [Tag Along Rights](/startup-law-glossary/tag-along-rights) [Takedown](/startup-law-glossary/takedown) [Takeover](/startup-law-glossary/takeover) [Tax-Free Reorganization](/startup-law-glossary/tax-free-reorganization) [Taxable Event](/startup-law-glossary/taxable-event) [Technology Transfer Agreement](/startup-law-glossary/technology-transfer-agreement) [Ten Bagger](/startup-law-glossary/ten-bagger) [Tender Offer](/startup-law-glossary/tender-offer) [Term Sheet](/startup-law-glossary/term-sheet) [Terms of Service](/startup-law-glossary/terms-of-service) [Time Value of Money](/startup-law-glossary/time-value-of-money) [Timing Risk](https://startuplawyer.com/startup-law-glossary/timing-risk) [Tokens](/startup-law-glossary/tokens) [Trade Secret](/startup-law-glossary/trade-secret) [Tranche](/startup-law-glossary/tranche) ### ### -U- [UCC](/startup-law-glossary/ucc) [UCC Financing Statement](/startup-law-glossary/ucc-financing-statement) [Underwater](/startup-law-glossary/underwater) [Underwriter](/startup-law-glossary/underwriter) [Unrelated Business Taxable Income](/startup-law-glossary/unrelated-business-taxable-income) [Unsecured Debt](/startup-law-glossary/unsecured-debt) [Utility Token](/startup-law-glossary/utility-token) ### ### -V- [Valuation](/startup-law-glossary/valuation) [VC Fund](/startup-law-glossary/vc-fund) [Venture Capital](/startup-law-glossary/venture-capital) [Venture Capital Financing](/startup-law-glossary/venture-capital-financing) [Venture Capitalist (VC)](/startup-law-glossary/venture-capitalist-vc) [Venture Capital Limited Partnership](/startup-law-glossary/venture-capital-limited-partnership) [Venture Debt](/startup-law-glossary/venture-debt) [Venture-Backed Startup](/startup-law-glossary/venture-backed-startup) [Vested](/startup-law-glossary/vested) [Vesting](/startup-law-glossary/vesting) [Vesting Schedule](/startup-law-glossary/vesting-schedule) [Vintage Year](/startup-law-glossary/vintage-year) [Voluntary Redemption](/startup-law-glossary/voluntary-redemption) [Voting Agreement](/startup-law-glossary/voting-agreement) [Voting Rights](/startup-law-glossary/voting-rights) ### ### -W- [Warrant](/startup-law-glossary/warrant) [Washout Round](/startup-law-glossary/washout-round) [Weighted Average Anti-Dilution](/startup-law-glossary/weighted-average-anti-dilution) [White Knight](/startup-law-glossary/white-knight) [White Label](/startup-law-glossary/white-label) [Working Capital Adjustment](/startup-law-glossary/working-capital-adjustment) [Workout Agreement](/startup-law-glossary/workout-agreement) ### ### -Z- [Zombie Equity](https://startuplawyer.com/startup-law-glossary/zombie-equity) [Zone of Insolvency](/startup-law-glossary/zone-of-insolvency) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Lawyer FAQs](https://startuplawyer.com/faq) **Published:** March 28, 2026 **Author:** Ryan Roberts **Content:** - [About Startup Lawyer](#aioseo-about-startup-lawyer-1) - [How to use the site](#aioseo-how-to-use-the-site-22) - [Editorial approach](#aioseo-editorial-approach-30) - [Legal guidance and use of content](#aioseo-legal-guidance-and-use-of-content-37) - [Where to start by situation](#aioseo-where-to-start-by-situation-42) - [Need more specific guidance?](#aioseo-need-more-specific-guidance-58) ## About Startup Lawyer ### What is Startup Lawyer? Startup Lawyer is a practical resource for founders, operators, investors, and advisors who want a clearer understanding of the legal issues that shape startup companies. It focuses on how startup law operates in real decisions, not just how it appears in documents. ### Who writes Startup Lawyer? Startup Lawyer is written by Ryan Roberts. If you want to learn more about his background and experience, visit the [Author page](https://startuplawyer.com/author). If you want more context about the site and what it is designed to cover, see the [About page](https://startuplawyer.com/about). ### Who is Startup Lawyer for? Startup Lawyer is written primarily for founders, co-founders, early operators, venture-backed company teams, angel investors, venture capital investors, and advisors working with high-growth companies. If you are building, financing, or governing a startup, the site is designed for you. ### What topics does Startup Lawyer cover? Startup Lawyer covers the core legal issues that arise throughout the life of a startup, including the following cornerstone topics: - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) These cornerstone guides are the best place to start if you want a deeper explanation of a specific issue or want to move through the startup lifecycle more intentionally. ## How to use the site ### How should I use Startup Lawyer? You can use Startup Lawyer in two ways. For a broad overview, start with the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) to see the major legal stages in the life of a startup. If you are focused on a specific issue, go directly to the relevant cornerstone guide. The site also includes the [Startup Law Glossary](https://startuplawyer.com/startup-law-glossary) for terminology, the [About](https://startuplawyer.com/about) and [Author](https://startuplawyer.com/author) pages for context, and the [Contact page](https://startuplawyer.com/contact) if your issue is already live or time-sensitive. ### Where should startup founders start on Startup Lawyer? If you are not sure where to begin, start with the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) for a stage-by-stage overview. If you already know the issue you are facing, the best next step is usually the cornerstone guide that matches it most closely. ### Why does Startup Lawyer have a glossary? The [Startup Law Glossary](https://startuplawyer.com/startup-law-glossary) exists because startup law can be difficult to navigate when key terms are used loosely in meetings, decks, and documents. It gives founders a reliable way to check terminology quickly and then move into the articles where those terms matter in practice. ## Editorial approach ### Why is Startup Lawyer so direct? Startup Lawyer is intentionally direct because startup legal issues often involve incentives, leverage, tradeoffs, and consequences that are easier to manage when they are described clearly. The aim is not alarm. It is better judgment. ### Why does Startup Lawyer discuss psychology and decision-making? Startup Lawyer discusses psychology and decision-making because many startup legal problems are driven by human behavior, not just legal rules. Misaligned expectations, avoided conversations, and rushed decisions often shape outcomes as much as the documents themselves. ### Does Startup Lawyer favor founders or investors? Startup Lawyer does not aim to favor either side. It aims to help readers understand how terms work, why they are requested, when they are market, and where meaningful negotiation usually exists. Founders usually make better decisions when they understand both sides of the table. ## Legal guidance and use of content ### Is Startup Lawyer legal advice? No. Startup Lawyer is educational and informational. It is designed to help readers understand startup law in practice so they can ask better questions, spot issues earlier, and work more effectively with their own counsel. Reading the site does not create an attorney-client relationship. ### Can I share or reference Startup Lawyer content? Yes. Founders often share Startup Lawyer articles with co-founders, boards, advisors, and internal teams to improve alignment before an important decision or conversation. ## Where to start by situation ### Where should I start if I am forming the company? Start with [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide). If you are making decisions about entity choice, founder stock, vesting, or formation documents, that guide is usually the clearest place to begin. If you need help with the formation work itself, you can also learn more on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. ### Where should I start if I am hiring my first employees or contractors? Start with [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide). That is usually the best place to begin if you are thinking about worker classification, equity grants, confidentiality, invention assignment, or onboarding documents. If hiring is becoming a broader ongoing legal-process issue, the [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page may also be useful. And if you are actively negotiating consulting agreements or other hiring-related documents, you can also learn more on the [Startup Contracts Lawyer](https://startuplawyer.com/startup-contracts-lawyer) page. ### Where should I start if I am raising money now? Start with the [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) and the [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide). Then focus on dilution mechanics, option pool dynamics, investor control terms, board composition, and consent rights. If you are preparing for a financing round, the [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page is the broadest next step. If you are working through SAFEs, notes, or a seed round specifically, the [Seed Funding Lawyer](https://startuplawyer.com/seed-funding-lawyer) page may be especially helpful. And if you are negotiating a priced round or preferred stock financing, you can also learn more on the [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page. ### Where should I start if I am thinking about selling the company? Start with [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide), then focus on letters of intent, exclusivity, diligence expectations, indemnity structure, earnouts, escrows, and rollover equity. Many acquisition problems are really process problems, and founders are often better served when they understand the sequence early. If you are actively preparing for a sale or dealing with a live transaction, the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page is the most relevant next step. ### When should I talk to a startup lawyer? Legal advice is often most useful before a financing, significant commercial arrangement, key hire, governance issue, intellectual property concern, or acquisition process becomes time-sensitive. In many cases, early guidance leads to better structure, cleaner execution, and fewer avoidable problems later. ## Need more specific guidance? If you are still exploring, the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) and the cornerstone guides linked above are the best place to start. If you are working through company setup and founder documents, the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page may be the best next step. If fundraising is on the horizon, the [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page is often the right place to go next. If your company needs broader ongoing legal support, the [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page may also be helpful. And if you are preparing for a sale or other strategic transaction, the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page is the most relevant next step. If you are dealing with a live issue and want to talk it through in more detail, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Author](https://startuplawyer.com/author) **Published:** April 11, 2026 **Author:** Ryan Roberts **Content:** Ryan Roberts is a startup and venture capital lawyer who writes Startup Lawyer. For more than twenty years, he has advised founders and investors on the legal issues that shape startup companies, from formation and founder equity through financing, governance, commercial relationships, and exit transactions. ## What Ryan Roberts advises on Ryan advises startup companies and venture capital investors across the startup lifecycle. His practice spans foundational startup work and more negotiated transactions, with an emphasis on practical execution, aligned incentives, and the legal infrastructure that helps companies scale without unnecessary friction. - [Startup incorporation and formation](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Founder equity, vesting, and cap table issues](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Hiring, equity compensation, and team documentation](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [Commercial contracts and operating discipline](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Seed funding, SAFEs, and convertible notes](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture capital financings and term sheets](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [Board governance and approval processes](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [Intellectual property and ownership issues](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [Acquisitions, diligence, and exit planning](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) Because he represents both companies and investors, Ryan brings a practical view of how startup terms are negotiated, how market positions develop, and how early legal decisions affect later financing, governance, and strategic outcomes. If you are looking for help with early company setup, the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page is a good place to start. If your company needs broader ongoing legal support as it grows, the [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page is also a useful next step. Ryan regularly advises startups on financings, including SAFEs, convertible notes, seed rounds, and venture financings. If you are preparing to raise capital, the [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page is a good next step. If you are working through a seed round, the [Seed Funding Lawyer](https://startuplawyer.com/seed-funding-lawyer) page may be especially helpful. And if you are negotiating a priced round or venture capital term sheet, the [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page may also be useful. ## Experience and background Ryan is a partner at Roberts Zimmerman PLLC and has spent two decades advising founders, startup leadership teams, and venture capital investors. His work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. Across that work, he has advised on more than $1 billion in transactions. That breadth matters because financing transactions are not all negotiated the same way. Different investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. Ryan received his J.D. from the University of California College of the Law, San Francisco, where he was on Law Review. Before law school, he earned an M.A. in Economics and a B.A. in Economics and Political Science from the University of Southern California. He also clerked with the U.S. Securities and Exchange Commission, Division of Enforcement, and was recognized as a Texas Super Lawyers Rising Star from 2013 through 2018. ## Author of *Acceleration* Ryan is the author of *[Acceleration: What All Entrepreneurs Must Know About Startup Law](https://www.amazon.com/Acceleration-What-Entrepreneurs-about-Startup/dp/1544513933)*, a book focused on the legal concepts, deal terms, and structural decisions founders encounter as they build and finance startup companies. It reflects the same practical orientation as Startup Lawyer: clear explanations, commercial context, and close attention to the decisions that have lasting consequences. If you are preparing for a sale or other strategic transaction, you can also learn more on the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page. ## How Ryan approaches startup law on Startup Lawyer On Startup Lawyer, Ryan writes for founders, operators, investors, and advisors who want startup law explained with clarity and precision. The site emphasizes practical, founder-oriented analysis rather than academic or generic legal commentary, with particular attention to how legal structure affects fundraising, governance, incentives, negotiation, and execution over time. If you want a broader overview of the site, visit the [About](https://startuplawyer.com/about) page. If you want a full-lifecycle overview of startup legal issues, start with the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). The site also includes [FAQs](https://startuplawyer.com/faq) and the [Startup Law Glossary](https://startuplawyer.com/startup-law-glossary) for readers who want quicker answers or help with terminology. ## Key startup law topics on Startup Lawyer Startup Lawyer is organized around the legal issues that recur throughout the life of a startup. The main content hubs cover incorporation, equity and vesting, hiring, commercial contracts, seed funding, venture capital, intellectual property, board governance, acquisitions, and working with startup counsel. If you are looking for the clearest starting point, the guides below are usually the most useful place to begin. If you are not sure where to begin, these are usually the most helpful places to start: - [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## When it makes sense to get in touch Many startup legal issues are easier and less expensive to address before they become urgent. Legal help is often most useful before a formation decision, financing, key hire, major contract, governance issue, intellectual property problem, or acquisition process turns into cleanup under deadline. If you are still exploring, the roadmap and cornerstone guides are the best place to start. If you are dealing with a live issue and would like to talk it through in more detail, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are working through company setup and founder documents, the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page may be the best next step. If fundraising is on the horizon, the [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page is often the right place to go next. If your company needs broader ongoing legal support, the [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page explains how Ryan typically works with growing companies. And if you are preparing for a sale or other strategic transaction, the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page may be a helpful next step. Content on Startup Lawyer is provided for general informational purposes and should not be taken as legal advice for any specific situation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [About Startup Lawyer](https://startuplawyer.com/about) **Published:** February 12, 2019 **Author:** Ryan Roberts **Content:** Startup Lawyer was launched in 2006 to help founders, investors, and startup operators better understand how startup law works in the real world. It is a startup law resource for people building, financing, advising, and investing in high-growth companies who want clearer, more practical guidance on the legal issues that shape a startup from formation through financing and exit. The site focuses on the decisions that matter most across formation, founder ownership, hiring, contracts, fundraising, governance, intellectual property, and acquisitions so readers can better understand what matters at each stage and what to do next. ## What Startup Lawyer covers for founders and investors Startup Lawyer is organized around the legal questions that recur throughout the life of a startup, from incorporation and founder equity to fundraising, governance, contracts, intellectual property, and exit. These are the site’s main topic hubs. The goal is practical, founder-oriented analysis that helps readers make better decisions, not generic legal commentary that sounds useful without helping much. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) The site also addresses adjacent questions about founder judgment, startup strategy, and the decisions that usually create avoidable legal friction as companies grow. ## Who Startup Lawyer is for Startup Lawyer is written for founders, co-founders, startup leadership teams, early operators, angel investors, venture capital investors, advisors, accelerators, and others working with high-growth companies. If you are building, financing, advising, or investing in a startup, the site is meant to help you navigate the legal side of growth with more clarity, better context, and less noise. ## How founders and investors can use Startup Lawyer You can use the site in two ways. If you want a broad overview of the startup journey, start with the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). If you are focused on a specific issue, go directly to the cornerstone guides covering formation, equity, hiring, contracts, seed funding, venture capital, governance, intellectual property, acquisitions, and working with startup counsel. If you are not sure where to begin, these are usually the most helpful places to start: - [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap) - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) The site also includes [FAQs](https://startuplawyer.com/faq) and the [Startup Law Glossary](https://startuplawyer.com/startup-law-glossary) to help readers move from broad questions to more specific legal issues. If a topic is already live or time-sensitive, the relevant service page or the [Contact page](https://startuplawyer.com/contact) may be the better next step. ## About Ryan Roberts Startup Lawyer is written by [Ryan Roberts](https://startuplawyer.com/author), a startup and venture capital attorney and partner at [Roberts Zimmerman PLLC](https://robertszimmerman.com/). He advises startup companies and venture capital investors across the startup lifecycle, including formation, financing, governance, commercial relationships, and exit transactions. Ryan has spent two decades advising founders and investors through the legal and strategic issues that arise as startup companies grow. If you are looking for help with early company setup, the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page is a good place to start. If you are preparing for fundraising, you can also read more on the [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. If your company needs broader ongoing legal support as it grows, the [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page explains how he typically works with growing companies. If you are preparing for a sale or other strategic transaction, the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page may also be a helpful next step. He is also the author of *[Acceleration: What All Entrepreneurs Must Know About Startup Law](https://www.amazon.com/Acceleration-What-Entrepreneurs-about-Startup/dp/1544513933)*, which expands on many of the themes discussed on Startup Lawyer through practical examples and recurring startup patterns. ## When startup legal counsel is most useful Many startup legal issues are easier and less expensive to address before they become urgent. Legal help is often most useful before a formation decision, financing, key hire, major contract, governance issue, intellectual property problem, or acquisition process turns into cleanup under deadline. If you are still exploring, the roadmap and cornerstone guides are the best place to start. If you are dealing with a live issue and want to talk it through in more detail, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are working through company setup and founder documents, the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page may be the best next step. If fundraising is on the horizon, you can also read more on the [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. If your company needs broader ongoing legal support, the [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page explains how Ryan typically works with growing companies. And if you are preparing for a sale or other strategic transaction, the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page may also be helpful. Content on Startup Lawyer is provided for general informational purposes and should not be taken as legal advice for any specific situation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Legal Roadmap For Founders](https://startuplawyer.com/startup-lawyer-roadmap) **Published:** March 28, 2026 **Author:** Ryan Roberts **Content:** - [How to use Startup Lawyer without feeling overwhelmed](#aioseo-welcome-heres-how-to-use-startup-lawyer-without-feeling-overwhelmed-1) - [Who this startup legal roadmap is for](#aioseo-who-this-startup-legal-roadmap-is-for-6) - [How to use this startup legal roadmap](#aioseo-how-to-use-this-startup-legal-roadmap-8) - [Core startup legal stages from formation to exit](#aioseo-core-startup-legal-stages-from-formation-to-exit-11) - [1. Form the company properly](#aioseo-1-form-the-company-properly-12) - [2. Protect ownership and document key startup relationships](#aioseo-2-protect-ownership-and-document-key-startup-relationships-20) - [3. Build the startup team with the right legal structure](#aioseo-3-build-the-startup-team-with-the-right-legal-structure-28) - [4. Raise startup capital with a clear understanding of terms](#aioseo-4-raise-startup-capital-with-a-clear-understanding-of-terms-36) - [5. Strengthen startup governance and legal discipline](#aioseo-5-strengthen-startup-governance-and-legal-discipline-46) - [6. Prepare for startup acquisitions, diligence, and exit](#aioseo-6-prepare-for-startup-acquisitions-diligence-and-exit-54) - [Browse startup legal topics by category](#aioseo-browse-startup-legal-topics-by-category-63) - [When a startup should get more tailored legal help](#aioseo-when-a-startup-should-get-more-tailored-legal-help-76) - [Startup legal roadmap FAQs](#aioseo-startup-legal-roadmap-faqs-81) - [Other startup legal resources](#aioseo-other-startup-legal-resources-92) - [If you want a deeper startup law walkthrough](#aioseo-if-you-want-a-deeper-startup-law-walkthrough-100) - [Need help with a startup legal issue?](#aioseo-need-help-with-a-startup-legal-issue-104) ## Welcome. Here’s how to use Startup Lawyer without feeling overwhelmed. If you have landed here at Startup Lawyer, you are probably building, funding, or seriously thinking about a startup and trying to make sense of decisions that feel bigger than they are often explained to be. You are not late. You are not missing something obvious. And you are definitely not the only founder who feels unsure where to start. Startup legal work is easier to manage when you can see the major decisions in sequence and understand which ones matter now versus later. This roadmap gives you a practical overview of the legal issues that typically arise across formation, ownership, hiring, contracts, financing, governance, intellectual property, and exit so you can identify priorities early and move with more confidence. ## Who this startup legal roadmap is for This page is for founders, leadership teams, and early operators who want a clearer view of the legal work that can shape a startup’s trajectory. It is designed to help you see what to address now, what to expect next, and where to go deeper when a topic becomes live. ## How to use this startup legal roadmap You can read this page from top to bottom for a high-level view of the startup journey, or jump straight to the stage that matches your current priorities. Each section links to a cornerstone guide for deeper reading. Start with the issue in front of you, use the linked guide to go deeper, and come back here when the next stage starts to matter. If a topic is already live or time-sensitive, it may also make sense to look at the relevant service page or reach out directly. ## Core startup legal stages from formation to exit ### 1. Form the company properly Formation decisions create the legal foundation for everything that follows. At this stage, founders usually need to address incorporation, founder ownership, vesting, and early governance with enough care to support future fundraising and reduce cleanup risk. - [Startup incorporation guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Founder equity, splits, and vesting guide](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Startup board of directors guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) These resources cover the legal foundation of a startup: how to form the company, allocate ownership, structure vesting, and establish governance early enough to support growth and future financing. This is the stage where a little precision usually prevents a disproportionate amount of cleanup later. If you are making formation or founder-equity decisions now, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. ### 2. Protect ownership and document key startup relationships Early legal infrastructure should protect what the company is building and clarify its important relationships. That usually means intellectual property protection, strong personnel documentation, and commercial contracts that are clear, usable, and consistent with the business model. - [Intellectual property for startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) - [Startup commercial contracts guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) These materials focus on ownership and documentation: protecting intellectual property, clarifying personnel relationships, and using contracts that fit the company’s commercial objectives. At this stage, the goal is not just paperwork. It is making sure the company actually owns what it is building and can prove it later. If your company needs broader ongoing support with contracts, IP discipline, personnel documentation, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### 3. Build the startup team with the right legal structure Hiring decisions shape both legal exposure and operational discipline. Founders often need to decide how to classify workers, structure equity, and document confidentiality and invention assignment protections as the team grows. - [Startup hiring guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide) - [Founder and employee equity guide](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Intellectual property for startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) These resources cover the team-building issues that often create early legal exposure, including worker classification, equity compensation, confidentiality, and invention assignment. Hiring tends to look simple until the company has to explain who was engaged, on what terms, and who owns the work product. If your company is starting to hire in earnest and needs broader support with hiring process, onboarding, equity administration, and people-related legal issues, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### 4. Raise startup capital with a clear understanding of terms Fundraising introduces more negotiated and more consequential legal terms. Founders usually need to understand SAFEs, convertible notes, venture capital term sheets, dilution, board dynamics, and control provisions before a round moves too far. - [Seed funding and SAFE vs. notes guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture capital term sheet guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [Startup board of directors guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) These articles are designed to help founders evaluate financing structures and negotiation points before they become binding economic or control terms. This is often the stage where a term that looks minor at first can shape dilution, governance, or leverage for years. If a financing is approaching, a focused review of the structure and principal terms is often far more useful before documents begin to harden. If your company is preparing to raise outside capital, see my [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page for a more detailed overview of SAFEs, notes, priced rounds, and venture financings. If you are negotiating a priced round or working through venture capital term sheets and investor control terms, you can also learn more about my work on the [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) page. ### 5. Strengthen startup governance and legal discipline As the company matures, legal work becomes more operational. Board process, approvals, recordkeeping, contract discipline, and equity administration can all influence diligence readiness, investor confidence, and execution speed. - [Startup board of directors guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [Startup commercial contracts guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) These resources address the legal discipline that supports later-stage execution: governance, approvals, contract process, and effective coordination with counsel. This is the part of the startup journey where organization starts to affect speed, diligence readiness, and how much avoidable friction the company creates for itself. If your company needs broader ongoing support with governance, approvals, contracts, hiring, and day-to-day legal judgment as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. ### 6. Prepare for startup acquisitions, diligence, and exit Exit readiness usually begins well before a transaction is on the table. Clean ownership, organized records, disciplined contracts, and well-documented intellectual property can materially affect diligence, leverage, timing, and outcome in an acquisition. - [Startup acquisition process guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Startup board of directors guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide) - [Startup commercial contracts guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [Intellectual property for startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups) These topics are central to acquisition readiness, including clean ownership, organized governance, reliable contracts, and intellectual property documentation that can withstand diligence. Exit readiness rarely begins when a buyer appears. It begins much earlier, in how the company keeps its records and manages legal basics over time. If your company is preparing for diligence, strategic discussions, or exit planning, you can also learn more about my work on the [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page. ## Browse startup legal topics by category If you would rather browse by subject than by stage, these are the main startup law categories covered on the site. - [Incorporation](https://startuplawyer.com/category/incorporation) - [Equity and vesting](https://startuplawyer.com/category/equity) - [Hiring and team documentation](https://startuplawyer.com/category/hiring) - [Intellectual property](https://startuplawyer.com/category/intellectual-property) - [Startup commercial contracts](https://startuplawyer.com/category/contracts) - [Seed funding, SAFEs, and notes](https://startuplawyer.com/category/seed-funding) - [Venture capital and term sheets](https://startuplawyer.com/category/venture-capital) - [Board of directors and governance](https://startuplawyer.com/category/board-of-directors) - [Acquisitions](https://startuplawyer.com/category/acquisitions) - [Working with a startup lawyer](https://startuplawyer.com/category/startup-lawyer) ## When a startup should get more tailored legal help Many of the most expensive startup legal problems begin as manageable issues that simply sat too long. Legal help is usually most valuable before a financing, major commercial arrangement, key hire, governance issue, intellectual property problem, or acquisition process becomes time-sensitive. If you are still orienting yourself, the linked guides throughout this page are the best place to start. But if one of these issues is already live, such as a formation decision, financing, major contract, governance problem, or acquisition process, it often helps to get more specific support sooner rather than later. If you are still getting the company set up, my [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page is usually the best place to start. If you are preparing to raise capital, see my [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. If your company needs broader ongoing legal support as it grows, you can read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. And if you are preparing for a sale or other strategic transaction, my [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page may be the most helpful next step. ## Startup legal roadmap FAQs ### What legal issues should a startup handle first? Most startups should begin with formation, founder ownership, vesting, intellectual property assignment, and basic governance. Those issues shape who owns the company, who controls it, and whether the company can raise money or pass diligence later. If those basics are still unclear, they are usually the right place to start. ### When should a startup hire a lawyer? A startup usually benefits from legal help before formation mistakes, founder-equity problems, hiring issues, financing terms, or contract issues become urgent. The earlier the issue affects ownership, money, or control, the more helpful early legal guidance tends to be. If the problem is already active, it is usually worth getting specific advice before it gets harder to unwind. ### Does every startup need to incorporate in Delaware? No. But Delaware is the market norm for venture-backed startups because investors and startup counsel are comfortable with its corporate law. If a company expects to raise venture capital, starting with a Delaware C-Corp often reduces friction later. ### When should a startup prepare for fundraising legal work? A startup should prepare before a financing is live. That usually means cleaning up formation documents, founder equity, cap table records, IP ownership, and governance history before investors or their counsel start asking for them. Preparation is usually much cheaper and less distracting before the round is under deadline. ### What legal issues matter before a startup acquisition? Before an acquisition, buyers usually focus on ownership, cap table accuracy, governance approvals, intellectual property, material contracts, and diligence readiness. Exit readiness usually starts long before a sale process begins. If those records are disorganized when a buyer appears, the process often gets slower, more expensive, and harder to control. ## Other startup legal resources If you want more background on Startup Lawyer, the author, common questions, key terminology, or how to get in touch, these pages are a good next place to go: - [About Startup Lawyer](https://startuplawyer.com/about) - [About the Author](https://startuplawyer.com/author) - [FAQs](https://startuplawyer.com/faq) - [Startup law glossary](https://startuplawyer.com/startup-law-glossary) - [Contact](https://startuplawyer.com/contact) ## If you want a deeper startup law walkthrough If you want a more complete, start-to-finish explanation that you can read offline, mark up, and come back to when decisions feel heavier, you may want to consider my book, *[Acceleration: What all Entrepreneurs Must Know about Startup Law](https://www.amazon.com/Acceleration-What-Entrepreneurs-about-Startup/dp/1544513933).* *[Acceleration](https://www.amazon.com/Acceleration-What-Entrepreneurs-about-Startup/dp/1544513933)* is a practical guide to startup law written for founders. It walks through the startup lifecycle from formation to financing to exit, with the same focus you will find on this site: real decisions, real tradeoffs, and the moments founders tend to underestimate. You do not need the book to use this site, but if you prefer a more structured, end-to-end view of the startup journey, it may be a good fit. ## Need help with a startup legal issue? If you are still browsing, the guides on this page are a good place to start. If you are dealing with a live issue and want to talk it through in more detail, I would be glad to hear from you through the [Contact page](https://startuplawyer.com/contact). If you are still getting the company set up, you can also learn more about my work on the [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) page. If you are preparing to raise outside capital, you can read more about my work as a [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer). If your company needs broader ongoing support as it grows, you can also read more about how I work on my [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) page. And if you are preparing for a sale or other strategic transaction, my [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) page may be a helpful next step. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Convertible Note Lawyer for Startups](https://startuplawyer.com/convertible-note-lawyer) **Published:** May 16, 2026 **Author:** Ryan Roberts **Content:** A convertible note lawyer helps startups and founders structure, review, and negotiate convertible note financings with attention to economics, maturity, interest, conversion mechanics, investor expectations, and the company’s future financing path. Many founders looking for a convertible note financing lawyer are trying to understand how those terms may affect dilution, leverage at maturity, and the company’s next priced round. Founders often reach this stage when they are comparing convertible notes to SAFEs, reviewing note terms proposed by investors, or preparing an early-stage financing that will convert in a future round. Many companies at this stage are also looking for a startup financing lawyer who can help them understand how note structure, maturity, conversion timing, and later-round implications fit into the broader fundraising picture. For a broader overview of how fundraising fits into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap "Startup Lawyer Roadmap"). For a practical overview of early-stage fundraising and the differences between notes and SAFEs, see [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide "Seed Funding: Complete SAFEs vs Notes Guide"). Depending on the financing, other cornerstone resources may also be relevant, including [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide "Venture Capital Term Sheet Survival Guide"), [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting "Startup Equity 101: Splits and Vesting"), and [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide "Startup Board of Directors Guide"). If you would like to discuss a convertible note financing and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ### What a Convertible Note Lawyer Does for Startups Convertible note work often includes helping the company review and prepare note documents, assess valuation caps and discounts, evaluate maturity and interest provisions, coordinate approvals, and understand how the note financing may affect dilution, repayment risk, and later conversion outcomes. It also often involves convertible note agreement review for founders who want to understand what a proposed instrument will mean in practice before they sign it. The objective is not simply to close the note. It is to help the company use the instrument in a way that is workable now and coherent when the next financing arrives. - Convertible note structure, valuation caps, discounts, maturity, and interest terms - Document review, investor comments, and side letter issues - Dilution, repayment, conversion, and later financing implications - Board approvals, company-side process, and financing coordination ### Why Founders Work With Me on Convertible Note Transactions Founders often want convertible note counsel who can help them understand not only the form of the instrument, but also the financing consequences that may emerge later if the note is not structured carefully. The value is not merely reviewing a standard form. It is helping the company assess maturity risk, valuation mechanics, investor requests, and the relationship between the note financing and future fundraising strategy. For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). - Practical judgment on note economics, maturity terms, investor comments, and financing strategy - A measured approach to dilution, repayment exposure, conversion outcomes, and future financing flexibility - Advice informed by startup, venture, and transactional experience across a range of fundraising settings ### Experience with Convertible Note Matters Clients typically want convertible note counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. I also have experience with convertible note rounds that took place after venture capital rounds and after SAFE rounds. That breadth is useful because financing transactions are not all negotiated the same way. Different investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with convertible note financings by informing how the company is structured, documented, and positioned before maturity, conversion, or the next financing creates pressure. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture transactions, including convertible note rounds after venture capital and SAFE rounds - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia ### How I Help Clients through Convertible Note Financings Convertible note financings often appear straightforward at first, but they still benefit from careful review, clear documentation, and practical judgment. I help founders work through the key note decisions in a way that supports both the immediate fundraising process and the company’s readiness for the next financing stage. That often includes helping the company think through maturity exposure, conversion timing, and how the note may shape leverage in a later round. I approach that work with an eye toward both the immediate financing and the risks that may emerge if the instrument remains outstanding longer than expected. - Assessing note terms, maturity exposure, valuation mechanics, and cap table implications - Reviewing and negotiating note documents and related investor requests - Coordinating approvals, documentation, and financing-readiness issues - Helping founders evaluate repayment risk, extension questions, and later conversion outcomes - Working to preserve flexibility for the company’s next financing decisions ### Maturity, Conversion, and Convertible Note Terms One of the most important parts of a convertible note financing is understanding how maturity, conversion mechanics, valuation caps, discounts, and repayment exposure interact in practice. A convertible note lawyer can help founders evaluate those terms in light of the current financing, later priced rounds, existing SAFEs or preferred stock, and the company’s broader fundraising strategy. ### Convertible Note Lawyer for Startups FAQs **When should a startup work with a startup convertible note lawyer?** It is often useful once the company begins offering convertible notes to investors or reviewing proposed note terms involving caps, discounts, maturity, or interest. **What does a convertible note lawyer usually help with?** The work often includes convertible note agreement review, note term negotiation, explaining maturity and conversion effects, responding to investor comments, coordinating approvals, and helping the company prepare for later conversion and financing issues. **What terms in a convertible note matter most?** Valuation cap, discount, maturity date, interest, conversion mechanics, repayment exposure, and any investor-side rights often matter most because they shape both the economics and the leverage of the instrument. **Can a convertible note create issues at maturity?** Yes. If the note has not converted before maturity, the company may face pressure around extension, amendment, repayment, or renegotiation depending on the note terms and investor expectations. **How are convertible notes different from SAFEs?** Convertible notes are debt instruments with maturity and interest features, while SAFEs are not debt. That difference can affect negotiation, leverage, and how the company thinks about timing and repayment risk. **Can a startup raise a convertible note round after a venture capital round?** Yes. In some situations, companies use a convertible note round after a venture capital round to address timing, bridge financing needs, or other interim capital needs. That kind of round should be reviewed carefully because the existing financing structure, investor rights, and capitalization history may affect how the note terms are negotiated and how the round fits with future financing plans. **Can a startup do a convertible note round after a SAFE round?** Yes. A company may raise on convertible notes after a SAFE round, but the relationship between the existing SAFEs and the new notes should be evaluated carefully. Founders often need to understand how the different instruments interact across dilution, conversion mechanics, cap table overhang, and future financing strategy. **Should founders be concerned about note overhang?** Often yes. A significant amount of outstanding notes can affect the cap table, negotiation dynamics, and how the next financing is structured, especially if conversion outcomes are not well understood in advance. ## Considering a Convertible Note Lawyer for Startups For founders raising capital on convertible notes, careful legal support from a convertible note lawyer can help make the financing more coherent, more informed, and more manageable as the company grows. Thoughtful work on note structure, documentation, maturity, conversion, and future financing implications can also help reduce avoidable complications later. If you would like to discuss a convertible note financing in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [SAFE Lawyer for Startups](https://startuplawyer.com/safe-lawyer) **Published:** May 16, 2026 **Author:** Ryan Roberts **Content:** A SAFE lawyer helps startups and founders structure, review, and negotiate Simple Agreements for Future Equity with attention to valuation mechanics, dilution, investor expectations, and the company’s future financing path. Many founders looking for a SAFE financing lawyer are trying to understand how valuation caps, discounts, MFN provisions, pro rata rights, side letters, and the company’s broader capitalization picture may affect the next round. Founders often reach this stage when they are raising on post-money SAFEs, comparing SAFEs to convertible notes, or trying to understand how a proposed SAFE will affect dilution, financing readiness, and later priced rounds. Many companies at this stage are also looking for a startup fundraising lawyer who can help them understand how early-stage financing decisions may shape the next round. For a broader overview of how startup fundraising fits into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap "Startup Lawyer Roadmap"). For a practical overview of early-stage fundraising and the differences between SAFEs and notes, see [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide "Seed Funding: Complete SAFEs vs Notes Guide"). Depending on the financing, other cornerstone resources may also be relevant, including [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting "Startup Equity 101: Splits and Vesting"), the V[enture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide "Venture Capital Term Sheet Survival Guide"), and the [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide "Startup Board of Directors Guide"). If you would like to discuss a SAFE financing and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ### What a SAFE Lawyer Does for Startups SAFE financing work often includes helping the company review and prepare SAFE agreements, assess valuation cap and discount mechanics, address side letter requests, coordinate approvals, and understand how the SAFE round may affect dilution, conversion outcomes, and later priced financings. It also often involves SAFE agreement review for founders who want to understand what a proposed instrument will mean in practice before they sign it. The objective is not simply to close the instrument. It is to help the company use SAFEs in a way that is coherent, appropriately documented, and workable when the next financing arrives. - SAFE structure, valuation caps, discounts, and conversion mechanics - Document review, investor comments, and side letter requests - Dilution, cap table, and later financing implications - Board approvals, company-side process, and financing coordination ### Why Founders Work With Me on SAFE Financings Founders often want SAFE counsel who can help them understand not only the form of the instrument, but also the financing consequences that may not be obvious from the template alone. The value is not merely reviewing a standard form. It is helping the company assess dilution, valuation mechanics, investor requests, and the relationship between the SAFE round and future financing strategy. I have worked with SAFEs since they were first established by [Y Combinator](https://www.ycombinator.com/). For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). - Practical judgment on valuation caps, discounts, side letters, and investor comments - A measured approach to dilution, conversion outcomes, and future financing flexibility - Advice informed by startup, venture, and transactional experience across a range of fundraising settings ### Experience with SAFE Matters Clients typically want SAFE counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is useful because financing transactions are not all negotiated the same way. Different investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with SAFE financings by informing how the company is properly structured, documented, and positioned before the next priced round begins. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience with SAFEs since they were first established by Y Combinator - Experience across financings ranging from early angel rounds to nine-figure venture transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia ### How I Help Clients through SAFE Financings SAFE financings often appear simple at first, but they still benefit from careful review, clear documentation, and practical judgment. I help founders work through the key SAFE decisions in a way that supports both the immediate fundraising process and the company’s readiness for the next financing stage. That often includes helping the company understand how seemingly simple SAFE terms can interact across multiple investors and affect dilution, conversion outcomes, and later priced rounds. I approach that work with an eye toward clarity now and fewer complications later. - Assessing SAFE terms, valuation mechanics, and cap table implications - Reviewing and negotiating SAFE documents and related investor requests - Coordinating approvals, documentation, and financing-readiness issues - Helping founders evaluate dilution, side letters, and later conversion consequences - Working to preserve a cleaner path into the next financing stage ### Valuation Caps, Side Letters, and SAFE Dilution One of the most common challenges in a SAFE financing is understanding how valuation caps, side letters, and multiple SAFE issuances interact across the cap table. A SAFE lawyer can help founders evaluate dilution, conversion outcomes, investor rights, and the practical effect of specific SAFE terms before those issues become more complicated in a later priced round. ### SAFE Lawyer for Startups FAQs **When should a startup work with a startup SAFE lawyer?** It is often useful once the company begins offering SAFEs to investors or reviewing a proposed SAFE round with caps, discounts, MFN terms, post-money SAFE structures, or side letters. **What does a SAFE lawyer usually help with?** The work often includes reviewing SAFE agreements, explaining valuation cap and dilution effects, responding to investor comments, coordinating approvals, and helping the company prepare for later conversion and financing issues. **What terms in a SAFE matter most?** Valuation cap, discount, MFN provisions, pro rata rights, side letters, and the overall capitalization context often matter most because they can materially affect dilution and later financing outcomes. **Are post-money SAFEs always better for founders?** Not necessarily. The answer depends on how the round is structured, how many SAFEs are being issued, and how the founders want to evaluate dilution and conversion outcomes in context. **Can a SAFE create cap table problems later?** It can if the company does not track the instruments carefully or does not fully understand how multiple SAFEs, valuation caps, or side letters may affect a later financing or cleanup process. **Should founders use side letters in a SAFE round?** Sometimes, but side letters should be evaluated carefully because they can create rights or obligations that are not obvious from the main SAFE form and may affect later investors or later rounds. ## Considering a SAFE Lawyer For founders raising capital on SAFEs, careful legal support from a SAFE lawyer can help make the financing more coherent, more informed, and more manageable as the company grows. Thoughtful work on SAFE structure, documentation, valuation caps, and future financing implications can also help reduce avoidable complications later. If you would like to discuss a SAFE financing in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Many founders looking for a startup contracts lawyer, startup commercial contracts lawyer, SaaS contracts lawyer, or commercial contracts lawyer for startups need help with customer agreements, vendor contracts, MSAs, SOWs, SaaS terms, and other operational agreements that need to fit the company’s business model and remain workable as the company grows. Founders often reach this stage when they are negotiating customer terms, revising a SaaS agreement, responding to redlines, working through vendor or partnership contracts, or trying to standardize the company’s agreement process. For a broader overview of how startup contracts fit into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap "Startup Lawyer Roadmap"). For a practical overview of startup agreements and negotiation issues, see [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide "The Startup Commercial Contracts Guide"). Depending on the company’s needs, other cornerstone resources may also be relevant, including [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer "Working With a Startup Lawyer"), [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups "Intellectual Property for Startups"), and [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide "The Ultimate Startup Hiring Guide"). If you would like to discuss your company’s contracts and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ### What a Startup Contracts Lawyer Does Startup contracts work often includes drafting and negotiating customer agreements, SaaS terms, MSAs, SOWs, vendor contracts, partnership agreements, confidentiality agreements, pilot agreements, and other operational documents. It also involves helping the company understand how provisions on payment, liability, indemnification, confidentiality, intellectual property, termination, service levels, and dispute resolution may affect the business in practice. The objective is not merely to close the deal. It is to help the company enter into agreements that are commercially sensible, legally coherent, and aligned with the company’s broader operating goals. - Customer agreements, SaaS terms, MSAs, SOWs, and order forms - Vendor agreements, procurement terms, and partnership contracts - Confidentiality agreements, IP clauses, indemnities, and limitation-of-liability terms - Contract review, negotiation strategy, and template refinement ### Why Founders Work With Me on Startup Contracts Matters Founders often want startup contracts counsel who can help them assess not only the legal language, but also the practical business implications of the agreement in front of them. The value is not merely turning redlines. It is helping the company understand where the real risk sits, which points are worth negotiating, and how contract positions may affect revenue, operations, intellectual property, and ongoing commercial relationships. For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). - Practical judgment on contract risk, commercial priorities, and negotiation leverage - A measured approach to drafting, redlines, and template development - Advice informed by startup, venture, and transactional experience across a range of business settings ### Experience with Startup Contracts Matters Clients typically want startup contracts counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds, other investors, and acquirers, which provides a useful perspective on how transactions, including a startup’s contracts, are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is useful because business agreements are not all negotiated the same way. Different counterparties, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with commercial contracts work by informing how agreements are structured, documented, and negotiated in a way that supports both legal protection and business execution. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Strategic partnerships with many of the world’s top brands - Experience across financings ranging from early angel rounds to nine-figure venture transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia ### How I Help Clients with Startup Contracts Commercial contract work often turns on priorities, leverage, and business context as much as on the text itself. I help startups approach agreements in a practical way, with attention to the issues most likely to affect revenue, operations, intellectual property, and long-term commercial relationships. That often includes helping the company decide what to push on, what to accept, and how to create a more consistent contracting approach as deal volume increases. I approach that work with an eye toward both legal protection and practical business execution. - Reviewing key contract terms in light of practical business risk - Negotiating agreements with attention to leverage and commercial priorities - Helping refine templates and contract processes as the company grows - Identifying the contract issues most likely to affect revenue, operations, and IP - Supporting a more consistent and scalable approach to commercial agreements ### Contract Review and Negotiation for Startups One of the most common reasons founders look for a startup contracts lawyer is contract review and negotiation. That work often includes reviewing customer agreements, SaaS agreements, MSAs, SOWs, vendor contracts, and partnership documents, identifying the terms that matter most, and helping the company respond to redlines in a way that balances legal protection, business priorities, and practical deal momentum. ### Startup Contracts Lawyer FAQs **When should a startup work with a startup contracts lawyer?** It is often useful once the company begins negotiating revenue-generating agreements, revising standard terms, or encountering contract language that could materially affect legal or commercial risk. **What does a startup contracts lawyer usually help with?** The work often includes contract review, drafting and negotiating customer agreements, SaaS terms, MSAs, SOWs, vendor contracts, reviewing redlines, evaluating contract risk, refining templates, and helping the company establish a more consistent contracting process. **What startup contracts usually matter most?** That depends on the business, but customer agreements, SaaS terms, vendor contracts, NDAs, statements of work, partnership agreements, and intellectual property provisions often carry the most immediate legal and commercial significance. **Can a startup use contract templates without a lawyer?** Templates can be useful starting points, but they do not always reflect the company’s business model, negotiation priorities, intellectual property needs, or risk allocation goals. Tailored review is often helpful when the agreement matters commercially. **What contract terms are startups most often asked to negotiate?** Common negotiation points include payment, service levels, data use, liability caps, indemnities, confidentiality, intellectual property ownership, termination rights, and dispute-resolution provisions. **When should a startup update its contract templates?** It is often useful to revisit templates when the company changes pricing or product scope, enters larger deals, receives recurring redlines on the same terms, or sees a gap between its agreements and how the business now operates. ## Considering a Startup Contracts Lawyer For startups entering into important customer, vendor, and partner agreements, careful legal support from a startup contracts lawyer can help make the company’s contracting process more disciplined, more efficient, and more aligned with its business priorities. Thoughtful work on drafting, negotiation, and commercial contract process can also help reduce avoidable friction as the company grows. If you would like to discuss your company’s contracts in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Legal Cleanup Lawyer](https://startuplawyer.com/startup-legal-cleanup-lawyer) **Published:** May 16, 2026 **Author:** Ryan Roberts **Content:** A startup legal cleanup lawyer helps founders identify, assess, and fix legal problems that often surface after a company was formed or documented using templates, AI tools, incomplete paperwork, or informal agreements without legal review. Many founders looking for help with startup formation mistakes, startup paperwork cleanup, or fixing startup legal documents discover those issues only when a financing, diligence request, major hire, or acquisition process is approaching. Founders often reach this stage when preparing for a financing, responding to investor diligence, trying to correct founder equity or vesting issues, or discovering that the company’s legal records do not fully support the way the business has actually been run. This is also a common pattern when startups initially relied on templates or AI-generated documents and later need startup legal cleanup before a seed round, venture financing, acquisition, or major hiring milestone. For a broader overview of how these issues fit into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap "Startup Lawyer Roadmap"). For practical background on formation and ownership issues, see [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide "Startup Incorporation: The Complete Guide") and [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting "Startup Equity 101: Splits and Vesting"). Depending on the issue, other cornerstone resources may also be relevant, including [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide "Seed Funding: Complete SAFEs vs Notes Guide") and [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide "Venture Capital Term Sheet Survival Guide"). If you would like to discuss startup legal cleanup issues and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ### What a Startup Legal Cleanup Lawyer Does Startup legal cleanup work often includes reviewing the company’s formation documents, equity history, board and stockholder approvals, stock and option records, SAFE and note documents, IP assignments, contractor and hiring paperwork, and any informal assumptions that may have shaped the company’s legal file over time. The objective is not merely to identify mistakes. It is to determine what needs to be corrected, clarified, ratified, documented, or restructured so the company can move forward with a more coherent legal foundation, stronger financing readiness, and a cleaner record for investors, acquirers, and later counsel. - Founder stock, vesting, and stock issuance issues - Missing approvals, inconsistent records, and incomplete company documentation - SAFE, convertible note, option, and cap table problems - Contractor, hiring, confidentiality, and IP assignment gaps ### Why Founders Work With Me on Startup Legal Cleanup and Formation Mistakes Founders often want cleanup counsel who can help them assess not only what is wrong with the legal file, but also what can realistically be fixed, how urgently it needs to be addressed, and how the cleanup may affect financing, governance, or founder relationships. That is especially true where the company initially relied on templates, AI-generated documents, or informal arrangements that saved time early but created uncertainty later. The value is not simply issue spotting. It is bringing practical judgment to startup legal cleanup, startup paperwork cleanup, and financing-readiness problems that often involve imperfect records, incomplete history, and decisions that need to hold up under later investor, acquirer, or counsel review. **There is no judgment in that process**. Many founders try to move efficiently with the tools available to them, and the objective here is simply to identify the issues, fix them carefully, and help the company move forward on a cleaner footing. - Practical judgment on startup legal cleanup priorities, legal risk, and financing readiness - A measured approach to documentation, ratification, and company-side process issues - Advice informed by startup, venture, and transactional experience across a range of financing and diligence settings For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). ### Experience with Startup Legal Cleanup Matters Clients typically want startup legal cleanup counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is useful because financing and diligence issues are not all addressed the same way. Different investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with startup legal cleanup by informing how the company’s formation, equity, financing, governance, and documentation issues should be reviewed and addressed before investor diligence or a major transaction begins. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with a cleaner record for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia ### How I Help Clients through Startup Legal Cleanup and Financing Readiness Startup legal cleanup often requires careful sequencing, clear documentation, and realistic judgment about what can and should be addressed first. I help founders work through those issues in a practical way, with attention to both the historical record and the company’s immediate financing readiness, governance, hiring, or diligence priorities. That often means distinguishing between issues that require immediate correction and issues that can be addressed through a more measured cleanup process, particularly where the company previously relied on templates, AI-generated forms, or informal documentation. I approach that work with an eye toward creating a cleaner legal file while minimizing unnecessary disruption to the company’s next financing or growth milestone. - Reviewing formation, equity, financing, and documentation history for gaps and inconsistencies - Prioritizing cleanup steps in light of financing, diligence, or dispute risk - Helping document corrections, clarifications, and ratification measures where appropriate - Addressing founder equity, vesting, SAFE, note, option, and IP assignment issues - Working toward a cleaner legal file for investors, acquirers, and later counsel ### Startup Legal Cleanup Lawyer FAQs **When should a startup work with a startup legal cleanup lawyer?** It is often useful once the company identifies inconsistencies in its legal records, discovers missing approvals or documentation, or begins preparing for financing, investor diligence, or a strategic transaction. **What does a startup legal cleanup lawyer usually help with?** The work often includes reviewing formation records, correcting documentation gaps, addressing founder equity or vesting issues, evaluating SAFE or note overhang, fixing contractor or IP assignment problems, and preparing a cleaner legal file for investors or acquirers. **What startup formation mistakes usually lead to legal cleanup?** Common issues include missing approvals, undocumented founder arrangements, inconsistent equity records, template-based or AI-generated documents that were not tailored to the company’s facts, SAFE or note tracking problems, and gaps between operational reality and legal documentation. **Can template or AI-generated startup documents create legal problems later?** Yes. Templates and AI tools can be useful for orientation, but if the documents were not tailored to the company’s actual facts, they can leave gaps in founder equity, approvals, vesting, IP ownership, financing documentation, and other areas that matter during diligence. **Can startup legal cleanup improve financing readiness?** Often yes. Startup legal cleanup before investors begin diligence can make the fundraising process more orderly and reduce the risk of last-minute corrections under pressure by cleaning up formation, equity, approvals, and financing records in advance. **When is the best time to address startup legal cleanup?** It is often best to address legal cleanup before a financing, acquisition process, or major diligence event begins, while the company has more time to review history, gather records, and fix problems carefully. ## Considering a Startup Legal Cleanup Lawyer For founders dealing with legal problems created by incomplete formation work, informal documentation, or template- or AI-based startup paperwork, careful legal support can help make the cleanup process more orderly, more informed, and more useful in advance of financing, diligence, or a strategic transaction. Thoughtful work on records, approvals, equity, and documentation can also help reduce avoidable friction later and improve the company’s financing readiness. If you would like to discuss startup legal cleanup issues in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup General Counsel](https://startuplawyer.com/startup-general-counsel) **Published:** May 16, 2026 **Author:** Ryan Roberts **Content:** Startup general counsel provides ongoing legal support as the company builds, hires, signs contracts, raises capital, and addresses day-to-day corporate matters. Many founders looking for startup general counsel, startup outside counsel, or outside general counsel for startups want more than occasional document review. They want counsel who understands how decisions made in one area of the business can affect governance, financing, hiring, intellectual property, commercial risk, and the company’s readiness for milestone transactions such as venture capital financings and startup acquisitions. Companies often reach this stage after formation, when legal work becomes more continuous and less easily handled as a series of isolated projects. In practice, many founders searching for fractional general counsel for startups or ongoing legal counsel for startups need steady support across contracts, governance, hiring, financing, and strategic decision-making. For a broader overview of how ongoing counsel fits into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap "Startup Lawyer Roadmap"). For a practical overview of how startup counsel typically works, see [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer "Working With a Startup Lawyer"). Depending on the company’s needs, other cornerstone resources may also be relevant, including [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide "The Startup Commercial Contracts Guide"), [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide "The Ultimate Startup Hiring Guide"), [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide "Startup Board of Directors Guide"), and [Intellectual Property for Startups](https://startuplawyer.com/intellectual-property/intellectual-property-for-startups "Intellectual Property for Startups"). If you would like to discuss your company’s legal needs and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ### What Startup General Counsel Means for Startups Startup general counsel work is usually broader than one transaction or one issue. It often involves helping founders and leadership teams address contracts, board and corporate matters, hiring questions, equity issues, investor-facing work, compliance concerns, and practical legal decisions that arise as the company grows. It can also include helping the company prepare for and navigate milestone transactions such as venture capital financings and startup acquisitions. The objective is to provide steady legal judgment across the business, not merely to react when problems become urgent. - Commercial contracts, customer agreements, vendor agreements, and negotiation support - Corporate governance, board approvals, and ongoing corporate maintenance - Hiring, contractor, confidentiality, and intellectual property documentation - Support on financing preparation, venture capital financings, startup acquisitions, and other strategic legal questions ### When Startups Typically Need Outside General Counsel Many startups begin looking for outside general counsel when legal work becomes frequent enough that piecemeal help is no longer efficient. That often happens after formation, during hiring, while negotiating commercial agreements, in connection with board and governance matters, or as the company prepares for a financing or acquisition. At that stage, continuity and context become especially useful. ### Contracts, Governance, and Day-to-Day Legal Support Outside general counsel often helps startups review and negotiate customer contracts, SaaS agreements, vendor agreements, partnership documents, employment and contractor paperwork, and internal corporate approvals. For a practical overview of startup agreements and negotiation issues, see [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide "The Startup Commercial Contracts Guide"). For governance and board-related issues, see [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide "Startup Board of Directors Guide"). For hiring-related legal considerations, see [The Ultimate Startup Hiring Guide](https://startuplawyer.com/hiring/the-ultimate-startup-hiring-guide "The Ultimate Startup Hiring Guide"). ### Why Ongoing Startup Counsel Can Be Valuable The value of outside general counsel is often continuity. Legal questions rarely arrive one at a time in isolation. They tend to overlap across contracts, governance, hiring, financing, and strategy. Working with counsel who understands the company’s structure, priorities, and risk profile can make decision-making more efficient and help reduce avoidable friction later. ### Why Founders Work With Me on Startup General Counsel Matters Founders often want startup general counsel who can provide steady judgment across the company’s legal needs without losing sight of the larger business context. The value is not only responsiveness. It is having counsel who can see how contracts, hiring, governance, financing, and risk management intersect as the company grows. For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). - Practical judgment across contracts, governance, hiring, financing, and day-to-day legal questions - Advice shaped by how startup decisions affect both near-term operations and later transactions - A measured approach that emphasizes clarity, consistency, and long-term usefulness ### Experience with Startup General Counsel for Startups Clients typically want startup general counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is useful because startup legal issues are not all negotiated or approached the same way. Different investors, markets, counterparties, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with outside general counsel work by informing how legal issues are prioritized, documented, and managed as the company grows. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia Additional background on my practice and experience is available on the [Author page](https://startuplawyer.com/author "Author"). ### How I Help Clients through Startup General Counsel Work Outside general counsel work often involves a steady flow of decisions rather than a single transaction. I help founders and leadership teams address those issues in a practical way, with attention to both the immediate question and the broader legal and business context in which it arises. That work often requires balancing speed, practicality, and legal discipline across multiple areas of the business at once. I approach it with an eye toward reducing avoidable friction while helping the company maintain a more coherent legal foundation as it grows and moves into milestone transactions such as [venture capital financings](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide "Venture Capital Term Sheet Survival Guide") and [startup acquisitions](https://startuplawyer.com/wp-content/uploads/Startup-Acquisition-Process-Guide.avif "Startup Acquisition Process Guide"). - Prioritizing legal issues in light of the company’s stage, resources, and objectives - Reviewing, negotiating, and documenting recurring contracts and internal approvals - Helping management address governance, hiring, IP, and financing-readiness issues as they arise - Supporting more consistent legal processes across the company’s day-to-day operations - Providing continuity across the legal questions that often overlap as the business grows ### Startup General Counsel FAQs **When should a startup hire startup general counsel?** It is often useful when legal work becomes ongoing rather than occasional, especially as the company grows, hires, negotiates more contracts, and prepares for financing or diligence. **What does startup general counsel usually help with?** The work often includes contracts, corporate governance, hiring documents, equity questions, intellectual property issues, and practical legal advice across the business. **Do startups need startup general counsel or only occasional legal help?** That depends on how often legal issues arise and how interconnected they are. When contracts, hiring, governance, financing, and operational questions begin to overlap, startup general counsel or outside general counsel for startups is often more efficient than addressing each issue in isolation. **Can outside general counsel help with contracts, hiring, and board issues?** Yes. Outside general counsel for startups often covers recurring commercial contracts, employment and contractor questions, governance matters, board approvals, and other operational issues that arise as the company grows. **When does startup general counsel become more efficient for a startup?** It often becomes more efficient once the company is reviewing contracts regularly, making hiring decisions, handling board matters, and preparing for financing or diligence at the same time. In that setting, continuity and familiarity with the business can reduce friction, whether the company thinks of the role as startup general counsel or fractional general counsel for startups. **Can outside general counsel help a startup prepare for financing or diligence?** Yes. Ongoing counsel can help address contracts, records, governance issues, and other legal matters before investors or counterparties begin asking for them in a diligence process. ## Considering Startup General Counsel For founders who want consistent legal support as the company grows, startup general counsel can provide practical guidance across the issues that arise between major transactions. Careful legal support at this stage can help the company operate more efficiently and address important questions before they become larger distractions. If you would like to discuss your company’s legal needs in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Venture Capital Lawyer](https://startuplawyer.com/venture-capital-lawyer) **Published:** May 16, 2026 **Author:** Ryan Roberts **Content:** A venture capital lawyer for startups helps founders and companies navigate priced equity financings with attention to term sheets, investor rights, governance, economics, documentation, and closing execution. Many founders looking for a startup venture capital lawyer or Series A lawyer are preparing for a financing in which valuation, control, board composition, liquidation preference, and future fundraising flexibility all matter. Founders often reach this stage when they are negotiating a Series Seed, Series A, or later venture financing, reviewing a term sheet, or preparing for investor diligence and closing documents. For a broader overview of how fundraising fits into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap "Startup Lawyer Roadmap"). For a practical overview of venture capital rounds and investor terms, see the [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide "Venture Capital Term Sheet Survival Guide"). Depending on the financing, other cornerstone resources may also be relevant, including [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting "Startup Equity 101: Splits and Vesting"), the [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide "Startup Board of Directors Guide"), and the [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide "Seed Funding: Complete SAFEs vs Notes Guide"). If you would like to discuss a venture financing and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ### What a Venture Capital Lawyer Does Venture capital work often includes helping the company review and negotiate term sheets, preferred stock financing documents, investor rights, board composition, governance provisions, and closing mechanics. It also involves coordinating company-side process, addressing capitalization and option-pool questions, preparing for diligence, and helping founders understand how the economic and control terms of the round may affect the company after closing. That work often includes experience with the [NVCA](http://nvca.org) documents and the way market-standard venture financing forms are typically negotiated in practice. The objective is not merely to complete the financing. It is to help the company raise capital on terms that fit both the round at hand and the company’s longer-term financing path. - Term sheet review, preferred stock financing documents, and closing support - Liquidation preference, anti-dilution, pro rata rights, and investor-rights terms - Board composition, investor rights, governance, and approval mechanics - Cap table, option pool, diligence, and future-round considerations ### Why Founders Work With Me on Venture Capital Matters Founders often want venture capital counsel who can help them understand not only the documents, but also how the negotiated terms will affect the company after the financing closes. The value is not merely turning drafts. It is helping the company assess governance tradeoffs, economics, investor requests, control implications, and the practical effect of a preferred stock financing or priced round on future financing flexibility. For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). - Practical judgment on term sheets, investor rights, governance, and control terms - A measured approach to economics, negotiation strategy, and future-round flexibility - Advice informed by startup, venture, and transactional experience across a range of financing settings ### Experienced Venture Capital Lawyer Clients typically want venture capital counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is useful because financing transactions are not all negotiated the same way. Different investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with venture capital financings by informing how the company is structured, documented, and positioned before and during complex investor negotiations. I also have experience working with the NVCA documents, which is useful because many venture financings are negotiated against those market-standard forms. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture capital transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia ### How I Help Clients through Venture Capital Financings Venture capital financings often move through a sequence of negotiation, diligence, documentation, and approval steps that can affect both timing and outcome. I help founders work through those steps in a practical way, with attention to the key economic, governance, and execution issues that are most likely to matter during and after the round. That often means helping the company understand how the negotiated terms will affect not only the current round, but also board dynamics, future investor expectations, and strategic flexibility after closing. I approach that work with an eye toward both deal execution and the company’s longer-term position. - Assessing term sheets, financing structure, and investor-rights implications - Reviewing and negotiating financing documents with attention to control and flexibility - Coordinating diligence, approvals, and closing-readiness issues - Helping founders evaluate governance, economics, and option-pool implications - Working to preserve room for later financing and strategic decisions ### Negotiating Venture Capital Term Sheets and Investor Rights One of the most important stages of a venture financing is negotiating the term sheet and the investor-rights package that will shape the full financing documents. A venture capital lawyer can help founders with term sheet review, valuation, liquidation preference, anti-dilution, board seats, protective provisions, pro rata rights, option pool treatment, and other investor-rights terms in light of both the current round and the company’s future financing path. That work also often involves familiarity with the NVCA documents and how those forms are adapted in actual financings. ### Venture Capital Lawyer FAQs **When should a startup work with a venture capital lawyer for a Series A or other priced round?** It is often useful once the company receives a term sheet, begins negotiating investor terms, or starts preparing for a priced venture financing and diligence process. **What does a startup venture capital lawyer usually help with?** The work often includes term sheet review, preferred stock financing documents, investor-rights and governance issues, cap table and option-pool considerations, diligence support, and closing coordination. **What terms in a venture capital financing matter most?** That depends on the round, but founders often focus on valuation, liquidation preference, board composition, protective provisions, anti-dilution, option pool treatment, pro rata rights, and the practical balance between capital and control. **Should founders negotiate the term sheet before full documents are drafted?** Yes, where possible. Important economic and governance terms are often easier to negotiate at the term-sheet stage than after the full financing documents are in circulation. **Can venture financing terms affect later rounds?** Yes. Governance provisions, investor rights, economic terms, and capitalization changes in one round can shape leverage, flexibility, and negotiation dynamics in later financings. **What should a startup prepare before a Series A or other priced venture round?** It is often helpful to have formation records, cap table information, option-pool details, intellectual property documentation, material contracts, and governance records organized before diligence begins in earnest. ## Considering Venture Capital Counsel For founders preparing for a priced venture round, careful legal support can help make the financing more disciplined, more informed, and more efficient. Thoughtful work on economics, governance, documentation, and process can also help preserve flexibility for later stages of growth. If you would like to discuss a venture financing in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Acquisition Lawyer](https://startuplawyer.com/startup-acquisition-lawyer) **Published:** May 16, 2026 **Author:** Ryan Roberts **Content:** A startup acquisition lawyer helps founders, boards, and companies navigate acquisitions, mergers, asset sales, acqui-hires, and other exit transactions with careful attention to structure, process, and execution. Many companies looking for a startup M&A lawyer are preparing for a sale process in which leverage, diligence, economic terms, and execution risk all matter from letter of intent through closing. Founders often reach this stage when a buyer has expressed interest, a letter of intent is under discussion, or the company wants to prepare for a possible acquisition before formal outreach begins. For a broader overview of how exit work fits into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap "Startup Lawyer Roadmap"). For a practical overview of startup acquisitions and exits, see [The Startup Acquisition Process Guide.](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide "The Startup Acquisition Process Guide") Depending on the transaction, other cornerstone resources may also be relevant, including the [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide "Startup Board of Directors Guide") and the [Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide "The Startup Commercial Contracts Guide"). If you would like to discuss a potential acquisition, sale, or exit process and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ### What a Startup Acquisition Lawyer Does Startup acquisition work often includes helping the company evaluate buyer interest, negotiate letters of intent, organize diligence, manage disclosure, review purchase agreement terms, address employee and equityholder issues, and work toward signing and closing on sound terms. The objective is not merely to document a sale. It is to help the company move through the transaction deliberately, with attention to leverage, risk allocation, timing, and execution. - Letters of intent, exclusivity, and deal-structure analysis - Diligence preparation, disclosure, and transaction readiness - Purchase agreement review and negotiation - Board, stockholder, equityholder, and closing-process support ### Why Founders Work With Me on Startup Acquisition Matters Founders often want startup acquisition counsel who can help them assess both the legal process and the practical dynamics of a sale. The value is not simply negotiating the documents. It is understanding how timing, leverage, diligence, deal structure, and process discipline can affect outcome. For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). - Practical judgment on transaction structure, diligence, and negotiation leverage - A measured approach to execution risk, process management, and closing readiness - Advice informed by startup, venture, and transactional experience across a range of deal settings ### Experience with Startup Acquisition Transactions Clients typically want startup acquisition counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and acquirers, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. I have also worked on transactions in which my clients sold to publicly traded companies and private equity firms, as well as acqui-hires. That breadth is useful because transaction processes are not all negotiated the same way. Different buyers, investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with startup acquisition work by informing how the company is positioned, prepared, and guided through diligence, negotiation, and closing. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture transactions and exit transactions to public companies - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia ### How I Help Clients through Startup Acquisition Transactions Sale transactions often involve a sequence of strategic and procedural decisions, not just document drafting. I help companies work through those decisions in a practical way, with attention to timing, leverage, diligence readiness, board process, and the terms that are likely to matter most at closing. That includes helping the company prepare thoughtfully before live deal pressure intensifies, so the transaction can move forward with clearer documentation, a more coherent process, and a stronger understanding of the issues most likely to affect outcome. - Assessing transaction structure, timing, and preliminary deal terms - Helping the company prepare for diligence and disclosure - Negotiating key terms through signing and closing - Coordinating board, stockholder, and equityholder process issues where needed - Helping the company manage execution risk as the transaction progresses ### Startup Acquisition Lawyer FAQs **When should a startup work with a startup acquisition lawyer?** It is often useful as soon as serious buyer interest emerges, particularly when a letter of intent, exclusivity, or a formal process may follow. **What does a startup acquisition lawyer usually help with?** The work often includes letters of intent, diligence, purchase agreement negotiation, board and stockholder approvals, and the practical steps required to reach closing. **What should a startup do before beginning a sale process?** It is often helpful to review corporate records, equity documentation, key contracts, intellectual property, and other diligence-sensitive areas before a buyer process becomes formal. Early preparation can make the process more orderly and reduce avoidable delay. **Can a startup acquisition lawyer help before a letter of intent is signed?** Yes. Counsel can help evaluate process, timing, buyer engagement, confidentiality, diligence readiness, and preliminary deal terms before the letter-of-intent stage. **What issues most often affect startup acquisition deals?** Common issues include diligence gaps, intellectual property ownership, equityholder approvals, employee and option treatment, indemnity structure, escrow or holdback terms, and the allocation of transaction risk. **How early should a startup prepare for acquisition diligence?** Earlier is generally better. Diligence issues are often easier to address before there is live deal pressure, especially where contracts, cap table records, governance, or IP documentation need attention. ## Considering a Startup Acquisition Lawyer For founders and companies considering a sale or acquisition process, careful legal support can help make the transaction more orderly, more informed, and more efficient. Thoughtful work on structure, diligence, negotiation, and execution can materially affect both process and outcome. If you would like to discuss a potential acquisition, sale, or exit transaction in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Formation Lawyer](https://startuplawyer.com/startup-formation-lawyer) **Published:** May 16, 2026 **Author:** Ryan Roberts **Content:** A startup formation lawyer helps founders structure the company correctly from the outset, with careful attention to entity choice, founder stock, vesting, intellectual property, and the post-incorporation documents investors expect to see. Many founders looking for a startup incorporation lawyer are also looking for guidance on Delaware C corporation formation, founder equity, and the legal groundwork for hiring and fundraising. For venture-backed and high-growth companies, formation is not merely the filing of an entity. It is the legal foundation for ownership, governance, diligence, and future financing. Founders often reach this page when they need help with startup incorporation, founder vesting, Delaware C corporation formation, stock purchase agreements, option pools, or IP assignment. At this stage, the objective is to structure the company correctly before formation issues delay financing or create unnecessary cleanup later. For a broader overview of how formation fits into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). For a more detailed discussion of the incorporation process itself, see [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide). If you would like to discuss your startup’s formation and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact). ### What a Startup Formation Lawyer Does Startup formation work usually includes entity selection, startup incorporation, founder stock issuance, vesting, board and stockholder approvals, bylaws, stock purchase agreements, equity incentive planning, and early-stage IP assignment and hiring documents. The point is not just to create an entity. It is to create a clean company with defensible ownership, organized records, and formation documents that can stand up to investor and acquirer diligence. - Delaware C corporation formation and startup incorporation strategy - Founder stock, vesting, and restricted stock purchase documentation - Bylaws, board consents, and post-incorporation corporate records - Option pool and equity incentive planning - IP assignment, confidentiality, and contractor or employee paperwork ### Why Founders Work With Me on Startup Formation Founders often look for counsel who can help them make sound formation decisions early and document them with care. The value is not simply speed. It is thoughtful judgment on entity choice, founder equity, governance, and IP ownership, together with formation work that remains coherent when the company later hires, raises capital, or undergoes diligence. For more on experience and perspective, see the [Author page](https://startuplawyer.com/author). - Thoughtful guidance on Delaware C corporation formation, founder equity, vesting, and startup incorporation issues - Formation documents prepared with an eye toward financing, governance, and diligence readiness - Practical support on founder stock, board approvals, option planning, and post-incorporation cleanup where needed - A measured approach that emphasizes clarity, consistency, and long-term usefulness of the legal file ### Experience with Startup Formations Clients typically want startup formation counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is useful because financing transactions are not all negotiated the same way. Different investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with startup formations by informing how the company is properly structured, documented, and positioned before financing begins. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia Additional background on my practice and experience is available on the [Author page](https://startuplawyer.com/author). ### Startup Formation Lawyer and Delaware C Corporation Incorporation Many founders searching for a startup incorporation lawyer are really asking whether they should form a Delaware C corporation or an LLC. For venture-backed startups, a Delaware C corporation is often the more familiar path because it aligns with common financing, equity, and governance expectations. But the right entity still depends on your growth plan, financing goals, and tax posture. The value of startup formation counsel is making that decision deliberately and executing it correctly from the start. For a more detailed walkthrough of the process, see [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide). ### Founder equity, founder vesting, and stock issuance Founder equity decisions shape the company early and are often difficult to unwind later. A startup formation lawyer can help document founder stock issuance, vesting schedules, repurchase rights, and the initial cap table with the precision investors expect. This is also the right time to address equity incentive planning, option pool setup, and any informal pre-incorporation equity promises that could create future disputes. ### Post-incorporation documents, board approvals, and corporate governance A proper startup formation process usually includes charter documents, bylaws, incorporator and board consents, founder stock purchase agreements, stockholder approvals, and organized corporate records. These documents matter because they establish ownership, authority, and legal continuity. Missing signatures, inconsistent approvals, or incomplete records often surface later during fundraising, diligence, or a founder dispute. ### IP assignment, confidentiality, and early hiring documents If the company does not own its code, product, brand assets, and other core work product, formation is not complete. Founders usually need IP assignment and confidentiality agreements for founders, employees, and contractors, along with practical help on offer letters, contractor agreements, and option-related paperwork. These issues routinely become diligence problems if they are left unresolved. ### When to Work with a Startup Formation Lawyer Most founders hire startup formation counsel when they are ready to incorporate, issue founder stock, finalize vesting, hire the first employee or contractor, adopt an option plan, or prepare for a pre-seed or seed round. Others reach this point when the company already exists but the paperwork is incomplete, the cap table is unclear, or early legal work needs cleanup before investors ask hard questions. - You are choosing between an LLC and a Delaware C corporation - You need founder stock, vesting, or stock purchase agreements documented correctly - You want to confirm the company owns all founder and contractor IP - You are hiring early employees or contractors and need clean paperwork - You are getting ready for pre-seed, seed, or diligence review ### How I Help Clients through Startup Formations Startup formations often move quickly, but they still benefit from careful sequencing, clear documentation, and sound judgment. I help founders address the core formation issues in a way that supports both the company’s immediate launch and its readiness for financing, hiring, and diligence. - Evaluating entity choice, ownership structure, and formation objectives - Documenting founder equity, vesting, and stock issuance - Preparing core post-incorporation documents and approvals - Addressing IP, hiring, and diligence-readiness issues early ### Startup Formation Lawyer FAQs **Do I need a lawyer to form a startup?** Not in every case, but many founders find legal advice useful when the formation involves multiple founders, vesting, intellectual property issues, contractor history, cross-border considerations, or plans to raise capital. The more the company’s structure and documentation will matter to future hiring, financing, or diligence, the more useful it can be to address those issues carefully at the outset. **When is the right time to work with a startup formation lawyer?** It is often best to involve counsel early, while the company is still making foundational decisions about entity choice, founder equity, vesting, intellectual property, and initial documentation. At that stage, the work is usually more straightforward and can help reduce the likelihood of cleanup later when the company is hiring, raising capital, or preparing for diligence. **Should my startup formation lawyer recommend an LLC or a Delaware C corporation?** For many venture-backed startups, a Delaware C corporation is often the more familiar path because it aligns with common financing, equity, and governance expectations. That said, entity choice should still be evaluated in light of the company’s business model, tax considerations, growth plans, and the founders’ broader objectives. For a broader framework for evaluating these decisions, see [the Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). **What documents does a startup need after incorporation?** A well-prepared post-incorporation file often includes charter documents, bylaws, board approvals, founder stock purchase documents, vesting terms, IP assignment agreements, confidentiality agreements, and organized corporate records. The appropriate set of documents can vary based on how the company is structured and what it expects to do next, including hiring, granting equity, or raising capital. **Do startup founders need vesting?** In many cases, yes. Founder vesting is commonly used to align long-term ownership with continued involvement in the business and to reduce the risk of imbalance if a founder leaves early. It is also a point that investors and later counsel often expect to see addressed clearly. **When should I work with a startup formation lawyer instead of relying on templates or AI tools?** Templates and AI tools can be useful for understanding the basic formation process and identifying common documents, but they do not replace legal judgment applied to a company’s specific facts. Formation issues often turn on details such as founder relationships, equity arrangements, prior contractor work, intellectual property ownership, cross-border considerations, and financing plans. Where those issues are present, tailored legal advice is often helpful in making sure the structure and documentation fit the company’s actual situation and hold up as the business grows. ## Considering Startup Formation Counsel For founders who want to place the company on a sound legal footing, formation is often the stage at which careful structuring matters most. Thoughtful work on entity choice, founder equity, post-incorporation documents, and IP ownership can help reduce avoidable issues later as the company hires, raises capital, and moves through diligence. Every startup begins with a set of early decisions that can shape the company well beyond formation. Addressing those decisions with care at the outset can make later stages of growth more orderly, more efficient, and less distracting. If you would like to discuss your company’s formation in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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Many founders looking for a seed round lawyer or seed financing lawyer are also trying to decide whether to use SAFEs, convertible notes, or a priced seed round, and how those choices may affect dilution, investor expectations, and future fundraising flexibility. Careful legal support at this stage can help the company raise capital more efficiently while preserving room for what comes next. Founders often reach this stage when they are beginning an angel round, comparing SAFEs to convertible notes, or preparing for a priced seed financing. In practice, many companies searching for a startup financing lawyer at this stage need help evaluating structure, reviewing documents, coordinating approvals, and understanding how early investor terms may shape the cap table and the company’s next round. For a broader overview of how fundraising fits into the larger legal lifecycle of a startup, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). For a practical overview of early-stage fundraising and the differences between SAFEs and notes, see [Seed Funding: Complete SAFEs vs Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide). Depending on the financing, other cornerstone resources may also be relevant, including [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting), [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide), and the [Startup Board of Directors Guide](https://startuplawyer.com/board-of-directors/startup-board-of-directors-guide). If you would like to discuss a seed financing and how I may assist, I would be glad to speak with you. Please visit the [Contact page](https://startuplawyer.com/contact). ### What a Seed Funding Lawyer Does Seed funding work often includes helping the company choose an appropriate financing structure, prepare and review financing documents, coordinate board and stockholder approvals, address cap table implications, and work through investor comments and closing process. The objective is not simply to complete the round. It is to help the company raise capital on terms that make sense in light of the company’s stage, financing needs, and future fundraising plans. - SAFEs, convertible notes, and priced seed financing structures - Financing document review, negotiation, and closing support - Cap table, dilution, and investor-rights considerations - Board approvals, company-side process, and financing readiness ### Why Founders Work With Me on Seed Funding Matters Founders often want seed funding counsel who can help them understand not only the documents, but also the practical consequences of the financing choices in front of them. The value is not merely papering the round. It is helping the company assess structure, dilution, investor expectations, and execution risk in a way that supports the company’s longer-term financing path. For more on experience and perspective, see the [Author page](https://startuplawyer.com/author "Author"). - Practical judgment on financing structure, investor comments, and closing process - A measured approach to dilution, governance implications, and future fundraising flexibility - Advice informed by startup, venture, and transactional experience across a range of financing settings ### Experienced Seed Funding Lawyer Clients typically want seed funding counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. Although I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how transactions are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is useful because financing transactions are not all negotiated the same way. Different investors, markets, and deal structures call for different judgment, negotiation instincts, and execution strategies. That perspective also helps with seed financings by informing how the company is structured, documented, and positioned before and during the round. I bring that perspective to each engagement so the company is better positioned to proceed efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia ### How I Help Clients through Seed Financings Seed financings often move quickly, but they still benefit from careful sequencing, clear documentation, and practical judgment. I help founders work through the key financing decisions in a way that supports both the immediate round and the company’s readiness for what may follow. That often means helping the company think beyond the current closing and address how the structure, investor terms, and documentation may affect later rounds, governance, and cap table flexibility. I approach that work with an eye toward both execution and the company’s longer-term financing path. - Assessing financing structure, investor terms, and cap table implications - Reviewing and negotiating financing documents with attention to future rounds - Coordinating approvals, closing steps, and financing-readiness issues - Helping founders evaluate dilution, investor requests, and company-side process questions - Working to preserve flexibility for later financings and strategic decisions ### Choosing Between SAFEs, Convertible Notes, and a Priced Seed Round One of the most common questions in seed financing is whether the company should raise on SAFEs, convertible notes, or a priced seed round. The answer depends on the company’s stage, investor base, timeline, documentation goals, and how much precision the founders want around valuation, dilution, governance, and future financing mechanics. A seed funding lawyer can help the company evaluate those tradeoffs deliberately rather than defaulting to the most familiar form. ### Seed Funding Lawyer FAQs **When should a startup work with a seed funding lawyer?** It is often useful once the company begins discussing terms with investors or deciding whether to use SAFEs, convertible notes, or a priced seed round. **What does a seed funding lawyer usually help with?** The work often includes financing structure, document review and negotiation, board approvals, cap table issues, investor comments, and closing support. **Should a startup use a SAFE, a convertible note, or a priced seed round?** That depends on the company’s stage, investor mix, timing, documentation goals, and how much pricing and governance complexity the company is prepared to address in the round. **What should founders prepare before starting a seed round?** It is often helpful to make sure formation documents, cap table records, founder equity, intellectual property assignments, and board approvals are in good order before active investor discussions begin. **Can a seed funding lawyer help with dilution and cap table questions?** Yes. Early-stage financing choices often affect dilution, conversion outcomes, investor rights, and the company’s flexibility in later rounds, so those issues are often worth addressing carefully at the outset. **When do investor terms start to matter in a seed round?** They often begin to matter as soon as valuation mechanics, caps, discounts, MFN terms, pro rata rights, board questions, or side letters enter the discussion, even in a relatively early financing. ## Considering Seed Funding Counsel For founders preparing to raise a seed round, careful legal support can help make the financing more orderly, more informed, and more efficient. Thoughtful work on structure, documentation, and process can also help preserve flexibility for future rounds. If you would like to discuss a seed financing in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact "Contact"). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) **Published:** May 13, 2026 **Author:** Ryan Roberts **Content:** I represent founders, startups, and growth-stage companies in startup financings, including SAFEs, convertible notes, seed rounds, venture financings, and term sheet negotiations. A startup financing lawyer should do more than explain documents. Sophisticated financing counsel helps founders assess market terms, identify pressure points early, negotiate from a position of clarity, and close efficiently without sacrificing long-term flexibility. The right financing structure should work not only for today’s closing, but also for the next financing, future diligence, strategic transactions, and an eventual exit. If you are considering when to bring in counsel or what the engagement typically looks like, you can read more about [working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). If you have a draft term sheet, SAFE, convertible note, or priced-round documents in front of you, that is the right time to involve a startup financing lawyer. If you are raising capital or reviewing financing documents now, [contact me here](https://startuplawyer.com/contact) to discuss the transaction, timing, and the most practical path forward with experienced company-side startup fundraising counsel. ## Legal Support for Startup Financings Startup financing decisions can affect ownership, governance, investor rights, cap table integrity, and future fundraising flexibility long after the money is received. I advise companies on startup financing transactions with a practical, commercially grounded approach focused on disciplined execution and long-term positioning. Whether the company is raising its first outside capital or negotiating a more complex venture financing, the objective is not simply to get the documents signed. It is to structure and document the transaction in a way that supports the company’s development with as little avoidable friction as possible. - SAFE financings, including post-money SAFE review and related side terms - Convertible note financings, including cap, discount, interest, maturity, and conversion analysis - Priced seed and venture equity rounds - Term sheet review, negotiation strategy, and investor document coordination - Cap table, dilution, and investor-rights issue spotting - Closing management, approvals, and post-closing cleanup ## Who Should Hire a Startup Financing Lawyer This page is for founders and companies that want practical, company-side financing counsel grounded in both market practice and deal judgment. It is particularly relevant for startups looking for a startup fundraising lawyer to help them navigate an active or approaching financing. Typical clients include: - Founders raising a first angel, SAFE financing, or seed round - Companies reviewing a convertible note, investor side letter, or priced-round term sheet - Startups negotiating with new investors while managing existing investor relationships - Companies that want a startup financing attorney, SAFE financing lawyer, venture financing lawyer, or venture capital lawyer who primarily represents the company side - Founders who want practical advice on which terms warrant attention and what is right for the company’s next stage ## Experience in Startup and Venture Financings Clients typically want financing counsel with sound judgment, market fluency, and a disciplined approach to execution. I bring more than 20 years of experience advising on startup, venture, and transactional matters, including transactions representing more than $1 billion in aggregate value. While I primarily represent companies, I also have experience representing venture funds and other investors, which provides a useful perspective on how deals are evaluated on both sides of the table. My work has ranged from helping startups close early angel financings in Texas to advising on nine-figure rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. That breadth is valuable because financing transactions are not all negotiated the same way. Different investors, markets, and deal structures call for different judgment, different negotiation instincts, and different execution strategies. I bring that perspective to each engagement so the company is better positioned to close efficiently, on sound terms, and with flexibility preserved for what comes next. - More than 20 years advising startups, founders, and investors on venture and transactional matters - Transactions representing more than $1 billion in aggregate value - Primarily company-side representation, informed by experience acting for venture funds and other investors - Experience across financings ranging from early angel rounds to nine-figure venture transactions - Cross-border work involving startups and investors across the United States, Europe, Asia, Latin America, and Australia Additional background on my practice and experience is available on my [Author page](https://startuplawyer.com/author). ## Why Founders Hire a Startup Financing Lawyer **Judgment, not just information.** Financing documents can appear straightforward until the economic terms, conversion mechanics, governance provisions, investor rights, and closing conditions are examined in context. That is one reason experienced counsel continues to matter, even in an era of abundant online resources and increasingly capable AI tools. Information can help explain what a term means, and sometimes what is considered market or standard. But [startup financings still require judgment](https://startuplawyer.com/startup-lawyer/ai-didnt-kill-startup-lawyers-it-just-gave-everyone-better-tools). **Market is a reference point, not the answer.** The more difficult question is often not what a provision says in the abstract, but what is right for this company, this investor group, this stage of growth, and this transaction in light of the company’s broader objectives. In practice, that means advising not only on whether a term is market, but also on when a market position should apply, when an exception may be warranted, and when a supposedly standard provision may not fit the deal as well as it first appears. **Deals are negotiated by people, not just documents.** No matter the advances of technology, there are still people on both sides of the table. Personalities, negotiating styles, individual quirks, and sometimes emotion often find their way into the process and, in turn, into the deal and documents themselves. **As companies grow, the table often gets more crowded.** New investor groups may come into the deal while existing investors remain involved, which means there may be more than two sides to the negotiation table. Part of the value of experienced counsel is helping founders sort through those dynamics, navigate the different constituencies, separate signal from noise, and move the transaction toward a sound and workable result. - You received a SAFE, convertible note, or priced-round term sheet and want a prompt, commercially grounded review - You want to understand valuation caps, discounts, pro rata rights, protective provisions, and other control terms before signing - You need help coordinating investor counsel, signatures, approvals, closing items, and post-closing records - You want to raise capital without creating preventable cap table or diligence issues for the next transaction ## Why a Startup Financing Lawyer Matters Beyond Closing Founders often focus, understandably, on getting the round closed. But experienced startup financing counsel also evaluates how the deal will function after closing. That means looking at whether the economics, control terms, side rights, approvals, and document architecture will continue to work as the company grows, takes on new investors, expands its option pool, enters significant commercial relationships, or moves toward an acquisition. In other words, the analysis is not limited to whether the deal can close today. It is also about preserving practical flexibility as the company develops. - Reduce the risk that rights granted now create leverage issues in the next financing - Identify cap table, dilution, and consent mechanics that may complicate future raises or exits - Keep governance and approval structures workable as the company grows - Avoid one-off concessions that are easy to sign today and difficult to manage later - Position the company for cleaner diligence in later financings, strategic transactions, and acquisitions For a broader view of how financing fits within the company’s legal development, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). ## Why Standard Startup Financing Documents Often Require Negotiation Over time, startup financing document sets such as SAFEs and priced rounds have become more standardized at the base-form level. But in practice, it is relatively uncommon for investors to sign templates entirely as-is. More often, the real negotiation happens in the additional provisions layered on top: side letters, pro rata rights, MFN provisions, information rights, consent mechanics, protective terms, board observer requests, special closing conditions, and other bespoke asks that can materially change the deal. That is one reason experienced financing counsel remains valuable even when the core documents appear familiar. The issue is often not the template itself. It is the added language and negotiated rights that sit around it and continue to matter long after closing. The same is true across the principal financing structures founders are most likely to encounter. ## Types of Startup Financings: SAFEs, Notes, Seed Rounds, and Venture Financings Different financing structures solve different problems, and each carries different implications for dilution, control, and future transaction planning. ### SAFE Financings SAFEs are often used when speed and simplicity are priorities, but founders still need to understand how valuation caps, discounts, MFN mechanics, and multiple instruments may interact over time. ### Convertible Notes Convertible notes may be appropriate in the right context, but maturity, accrued interest, default dynamics, and conversion leverage warrant careful review. ### Seed Rounds Priced seed rounds offer clearer ownership outcomes and a more complete financing architecture, but they also tend to involve more extensive negotiation around governance, investor rights, liquidation preferences, protective provisions, and closing mechanics. ### Venture Financings The right venture financing round structure and terms should be guided by the company’s stage, investor mix, timing, and longer-term financing strategy, rather than by what happens to be the quickest document set to sign in the moment. For a broader discussion of early-stage financing structures, see my [Seed Funding guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide). For a more detailed discussion of venture term sheets, see my [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide). ## Common Startup Financing Issues I Help Solve Many founders do not come to a startup financing lawyer because they want a generic overview of financing documents. They come because a deal is moving, investor asks are becoming more particular, or the company wants to avoid creating unnecessary friction in the next transaction. Common issues include: - A SAFE, note, or term sheet that appears standard at first glance but includes side terms that change the deal economics or control dynamic - Investor requests for side letters, pro rata rights, MFN provisions, information rights, or board observer rights - Questions about whether a commonly accepted term actually fits this company’s seed round or venture financing - Managing the negotiation when founders, existing investors, and new investors do not view the deal the same way - Need for a term sheet lawyer or seed round lawyer to review documents quickly without losing sight of the long-term picture - Cleanup issues involving approvals, cap table records, or post-closing documents before the next financing or diligence process ## How I Help Clients Through Startup Financings Startup financings often move quickly, but they should still be handled with discipline. My role is to help clients understand the deal, focus on the terms that matter, manage the moving pieces, and close efficiently. 1. **Initial review and deal mapping** to understand the proposed financing, the timeline, the cap table context, the investor mix, and the issues most likely to affect leverage, speed, and closing. 2. **Term, structure, and judgment analysis** so the company understands not only what the documents say, but which economic, control, and long-term flexibility points truly matter for this particular deal. 3. **Documentation, negotiation, and coordination** with focused revisions, practical communication, and careful management of founders, existing investors, new investors, and counsel so the process keeps moving without losing sight of the company’s priorities. 4. **Closing execution and post-closing follow-through** so approvals, signatures, cap table updates, records, and cleanup are handled properly and with an eye toward future diligence and later transactions. ## Frequently Asked Questions About Startup Financings ### Can you review a SAFE or convertible note quickly? Yes. Financing timelines often move quickly, and a focused review can help founders identify the principal legal, economic, governance, and long-term flexibility issues without slowing the transaction unnecessarily. ### Do founders need a lawyer for a SAFE financing? Often, yes. SAFEs are simpler than priced rounds at the base-document level, but the practical issues are frequently found in side letters, investor-rights requests, cap table planning, and the effect of the deal on later financings. ### What does a startup financing lawyer help with in a priced round? Typical work includes term sheet review, financing structure analysis, negotiation of the principal and ancillary documents, board and stockholder approvals, closing management, and post-closing record organization. Just as importantly, counsel can help evaluate how priced-round terms may affect governance, later financings, strategic options, and exit flexibility. ### Do I need a startup financing lawyer for a seed round or to review a term sheet before signing? In many cases, yes. A seed round lawyer or term sheet lawyer can help founders understand the economic and control terms that are likely to carry through the full document set, identify what is negotiable, and avoid agreeing too quickly to provisions that may create friction in the next financing. ### What does a venture capital lawyer do for startups? For startups, a venture capital lawyer or startup financing lawyer typically helps evaluate term sheets, negotiate financing documents, coordinate approvals and closing, and assess how investor rights, governance terms, and cap table decisions may affect future rounds and strategic flexibility. ### When should a startup bring in a startup financing lawyer? Ideally before signing a term sheet or circulating final documents. Early legal review usually gives founders more room to understand the terms, negotiate intelligently, and structure the transaction in a way that works not just for this financing, but for the company’s likely next transaction as well. If documents are already in motion, it is usually still worthwhile to involve counsel promptly. ## Considering a Startup Financing Lawyer If you are reviewing a SAFE, negotiating a convertible note, working through a priced round, or preparing for investor diligence, I can help you assess the terms, negotiate the documents, and manage the process efficiently. Startup financings involve more than defined terms on a page. They also involve judgment, context, and navigating the people and constituencies around the table. If you would like to discuss your company’s financing in more detail, I would be glad to speak with you about your plans and priorities. Please visit the [Contact page](https://startuplawyer.com/contact). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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If you are looking for a U.S. startup lawyer for non-U.S. founders, a Delaware C-Corp lawyer, or counsel with experience representing cross-border startups, this page explains the work I handle and the issues that commonly arise when a company is built outside the U.S. but financed or structured through a U.S. entity. If you’d like to discuss a matter, [contact me here](https://startuplawyer.com/contact). **About Ryan Roberts:** I’m a [US startup lawyer](https://startuplawyer.com/author) with more than 20 years in practice, advising founders and companies on formation, equity and governance, SAFEs and venture financings, acquisitions, and the corporate and commercial work that supports growth. Over the course of my practice, I have handled transactions totaling more than $1 billion. My work has ranged from helping startups close seed and venture capital financings in California, New York, and Texas to advising on nine-figure venture rounds in Singapore, as well as cross-border matters involving startups and investors across the United States, Europe, Asia, Latin America, and Australia. I work with founders in the United States and abroad, including companies whose teams, operations, customers, or technical talent are based outside the U.S. even though the parent entity is a Delaware corporation. - **Delaware startup formation and founder setup** (formation, founder equity, vesting, governance, parent-subsidiary and cross-border structuring issues) - **Seed financing and venture capital** (SAFEs, convertible notes, priced rounds, investor documents, closing support) - **Cross-border startup legal support** (U.S. corporate documentation coordinated with teams, contractors, subsidiaries, and operations outside the U.S.) - **M&A and strategic transactions** (LOIs, diligence, purchase agreements, and exit planning for Delaware corporations with international operations) ## U.S. Startup Lawyer Services for Non-U.S. Founders With Delaware C-Corps I work with non-U.S. founders, international startups, and growth-stage companies that are headquartered, staffed, or operating outside the United States but have formed, or plan to form, a Delaware corporation to raise capital and engage with U.S. investors, venture capital funds, counterparties, and acquirers. Typical clients include international startups preparing for Delaware formation, founders cleaning up founder equity or governance issues before a seed financing or priced round, and companies that want a U.S. startup lawyer for cross-border corporate work, startup financing, venture capital, and M&A. If you want a broader overview of the issues startups tend to face as they grow, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). If you are evaluating what it is like to work with outside counsel on an ongoing basis, you can also read more about [working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). ## Why Non-U.S. Founders Hire a U.S. Startup Lawyer For many non-U.S. founders, the key issue is not finding a lawyer in their home country. It is finding a U.S. startup lawyer who regularly works on Delaware formation, founder equity, venture financings, seed rounds, governance, commercial contracts, and startup acquisitions. U.S. investors, accelerators, and acquirers often expect a clean Delaware C-Corp structure and documentation that fits U.S. market practice. That means international founders usually benefit more from working with a U.S. startup lawyer who understands Delaware startup practice and venture-backed execution than from working with a lawyer who happens to be physically close to the operating team. ### U.S. Startup Lawyer for Delaware Formation and Founder Setup International startups often face early structural questions that affect fundraising, hiring, IP ownership, governance, tax coordination, and diligence later. As a lawyer handling Delaware formation for startups, I help founders form and organize Delaware entities, document founder relationships, address [vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) and governance, and think through ownership and documentation issues that commonly arise when founders, employees, or contractors are based in multiple countries. A clean Delaware startup formation can reduce friction significantly when investors or buyers begin diligence. - Delaware entity formation and organizational documents - Founder equity, vesting, board approvals, and governance basics - Cap table organization and option pool planning where appropriate - IP assignment, confidentiality, and onboarding documents for globally distributed teams ### U.S. Startup Lawyer for Seed Financing and Venture Capital Many non-U.S. founders use a Delaware C-Corp because they plan to raise from U.S. angels, seed investors, or venture capital funds, or because they want a structure that is familiar to startup investors and counterparties. Whether you are reviewing a [SAFE](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide), negotiating a convertible note, or working through a [venture capital financing](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide), I help founders understand what is market, what is negotiable, and what should be addressed before signing. If you need a U.S. startup lawyer for seed financing, venture capital, or Delaware startup financing documents, I help companies close efficiently on workable terms while staying organized for the next round. - Term sheet review and negotiation support - SAFEs and convertible notes - Priced rounds and investor rights documentation - Closing management and post-closing corporate cleanup ### U.S. Startup Lawyer for M&A and Exit Transactions An acquisition can be more complicated when the Delaware parent is only one part of a broader international operating structure. I represent founders and buyers in startup M&A transactions involving diligence, letters of intent, definitive agreements, and closing coordination, with attention to the practical issues that often arise when contracts, personnel, assets, or subsidiaries sit outside the United States. Founders can also benefit from thinking about [startup acquisition preparation](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) before a transaction becomes active. - LOIs and deal structure evaluation - Diligence planning and response support - Purchase agreement drafting and negotiation - Closing coordination and post-close follow-through ### U.S. Startup Lawyer for Cross-Border Corporate and Commercial Work International founders often need a U.S. lawyer not just for one financing, but for the recurring corporate and commercial work that helps a Delaware company stay organized and transact efficiently. I draft, review, and negotiate the agreements that support scaling, including customer contracts, contractor and employment documents, option plan materials, board and stockholder approvals, and other corporate records. You can also read more about [startup commercial contracts](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) and [outside counsel support](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). - Customer agreements, including MSAs, SOWs, and SaaS terms - Employment and contractor agreements, including IP and confidentiality basics - Option plans and other equity incentive documentation - Board, stockholder, vendor, and operational corporate support ## Working Remotely With a U.S. Startup Lawyer Most of this work can be handled efficiently by phone, video, and email. For international founders, what usually matters is responsiveness, familiarity with Delaware venture practice, and the ability to move transactions forward across time zones. I regularly work with companies whose founders, employees, customers, and investors are not all in one place. That makes it possible to support a Delaware corporation effectively even when the operating business is based abroad. ## Common Legal Issues for Non-U.S. Founders Non-U.S. founders and international startups often encounter a similar set of legal pressure points: Delaware formation, founder equity and vesting, IP ownership across borders, alignment between U.S. corporate paperwork and non-U.S. operations, seed financing and venture capital readiness, and corporate cleanup before M&A or investor diligence begins. The right legal support should help the company stay investable, commercially ready, and better positioned for diligence without creating unnecessary drag. - Forming a Delaware C-Corp before a U.S. accelerator, investor process, or priced financing - Documenting founder equity, vesting, IP assignments, and governance across multiple jurisdictions - Reviewing a SAFE, note, or venture financing term sheet from a U.S. investor - Cleaning up cap table, approvals, and corporate records before diligence - Preparing a Delaware parent and international operating structure for acquisition discussions ## Why Work With Me Founders usually do not need unnecessary complexity. They need clear judgment, practical documents, and a process that helps the company keep moving. My practice is centered on startup legal work, including formation, founder matters, financings, commercial contracts, and acquisitions. Over the course of my practice, I have handled transactions totaling more than $1 billion across many different countries. I aim to help clients make sound structural decisions, execute efficiently, and avoid the documentation gaps that often create friction later in fundraising, diligence, and exits. ## What Working With a U.S. Startup Lawyer Looks Like 1. **Initial conversation** to understand the company, structure, timeline, and immediate priorities. 2. **Scoping and planning** so the company understands the workstream, assumptions, and likely next steps. 3. **Execution** through drafting, review, negotiation, and transaction management as needed. 4. **Wrap-up** with a cleaner document set and guidance on what to address next. ## FAQs **Do non-U.S. founders need a U.S. startup lawyer for a Delaware C-Corp?** Often, yes, if the company has formed or plans to form a Delaware corporation, raise from U.S. investors, or use a U.S. parent company in its financing and exit strategy. In that situation, the relevant legal work is usually tied to U.S. corporate and venture practice rather than the founder’s physical location. **Can you help if I’m a non-U.S. founder but my startup has a Delaware C-Corp?** Yes. I regularly help founders who live and operate outside the U.S. but use a Delaware corporation for fundraising, governance, and transaction planning. **Can a U.S. startup lawyer help with SAFEs, seed rounds, and venture financings for international startups?** Yes. I help founders review and negotiate SAFEs, notes, venture capital term sheets, priced-round documents, and related closing materials, with an emphasis on practical execution and keeping the company organized for the next financing. **Does it matter where in the United States my lawyer is located?** Usually less than founders expect. For this type of work, the more important question is whether the lawyer regularly handles Delaware C-Corp formation, startup financing, governance, commercial contracts, and acquisitions for venture-backed or venture-oriented companies. **Can you help prepare our company for U.S. investor or buyer diligence?** Yes. Common diligence preparation work includes cleaning up formation documents, founder equity, cap table records, board and stockholder approvals, IP assignments, financing documents, and other corporate records that investors and acquirers commonly review. **Can we work together remotely if I’m based outside the U.S.?** Yes. Many of these matters can be handled efficiently by phone, video, and email, which is often the most practical approach for international founders and distributed teams. ## Related Resources If you are looking for more detailed guidance from a U.S. startup lawyer on Delaware formation, founder equity, startup financing, venture capital, commercial contracts, and acquisitions, these articles provide a useful starting point. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Seed Funding: Complete SAFEs vs. Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Talk to a U.S. Startup Lawyer for Non-U.S. Founders If you are a non-U.S. founder using a Delaware corporation or Delaware C-Corp for formation, seed financing, venture capital, day-to-day corporate work, or a potential acquisition, I’d be glad to discuss the matter. [Contact Ryan Roberts](https://startuplawyer.com/contact) to talk through the company’s structure, timing, and next steps with a U.S. startup lawyer experienced in Delaware startup work. To learn more about my background and experience advising startups, visit my [Author page](https://startuplawyer.com/author). For a more detailed overview of my practice and background, visit my [law firm attorney profile](https://robertszimmerman.com/ryan-roberts/). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Southlake Startup Lawyer](https://startuplawyer.com/southlake-startup-lawyer) **Published:** April 14, 2026 **Author:** Ryan Roberts **Content:** I’m [Ryan Roberts](https://startuplawyer.com/author), and I advise founders, startups, and growth-stage companies in Southlake on incorporation, founder equity, financings, commercial contracts, and acquisitions. If you are looking for a Southlake startup lawyer, this page provides an overview of the work I handle for founders in Southlake, Tarrant County, and the broader DFW market. Many clients need legal support that is practical, responsive, and able to keep pace with fundraising, customer contracts, hiring, and strategic transactions. If you’d like to discuss a matter, [contact me here](https://startuplawyer.com/contact). **About Ryan Roberts:** I’m a [startup-focused lawyer](https://startuplawyer.com/author) with more than 20 years in practice, advising founders and companies on formation, equity and governance, SAFEs and venture financings, acquisitions, and the corporate and commercial work that supports growth. Over the course of my practice, I have handled transactions totaling more than $1 billion. My approach is practical, transaction-focused, and commercially grounded. I work with companies in Southlake and across DFW, including businesses that value local accessibility, sound judgment, and efficient execution. - **Formation and founder planning** (entity formation, founder equity, vesting, governance) - **Financing support** (SAFEs, convertible notes, venture capital financings, priced rounds) - **Acquisitions and strategic transactions** (LOIs, diligence, purchase agreements, closing support) - **Corporate and commercial agreements** (customer contracts, option plans, employment and contractor documents) ## Startup Legal Services in Southlake I work with early-stage and growth-stage companies on the legal issues that matter as they build, raise capital, hire, negotiate customer relationships, and prepare for major transactions. Typical clients include venture-backed startups, founder-led businesses, and companies that want practical outside counsel as they scale. For a broader look at how legal needs tend to evolve as a company grows, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). If you are thinking about ongoing outside counsel support, you can also read more about [working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). ## Southlake Founders Often Value Responsive, High-Touch Counsel Southlake sits in a business-oriented part of DFW, with convenient access to regional business infrastructure and development activity, proximity to DFW Airport, and a local business community supported by organizations such as the Southlake Chamber of Commerce. Publicly available rankings and local business data also reflect a meaningful concentration of companies in Southlake and the surrounding area. In that setting, founders and management teams often want legal counsel that is accessible, commercially sensible, and able to support financings, contracts, and acquisitions without creating unnecessary drag. ### Formation, Founder Equity, and Core Company Documents Decisions made early often shape what happens later in fundraising, hiring, and diligence. I help Southlake founders evaluate [entity structure](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide), document founder relationships, address [vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) and governance, and put the company in a stronger position to sign customers, issue equity, and raise capital with fewer cleanup issues later. - Entity formation and related filings - Founder equity, vesting, and governance documents - Cap table organization and option pool planning - Employee and contractor onboarding documents, including IP and confidentiality basics ### SAFE Financings, Venture Capital Rounds, and Closing Support Whether the company is raising from angels, using a [SAFE](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide), negotiating a convertible note, or working through a venture capital financing, I help founders understand the economics, control terms, and closing mechanics that matter. The goal is to help the company complete the financing on workable terms and stay organized for what comes next. For a more detailed overview, see my [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. - Term sheet review and negotiation support - SAFEs and convertible notes - Venture capital and priced-round documentation - Closing management and post-closing cleanup ### Acquisitions, Exit Transactions, and Diligence Preparation I represent founders and buyers in acquisition transactions, from letters of intent through diligence, negotiation, definitive agreements, and closing. A thoughtful process can make a substantial difference in leverage, timing, and deal certainty. Founders can also benefit from thinking about [startup acquisition preparation](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) before a transaction is active. - LOIs and deal structure evaluation - Diligence planning and response support - Purchase agreement drafting and negotiation - Closing coordination and post-close follow-through ### Commercial Contracts and Outside Counsel Support Southlake founders often need practical support on the agreements that shape revenue growth and day-to-day operations. I draft, review, and negotiate customer and vendor agreements, employment and contractor documents, equity incentive materials, and other recurring corporate documents. You can also read more about [startup commercial contracts](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) and [outside counsel support](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) for scaling companies. - Customer contracts, including MSAs, SaaS terms, and SOWs - Employment and contractor agreements - Option plans and other equity incentive documentation - Vendor, partner, and operational agreements ## Working With Startups in Southlake, Tarrant County, and DFW I work with companies in Southlake and across the surrounding market, including founders in Tarrant County and elsewhere in DFW. Some matters benefit from in-person meetings, particularly around financings, acquisitions, or important planning discussions. Many others can be handled efficiently by phone and video, which allows founders to move quickly without sacrificing legal support. ## Common Legal Issues for Southlake Startups Southlake founders often need legal support that is responsive, practical, and oriented toward efficient execution. Common issues include forming the company on the right footing, documenting founder equity before the business gains traction, reviewing a first SAFE or venture financing, putting repeatable customer contracts in place, and cleaning up records before investor or buyer diligence begins. The right legal work should help the company keep moving while reducing avoidable risk. - Entity selection and founder documentation before an accelerator, investor conversation, or major customer deal - SAFE, venture financing, and priced-round review - Commercial contract processes that support sales without creating excessive legal drag - Ownership, IP, and governance cleanup before financing or acquisition diligence - LOI review and transaction planning for an acquisition or strategic sale ## Why Work With Me Founders are usually looking for sound judgment, practical documentation, and a process that lets the company keep moving. My practice is centered on startup legal work, including formation, founder matters, financings, commercial contracts, and acquisitions. Over the course of my practice, I have handled transactions totaling more than $1 billion. I aim to help clients make strong structural decisions, execute efficiently, and avoid the kinds of documentation gaps that create friction later. ## What Working With a Southlake Startup Lawyer Usually Looks Like 1. **Initial conversation** to understand the company, transaction, timeline, and immediate priorities. 2. **Scoping and planning** so the company understands the workstream, assumptions, and likely next steps. 3. **Execution** through drafting, review, negotiation, and transaction management as needed. 4. **Wrap-up** with a cleaner document set and guidance on what to address next. ## Southlake Startup Lawyer FAQs **Do I need a Southlake startup lawyer if my company operates across DFW?** Not necessarily, but many founders prefer counsel who understands the Southlake and broader DFW market and can support matters efficiently whether they are handled in person or remotely. **Can you help Southlake startups with SAFEs, venture financings, and priced rounds?** Yes. I help founders review and negotiate SAFEs, notes, venture capital term sheets, priced-round documents, and related closing materials, with an emphasis on practical execution and keeping the company organized for the next financing. **Should a Southlake startup form in Texas or Delaware?** It depends on the company’s fundraising goals, ownership structure, investor expectations, and operating plans. Many venture-backed startups use a Delaware C-Corp, while others may prefer a Texas entity depending on the company’s path. **Can you help with customer contracts and day-to-day corporate work for a Southlake startup?** Yes. Common projects include MSAs, SOWs, SaaS terms, contractor and employment agreements, equity incentive documents, vendor agreements, and other recurring transactional work. **Do you handle acquisitions for Southlake founders and buyers?** Yes. I support both buyers and sellers through LOIs, diligence, definitive agreements, and closing, with an emphasis on disciplined execution and clear deal terms. **Can we work together remotely if I’m in Southlake?** Yes. Many matters can be handled efficiently by phone and video, while in-person meetings can still be useful for selected negotiations, planning discussions, or transaction milestones. ## Related Resources If you are looking for more detailed guidance on Southlake startup formation, founder equity, startup financing, venture capital, commercial contracts, and acquisitions, these articles provide a useful starting point. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Seed Funding: Complete SAFEs vs. Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Talk to a Southlake Startup Lawyer If you are forming a company, addressing founder equity, evaluating a financing, refining key contracts, or preparing for a potential acquisition, I’d be glad to discuss the matter. [Contact Ryan Roberts](https://startuplawyer.com/contact) to talk through the context, timing, and next steps. To learn more about my background and experience advising startups, visit my [Author page](https://startuplawyer.com/author). For a more detailed overview of my practice and background, visit my [law firm attorney profile](https://robertszimmerman.com/ryan-roberts/). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Frisco Startup Lawyer](https://startuplawyer.com/frisco-startup-lawyer) **Published:** April 14, 2026 **Author:** Ryan Roberts **Content:** I’m [Ryan Roberts](https://startuplawyer.com/author), and I advise founders, startups, and growth-stage companies in Frisco on incorporation, founder equity, financings, commercial contracts, and acquisitions. If you are looking for a Frisco startup lawyer, this page provides an overview of the work I handle for founders in Frisco, Collin County, and the broader North Texas market. Many clients need legal support that is practical, responsive, and able to keep pace with financing activity, customer contracts, hiring, and strategic transactions. If you’d like to discuss a matter, [contact me here](https://startuplawyer.com/contact). **About Ryan Roberts:** I’m a [startup-focused lawyer](https://startuplawyer.com/author) with more than 20 years in practice, advising founders and companies on formation, equity and governance, SAFEs and venture financings, acquisitions, and the corporate and commercial work that supports growth. Over the course of my practice, I have handled transactions totaling more than $1 billion. My approach is practical, transaction-focused, and commercially grounded. I work with companies in Frisco and across North Texas, including businesses that want startup counsel with local familiarity and the flexibility to handle matters efficiently in person or remotely. - **Formation and founder planning** (entity formation, founder equity, vesting, governance) - **Financing support** (SAFEs, convertible notes, venture capital financings, priced rounds) - **Acquisitions and strategic transactions** (LOIs, diligence, purchase agreements, closing support) - **Corporate and commercial agreements** (customer contracts, option plans, employment and contractor documents) ## Startup Legal Services in Frisco I work with early-stage and growth-stage companies on the legal issues that matter as they build, raise capital, hire, negotiate customer relationships, and prepare for major transactions. Typical clients include venture-backed startups, founder-led technology and services businesses, and companies that want practical outside counsel as they scale. For a broader look at how legal needs tend to evolve as a company grows, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). If you are thinking about ongoing outside counsel support, you can also read more about [working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). ## Frisco Founders Often Need Counsel That Can Keep Pace With Capital and Growth Frisco’s business environment includes software, fintech, healthcare, AI, cybersecurity, sportstech, and other founder-led companies operating in a fast-moving part of North Texas. Recent local developments, including the new Origin innovation hub and Frisco’s efforts to expand its venture capital ecosystem, reflect a market where growth, capital formation, and commercial execution often move together. In that setting, founders often want legal counsel that is responsive, commercially sensible, and able to support financings, contracts, and acquisitions without slowing the business down. ### Formation, Founder Equity, and Core Company Documents Decisions made early often shape what happens later in fundraising, hiring, and diligence. I help Frisco founders evaluate [entity structure](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide), document founder relationships, address [vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) and governance, and put the company in a stronger position to sign customers, issue equity, and raise capital with fewer cleanup issues later. - Entity formation and related filings - Founder equity, vesting, and governance documents - Cap table organization and option pool planning - Employee and contractor onboarding documents, including IP and confidentiality basics ### SAFE Financings, Venture Capital Rounds, and Closing Support Whether the company is raising from angels, using a [SAFE](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide), negotiating a convertible note, or working through a venture capital financing, I help founders understand the economics, control terms, and closing mechanics that matter. The goal is to help the company complete the financing on workable terms and stay organized for what comes next. For a more detailed overview, see my [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. - Term sheet review and negotiation support - SAFEs and convertible notes - Venture capital and priced-round documentation - Closing management and post-closing cleanup ### Acquisitions, Exit Transactions, and Diligence Preparation I represent founders and buyers in acquisition transactions, from letters of intent through diligence, negotiation, definitive agreements, and closing. A thoughtful process can make a substantial difference in leverage, timing, and deal certainty. Founders can also benefit from thinking about [startup acquisition preparation](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) before a transaction is active. - LOIs and deal structure evaluation - Diligence planning and response support - Purchase agreement drafting and negotiation - Closing coordination and post-close follow-through ### Commercial Contracts and Outside Counsel Support Frisco founders often need practical support on the agreements that shape revenue growth and day-to-day operations. I draft, review, and negotiate customer and vendor agreements, employment and contractor documents, equity incentive materials, and other recurring corporate documents. You can also read more about [startup commercial contracts](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) and [outside counsel support](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) for scaling companies. - Customer contracts, including MSAs, SaaS terms, and SOWs - Employment and contractor agreements - Option plans and other equity incentive documentation - Vendor, partner, and operational agreements ## Working With Startups in Frisco, Collin County, and North Texas I work with companies in Frisco and across the surrounding market, including founders in Collin County and elsewhere in North Texas. Some matters benefit from in-person meetings, particularly around financings, acquisitions, or important planning discussions. Many others can be handled efficiently by phone and video, which allows founders to move quickly without sacrificing legal support. ## Common Legal Issues for Frisco Startups Frisco founders often need legal support that is responsive, practical, and oriented toward efficient execution. Common issues include forming the company on the right footing, documenting founder equity before the business gains traction, reviewing a first SAFE or venture financing, putting repeatable customer contracts in place, and cleaning up records before investor or buyer diligence begins. The right legal work should help the company keep moving while reducing avoidable risk. - Entity selection and founder documentation before an accelerator, investor conversation, or major customer deal - SAFE, venture financing, and priced-round review - Commercial contract processes that support sales without creating excessive legal drag - Ownership, IP, and governance cleanup before financing or acquisition diligence - LOI review and transaction planning for an acquisition or strategic sale ## Why Work With Me Founders are usually looking for sound judgment, practical documentation, and a process that lets the company keep moving. My practice is centered on startup legal work, including formation, founder matters, financings, commercial contracts, and acquisitions. Over the course of my practice, I have handled transactions totaling more than $1 billion. I aim to help clients make strong structural decisions, execute efficiently, and avoid the kinds of documentation gaps that create friction later. ## What Working With a Frisco Startup Lawyer Usually Looks Like 1. **Initial conversation** to understand the company, transaction, timeline, and immediate priorities. 2. **Scoping and planning** so the company understands the workstream, assumptions, and likely next steps. 3. **Execution** through drafting, review, negotiation, and transaction management as needed. 4. **Wrap-up** with a cleaner document set and guidance on what to address next. ## Frisco Startup Lawyer FAQs **Do I need a Frisco startup lawyer if my company operates across North Texas or DFW?** Not necessarily, but many founders prefer counsel who understands the Frisco and broader North Texas market and can support matters efficiently whether they are handled in person or remotely. **Can you help Frisco startups with SAFEs, venture financings, and priced rounds?** Yes. I help founders review and negotiate SAFEs, notes, venture capital term sheets, priced-round documents, and related closing materials, with an emphasis on practical execution and keeping the company organized for the next financing. **Should a Frisco startup form in Texas or Delaware?** It depends on the company’s fundraising goals, ownership structure, investor expectations, and operating plans. Many venture-backed startups use a Delaware C-Corp, while others may prefer a Texas entity depending on the company’s path. **Can you help with customer contracts and day-to-day corporate work for a Frisco startup?** Yes. Common projects include MSAs, SOWs, SaaS terms, contractor and employment agreements, equity incentive documents, vendor agreements, and other recurring transactional work. **Do you handle acquisitions for Frisco founders and buyers?** Yes. I support both buyers and sellers through LOIs, diligence, definitive agreements, and closing, with an emphasis on disciplined execution and clear deal terms. **Can we work together remotely if I’m in Frisco?** Yes. Many matters can be handled efficiently by phone and video, while in-person meetings can still be useful for selected negotiations, planning discussions, or transaction milestones. ## Related Resources If you are looking for more detailed guidance on Frisco startup formation, founder equity, startup financing, venture capital, commercial contracts, and acquisitions, these articles provide a useful starting point. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Seed Funding: Complete SAFEs vs. Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Talk to a Frisco Startup Lawyer If you are forming a company, addressing founder equity, evaluating a financing, refining key contracts, or preparing for a potential acquisition, I’d be glad to discuss the matter. [Contact Ryan Roberts](https://startuplawyer.com/contact) to talk through the context, timing, and next steps. To learn more about my background and experience advising startups, visit my [Author page](https://startuplawyer.com/author). For a more detailed overview of my practice and background, visit my [law firm attorney profile](https://robertszimmerman.com/ryan-roberts/). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Plano Startup Lawyer](https://startuplawyer.com/plano-startup-lawyer) **Published:** April 14, 2026 **Author:** Ryan Roberts **Content:** I’m [Ryan Roberts](https://startuplawyer.com/author), and I advise founders, startups, and growth-stage companies in Plano on incorporation, founder equity, financings, commercial contracts, and acquisitions. If you are looking for a Plano startup lawyer, this page provides an overview of the work I handle for founders in Plano, Collin County, and the broader North Dallas market. Many clients need legal support that is responsive, practical, and able to keep pace with fundraising, customer contracting, hiring, and strategic transactions. If you’d like to discuss a matter, [contact me here](https://startuplawyer.com/contact). **About Ryan Roberts:** I’m a [startup-focused lawyer](https://startuplawyer.com/author) with more than 20 years in practice, advising founders and companies on formation, equity and governance, SAFEs and venture financings, acquisitions, and the corporate and commercial work that supports growth. Over the course of my practice, I have handled transactions totaling more than $1 billion. My approach is practical, transaction-focused, and commercially grounded. I work with companies in Plano and across North Texas, including businesses that want startup counsel with local familiarity and the flexibility to handle matters efficiently in person or remotely. - **Formation and founder planning** (entity formation, founder equity, vesting, governance) - **Financing support** (SAFEs, convertible notes, priced rounds, venture capital financings) - **Acquisitions and strategic transactions** (LOIs, diligence, purchase agreements, closing support) - **Corporate and commercial agreements** (customer contracts, option plans, employment and contractor documents) ## Startup Legal Services in Plano I work with early-stage and growth-stage companies on the legal issues that matter most as they build, raise capital, hire, negotiate customer relationships, and prepare for major transactions. Typical clients include venture-backed startups, founder-led software and services businesses, and companies that want practical outside counsel as they scale. For a broader look at how legal needs tend to evolve as a company grows, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). If you are thinking about ongoing outside counsel support, you can also read more about [working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). ## Plano Founders Often Need Efficient Counsel for Growth and Financing Plano’s business environment includes software, SaaS, fintech, healthcare, enterprise technology, and other founder-led companies operating in a fast-moving North Dallas market. There is a meaningful concentration of startups and technology companies in Plano, reflecting a business community where growth, financing, and commercial execution often move in parallel. In that setting, founders often want legal counsel that is responsive, commercially sensible, and able to support financings, contracts, and acquisitions without slowing the business down. ### Formation, Founder Equity, and Core Company Documents Decisions made early often shape what happens later in fundraising, hiring, and diligence. As a Plano startup lawyer, I help Plano founders evaluate [entity structure](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide), document founder relationships, address [vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) and governance, and put the company in a stronger position to sign customers, issue equity, and raise capital with fewer cleanup issues later. - Entity formation and related filings - Founder equity, vesting, and governance documents - Cap table organization and option pool planning - Employee and contractor onboarding documents, including IP and confidentiality basics ### SAFE Financings, Venture Capital Rounds, and Closing Support Whether the company is raising from angels, using a [SAFE](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide), negotiating a convertible note, or working through a venture capital financing, I help founders understand the economics, control terms, and closing mechanics that matter. The goal is to help the company complete the financing on workable terms and stay organized for what comes next. For a more detailed overview, see my [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. - Term sheet review and negotiation support - SAFEs and convertible notes - Venture capital and priced-round documentation - Closing management and post-closing cleanup ### Acquisitions, Exit Transactions, and Diligence Preparation I represent founders and buyers in acquisition transactions, from letters of intent through diligence, negotiation, definitive agreements, and closing. A thoughtful process can make a substantial difference in leverage, timing, and deal certainty. Founders can also benefit from thinking about [startup acquisition preparation](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) before a transaction is active. - LOIs and deal structure evaluation - Diligence planning and response support - Purchase agreement drafting and negotiation - Closing coordination and post-close follow-through ### Commercial Contracts and Outside Counsel Support Plano founders often need practical support on the agreements that shape revenue growth and day-to-day operations. I draft, review, and negotiate customer and vendor agreements, employment and contractor documents, equity incentive materials, and other recurring corporate documents. You can also read more about [startup commercial contracts](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) and [outside counsel support](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) for scaling companies. - Customer contracts, including MSAs, SaaS terms, and SOWs - Employment and contractor agreements - Option plans and other equity incentive documentation - Vendor, partner, and operational agreements ## Working With Startups in Plano, Collin County, and North Dallas I work with companies in Plano and across the surrounding market, including founders in Collin County and elsewhere in North Dallas. Some matters benefit from in-person meetings, particularly around financings, acquisitions, or important planning discussions. Many others can be handled efficiently by phone and video, which allows founders to move quickly without sacrificing legal support. ## Common Legal Issues for Plano Startups Plano founders often need legal support that is responsive, practical, and oriented toward efficient execution. Common issues include forming the company on the right footing, documenting founder equity before the business gains traction, reviewing a first SAFE or venture financing, putting repeatable customer contracts in place, and cleaning up records before investor or buyer diligence begins. The right legal work should help the company keep moving while reducing avoidable risk. - Entity selection and founder documentation before an accelerator, investor conversation, or major customer deal - SAFE, venture financing, and priced-round review - Commercial contract processes that support sales without creating excessive legal drag - Ownership, IP, and governance cleanup before financing or acquisition diligence - LOI review and transaction planning for an acquisition or strategic sale ## Why Work With Me Founders are usually looking for sound judgment, practical documentation, and a process that lets the company keep moving. My practice is centered on startup legal work, including formation, founder matters, financings, commercial contracts, and acquisitions. Over the course of my practice, I have handled transactions totaling more than $1 billion. I aim to help clients make strong structural decisions, execute efficiently, and avoid the kinds of documentation gaps that create friction later. ## What Working With a Plano Startup Lawyer Usually Looks Like 1. **Initial conversation** to understand the company, transaction, timeline, and immediate priorities. 2. **Scoping and planning** so the company understands the workstream, assumptions, and likely next steps. 3. **Execution** through drafting, review, negotiation, and transaction management as needed. 4. **Wrap-up** with a cleaner document set and guidance on what to address next. ## Plano Startup Lawyer FAQs **Do I need a Plano startup lawyer if my company operates across North Dallas or DFW?** Not necessarily, but many founders prefer counsel who understands the Plano and broader North Dallas market and can support matters efficiently whether they are handled in person or remotely. **Can you help Plano startups with SAFEs, venture financings, and priced rounds?** Yes. I help founders review and negotiate SAFEs, notes, venture capital term sheets, priced-round documents, and related closing materials, with an emphasis on practical execution and keeping the company organized for the next financing. **Should a Plano startup form in Texas or Delaware?** It depends on the company’s fundraising goals, ownership structure, investor expectations, and operating plans. Many venture-backed startups use a Delaware C-Corp, while others may prefer a Texas entity depending on the company’s path. **Can you help with customer contracts and day-to-day corporate work for a Plano startup?** Yes. Common projects include MSAs, SOWs, SaaS terms, contractor and employment agreements, equity incentive documents, vendor agreements, and other recurring transactional work. **Do you handle acquisitions for Plano founders and buyers?** Yes. I support both buyers and sellers through LOIs, diligence, definitive agreements, and closing, with an emphasis on disciplined execution and clear deal terms. **Can we work together remotely if I’m in Plano?** Yes. Many matters can be handled efficiently by phone and video, while in-person meetings can still be useful for selected negotiations, planning discussions, or transaction milestones. ## Related Resources If you are looking for more detailed guidance on Plano startup formation, founder equity, startup financing, venture capital, commercial contracts, and acquisitions, these articles provide a useful starting point. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Seed Funding: Complete SAFEs vs. Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Talk to a Plano Startup Lawyer If you are forming a company, addressing founder equity, evaluating a financing, refining key contracts, or preparing for a potential acquisition, I’d be glad to discuss the matter. [Contact Ryan Roberts](https://startuplawyer.com/contact) to talk through the context, timing, and next steps. To learn more about my background and experience advising startups, visit my [Author page](https://startuplawyer.com/author). For a more detailed overview of my practice and background, visit my [law firm attorney profile](https://robertszimmerman.com/ryan-roberts/). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fort Worth Startup Lawyer](https://startuplawyer.com/fort-worth-startup-lawyer) **Published:** April 14, 2026 **Author:** Ryan Roberts **Content:** I’m [Ryan Roberts](https://startuplawyer.com/author), and I advise founders, startups, and growth-stage companies in Fort Worth on incorporation, founder equity, financings, commercial contracts, and acquisitions. If you are looking for a Fort Worth startup lawyer, this page provides an overview of the work I handle for founders in Fort Worth, Tarrant County, and the broader western side of DFW. Many clients need practical legal support that can keep pace with fundraising, customer contracting, hiring, and strategic transactions. If you’d like to discuss a matter, [contact me here](https://startuplawyer.com/contact). **About Ryan Roberts:** I’m a [startup-focused lawyer](https://startuplawyer.com/author) with more than 20 years in practice, advising founders and companies on formation, equity and governance, SAFEs and venture financings, acquisitions, and the corporate and commercial work that supports growth. Over the course of my practice, I have handled transactions totaling more than $1 billion. My approach is practical, execution-oriented, and commercially grounded. I work with companies in Fort Worth and across North Texas, including businesses that want startup counsel with local familiarity and the flexibility to handle matters efficiently in person or remotely. - **Formation and founder documentation** (entity formation, founder equity, vesting, governance) - **Startup financing** (SAFEs, convertible notes, priced rounds, venture financings) - **Acquisitions and exit transactions** (LOIs, diligence, purchase agreements, closing support) - **Corporate and commercial agreements** (customer contracts, option plans, employment and contractor documents) ## Startup Legal Services in Fort Worth I represent early-stage and growth-stage companies on the legal work that tends to matter most when a business is trying to build momentum without creating avoidable issues later. That includes founders preparing for a first financing, management teams tightening contracts before a larger commercial push, and companies that want experienced outside counsel for recurring corporate and transactional work. For a broader look at how legal needs tend to evolve as a company grows, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap). If you are thinking about ongoing outside counsel support, you can also read more about [working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). ## Fort Worth Founders Often Need Practical, Transaction-Focused Counsel Fort Worth’s startup environment includes technology, life sciences, mobility, industrial, healthcare, and other founder-led businesses building across Tarrant County and the wider North Texas market. Organizations like TechFW and Cowtown Angels reflect a local ecosystem that values disciplined execution, capital efficiency, and practical support for emerging companies. In that setting, founders often want legal counsel that is responsive, commercially sensible, and able to support financings, contracts, and acquisitions without slowing the business down. ### Formation, Founder Equity, and Early Structure Early structural decisions have a way of showing up later in fundraising, hiring, and diligence. I help Fort Worth founders evaluate [entity structure](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide), document founder relationships, address [vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) and governance, and put the company in a better position to sign customers, issue equity, and raise capital with fewer cleanup issues later. - Entity formation and related filings - Founder equity, vesting, and governance documents - Cap table organization and option pool planning - Employee and contractor onboarding documents, including IP and confidentiality basics ### SAFE Financings, Notes, and Venture Rounds Whether the company is raising from angels, using a [SAFE](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide), negotiating a convertible note, or working through a priced equity round, I help founders understand the economics, control terms, and closing mechanics that matter. The goal is not simply to get documents signed, but to help the company close on workable terms and stay organized for what comes next. For a more detailed overview, see my [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. - Term sheet review and negotiation support - SAFEs and convertible notes - Priced rounds and investor rights documentation - Closing management and post-closing cleanup ### Acquisitions, Diligence, and Exit Planning I represent founders and buyers in acquisition transactions, from letters of intent through diligence, negotiation, definitive agreements, and closing. A careful process can make a substantial difference in leverage, timing, and deal certainty. Founders can also benefit from thinking about [startup acquisition preparation](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) before a transaction is active. - LOIs and deal structure evaluation - Diligence planning and response support - Purchase agreement drafting and negotiation - Closing coordination and post-close follow-through ### Commercial Contracts and Ongoing Corporate Support Founders in Fort Worth often need practical support on the agreements that shape day-to-day operations and revenue growth. I draft, review, and negotiate customer and vendor agreements, employment and contractor documents, equity incentive materials, and other recurring corporate documents. You can also read more about [startup commercial contracts](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) and [outside counsel support](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) for scaling companies. - Customer contracts, including MSAs, SaaS terms, and SOWs - Employment and contractor agreements - Option plans and other equity incentive documentation - Vendor, partner, and operational agreements ## Working With Startups in Fort Worth, Tarrant County, and DFW I work with companies in Fort Worth and across the surrounding market, including founders in Tarrant County and elsewhere in DFW. Some matters benefit from in-person meetings, particularly around financings, acquisitions, or important planning discussions. Many others can be handled efficiently by phone and video, which allows founders to move quickly without sacrificing legal support. ## Common Legal Issues for Fort Worth Startups Fort Worth founders often want legal support that is steady, practical, and oriented toward execution. Common issues include forming the company on the right footing, documenting founder equity before the business gains traction, reviewing a first SAFE or note financing, putting repeatable customer contracts in place, and cleaning up records before investor or buyer diligence begins. The right legal work should help the company keep moving while reducing avoidable risk. - Entity selection and founder documentation before an accelerator, investor conversation, or major customer deal - SAFE, note, and priced-round review - Commercial contract processes that support sales without creating excessive legal drag - Ownership, IP, and governance cleanup before financing or acquisition diligence - LOI review and transaction planning for an acquisition or strategic sale ## Why Work With Me Founders are usually looking for sound judgment, practical documentation, and a process that lets the company keep moving. My practice is centered on startup legal work, including formation, founder matters, financings, commercial contracts, and acquisitions. Over the course of my practice, I have handled transactions totaling more than $1 billion. I aim to help clients make strong structural decisions, execute efficiently, and avoid the kinds of documentation gaps that create friction later. ## What Working With a Fort Worth Startup Lawyer Usually Looks Like 1. **Initial conversation** to understand the company, transaction, timeline, and immediate priorities. 2. **Scoping and planning** so the company understands the workstream, assumptions, and likely next steps. 3. **Execution** through drafting, review, negotiation, and transaction management as needed. 4. **Wrap-up** with a cleaner document set and guidance on what to address next. ## Fort Worth Startup Lawyer FAQs **Do I need a Fort Worth startup lawyer if my company operates across DFW?** Not necessarily, but many founders prefer counsel who understands the Fort Worth and broader DFW market and can support matters efficiently whether they are handled in person or remotely. **Can you help Fort Worth startups with SAFEs and priced rounds?** Yes. I help founders review and negotiate SAFEs, notes, term sheets, and priced-round documents, with an emphasis on practical execution and keeping the company organized for the next financing. **Can you help with venture capital financings for a Fort Worth startup?** Yes. I represent founders in venture capital financings, including term sheet review, financing document negotiation, investor rights packages, closing support, and related corporate cleanup so the company is well-positioned for the transaction and what follows. **Should a Fort Worth startup form in Texas or Delaware?** It depends on the company’s fundraising goals, ownership structure, investor expectations, and operating plans. Many venture-backed startups use a Delaware C-Corp, while others may prefer a Texas entity depending on the company’s path. **Can you help with customer contracts and day-to-day corporate work for a Fort Worth startup?** Yes. Common projects include MSAs, SOWs, SaaS terms, contractor and employment agreements, equity incentive documents, vendor agreements, and other recurring transactional work. **Do you handle acquisitions for Fort Worth founders and buyers?** Yes. I support both buyers and sellers through LOIs, diligence, definitive agreements, and closing, with an emphasis on disciplined execution and clear deal terms. **Can we work together remotely if I’m in Fort Worth?** Yes. Many matters can be handled efficiently by phone and video, while in-person meetings can still be useful for selected negotiations, planning discussions, or transaction milestones. ## Related Resources If you are looking for more detailed guidance on Fort Worth startup formation, founder equity, startup financing, venture capital, commercial contracts, and acquisitions, these articles provide a useful starting point. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Seed Funding: Complete SAFEs vs. Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Talk to a Fort Worth Startup Lawyer If you are forming a company, addressing founder equity, evaluating a financing, refining key contracts, or preparing for a potential acquisition, I’d be glad to discuss the matter. [Contact Ryan Roberts](https://startuplawyer.com/contact) to talk through the context, timing, and next steps. To learn more about my background and experience advising startups, visit my [Author page](https://startuplawyer.com/author). For a more detailed overview of my practice and background, visit my [law firm attorney profile](https://robertszimmerman.com/ryan-roberts/). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Texas Startup Lawyer](https://startuplawyer.com/texas-startup-lawyer) **Published:** May 13, 2026 **Author:** Ryan Roberts **Content:** I’m [Ryan Roberts](https://startuplawyer.com/author), and I advise founders, startups, and growth-stage companies doing business in Texas on incorporation, founder equity, financings, commercial contracts, and acquisitions. If you are looking for a Texas startup lawyer or startup attorney in Texas, this page provides an overview of the work I handle for companies operating across Texas, including businesses entering the state and management teams dealing with the legal issues that often accompany growth, financing, hiring, contracting, and exit planning. If you’d like to discuss a matter, [contact me here](https://startuplawyer.com/contact). **About Ryan Roberts:** I’m a [Texas startup lawyer](https://startuplawyer.com/author) with more than 20 years in practice, advising founders and companies on formation, equity and governance, SAFEs and venture financings, acquisitions, and the corporate and commercial work that supports growth. Over the course of my practice, I have handled transactions totaling more than $1 billion. My approach is practical and commercially grounded, with an emphasis on putting the right documents in place, keeping transactions moving, and addressing issues before they become more expensive or distracting later. I work with Texas founders across a range of industries, including software, SaaS, tech-enabled services, e-commerce, and other growth-oriented businesses. - **Startup formation and founder setup** (entity formation, founder equity, vesting, governance) - **Startup financing** (angel financings, SAFEs, convertible notes, priced rounds, venture capital transactions) - **Startup acquisitions** (LOIs, diligence, purchase agreements, closing support) - **General corporate and commercial contracts** (option plans, employment and contractor documents, customer and vendor agreements) ## Texas Startup Lawyer Services I work with early-stage and growth-stage companies, from first-time founders to repeat operators, on legal issues that affect financing, sales, hiring, and exit readiness. Typical clients include venture-backed startups, bootstrapped companies, founder-led businesses preparing for a financing, and companies that want practical outside counsel as they grow. If you want a broader overview of the issues companies typically face as they grow, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap), or [contact me here](https://startuplawyer.com/contact) if you’d like to discuss your company or a specific matter. If you are evaluating what it is like to engage counsel on an ongoing basis, you can also read more about [working with a startup lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer). ## Why Founders Across Texas Work With a Texas Startup Lawyer Many Texas startups operate across more than one market, whether that means building in multiple cities, hiring across the state, or expanding into Texas from elsewhere. In those situations, founders often need legal support that extends beyond formation, financings, contracts, and acquisitions to include questions about entity structure, Texas registration, governance, employment and contractor documentation, and related operational issues. The objective is to help the business grow in Texas on a sound legal foundation without creating unnecessary friction. ### Startup Formation and Founder Documentation Getting the company structured correctly at the outset can save substantial time, cost, and distraction later. I help Texas founders with startup formation, entity selection, founder documentation, [vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting), governance, and the legal groundwork needed to hire, contract, and raise capital on a cleaner foundation. For some founders, that means forming a Texas entity. For others, especially companies planning for venture financing, it may mean evaluating a Delaware C-Corp structure while making sure Texas operations are handled correctly. You can also read more about [startup incorporation and entity structure](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide). - Entity formation and related filings - Founder equity, vesting, and governance basics - Cap table hygiene and option pool planning where appropriate - Contractor and employee paperwork, including IP assignment and confidentiality basics ### Startup Financing: SAFEs, Notes, and Venture Capital Financings Whether you are raising an angel round, reviewing a [SAFE](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide), negotiating a [convertible note](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide), or working through a [venture capital financing](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide), I help founders move efficiently from term sheet to close. As a Texas startup financing lawyer, I focus on identifying what is market, what is negotiable, and what deserves attention before signing so the company can move forward with clarity and fewer surprises. - Term sheet review and issue spotting - SAFEs and convertible notes - Priced equity rounds and investor rights packages - Closing checklists, signatures, and post-close cleanup For a more detailed overview of how I help founders with SAFEs, notes, priced rounds, and venture financings, see my [Startup Financing Lawyer](https://startuplawyer.com/startup-financing-lawyer) page. ### Startup Acquisitions and Exit Transactions An acquisition is often one of the most consequential transactions in a company’s lifecycle. I support founders and buyers through letters of intent, diligence, negotiation, purchase agreement work, and closing, with an emphasis on disciplined execution and clear deal terms. [Preparing for startup acquisition](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) before a deal is active can also reduce friction and improve leverage later in the process. - Letters of intent and deal term negotiation - Legal diligence planning and diligence response support - Purchase agreements and ancillary transaction documents - Closing and post-closing transition items ### General Corporate and Commercial Contract Support As a company grows, the recurring legal work matters: hiring documents, equity incentives, customer terms, vendor agreements, and routine [commercial contract negotiation](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide). I draft, review, and negotiate the agreements that support scaling while keeping them practical for fast-moving businesses. For companies that want a trusted point of contact for ongoing legal work, I also provide [outside counsel style support](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) for day-to-day corporate and transactional needs. - Customer agreements, including MSAs, SOWs, and SaaS terms - Employment and contractor agreements, including IP and confidentiality basics - Equity incentive and option plan support - Vendor and partner agreements, plus contract process support for repeatable negotiation ## Startups and Founders Moving to Texas Texas continues to attract founders and companies opening offices, relocating operations, or increasing their presence in the state. For startups, a move to Texas can raise structural and operational questions, including whether to keep an existing entity, register to do business in Texas as an out-of-state company, form a Texas entity, or consider a broader restructuring. Those decisions often connect to governance, contracts, employment arrangements, equity administration, and longer-term financing considerations. I help relocating founders and companies evaluate those issues in a practical way. Depending on the situation, that may include reviewing whether the existing entity structure still fits the business, coordinating Texas formation or registration work, updating founder and governance documents, addressing employee and contractor documentation, tightening IP assignment coverage, reviewing contracts for consent or assignment issues, and preparing the company for a financing or acquisition after the move. The goal is to help the company establish or expand its Texas operations in a way that is orderly, practical, and well-positioned for what comes next. - Evaluating whether to keep an existing out-of-state entity, register it in Texas, or restructure - Handling Texas entity formation or foreign qualification where appropriate - Updating founder, governance, equity, employment, and contractor documentation after the move - Reviewing contracts for assignment, consent, notice, or operational transition issues - Helping the company stay organized for future fundraising, diligence, or exit work ## Texas Startup Lawyer: Serving Founders Across the State I work with companies operating across Texas, including founders in Austin, Dallas-Fort Worth, Houston, San Antonio, and other parts of the state, as well as businesses entering Texas from elsewhere. Some clients are looking for help with a specific transaction. Others want ongoing counsel as they expand hiring, contract activity, financing efforts, or physical operations in Texas. Many of these matters can be handled efficiently by phone and video, with in-person meetings where useful. ## Common Legal Issues for Texas Startups Texas startups often encounter legal questions that extend beyond the usual formation, financing, contract, and acquisition work. For some companies, the issue is how Texas operations should fit with an existing entity structure. For others, it is whether an out-of-state company should register here, how to align hiring and contractor documentation with a growing Texas presence, or how to address ownership, IP, and governance issues before diligence begins. These are the kinds of issues a Texas startup lawyer or Texas startup attorney is often asked to address when a company is expanding, raising capital, or preparing for a significant transaction. - Choosing between a Texas entity, a Delaware C-Corp, or an existing out-of-state structure based on the company’s actual plans - Registering an out-of-state company to do business in Texas where appropriate - Updating founder, equity, governance, and IP documentation before a financing or major commercial push - Building a repeatable contract process for customer and vendor agreements as Texas operations grow - Preparing for diligence in a financing, acquisition, or strategic transaction after expansion or relocation If you want a broader overview of the issues companies typically face as they grow, see the [Startup Legal Roadmap](https://startuplawyer.com/startup-lawyer-roadmap), or [contact me here](https://startuplawyer.com/contact) if you’d like to discuss your company or a specific matter. ## Why Work With Me Founders generally do not need unnecessary complexity. They need sound judgment, practical documentation, and a process that allows the business to keep moving. My Texas startup lawyer practice is centered on startup legal work, including formation, founder matters, financings, commercial contracts, acquisitions, and the issues that arise when a company is entering or expanding in Texas. Over the course of my practice, I have handled transactions totaling more than $1 billion. I aim to help clients make sound structural decisions, execute efficiently, and avoid documentation problems that can create leverage issues later. ## How Working With a Texas Startup Lawyer Typically Looks 1. **Intro call** to understand the company, timeline, priorities, and the immediate legal issue. 2. **Scope and plan** so the company understands what work is included, what assumptions matter, and how the project should move forward. 3. **Execution** with practical drafts, focused issue spotting, and negotiation support where needed. 4. **Closeout and next steps** with a clean document set and guidance on what to address next. ## Texas Startup Lawyer Frequently Asked Questions **Do I need a Texas startup lawyer to represent my startup?** Not always. Many matters can be handled remotely, and many startup legal issues are not tied to a single city. But founders often want counsel who understands the Texas market, can work efficiently across the state, and can advise on issues that affect Texas-based operations while also supporting financings, contracts, and acquisitions. **Can you help with Delaware C-Corp formation if I’m based in Texas?** Yes. Many venture-backed startups form as Delaware C-Corps even when operations are in Texas. The right choice depends on fundraising plans, ownership structure, tax and operational considerations, investor expectations, and where the company will actually do business. **Should a Texas startup form in Texas or Delaware?** It depends on the company’s fundraising goals, investor expectations, ownership structure, and operational plans. Many venture-backed startups choose a Delaware C-Corp, while others may prefer a Texas entity. The right answer depends on the company’s actual path, not a one-size-fits-all rule. **What’s the difference between a SAFE and a priced round?** A SAFE is usually a simpler early-stage financing instrument that converts into equity later. A priced round sells equity at an agreed valuation and typically includes a more developed investor rights package. **When should my startup start thinking about acquisition readiness?** Usually earlier than founders expect. Clean cap tables, clear IP ownership, consistent contracts, and organized records can make diligence faster and reduce deal friction. **Do you offer fixed-fee packages?** In many cases, yes, especially for common startup projects such as formation and some standard financing work. After an intro call, I can propose a scope and fee structure that fits the project. **Is there a difference between a startup lawyer and a startup attorney in Texas?** Not in any meaningful way. The more important question is whether the lawyer regularly handles startup formation, equity, financing, commercial contracts, and acquisition work. **Can you review a term sheet for a Texas startup?** Yes. A term sheet often sets the economic and control points that carry through the final documents. A focused review can help founders understand what is standard, what is negotiable, and what to prioritize. **Do you help Texas startups with SAFE financings?** Yes. I assist with drafting or reviewing SAFEs, aligning closing mechanics, and keeping cap table and post-close records organized for the next round. **Can you help with general corporate and transactional work for a Texas startup?** Yes. Common projects include customer MSAs and SOWs, SaaS terms, employment and contractor agreements, option plan support, NDAs, vendor agreements, and practical commercial contract negotiation support. **Do you handle acquisitions for Texas startups?** Yes. I support buyers and sellers through LOIs, diligence, purchase agreement negotiation, and closing, with an emphasis on clear deal terms and efficient execution. **When should I hire a Texas startup lawyer?** Common trigger points include forming the company, issuing founder equity, signing a major customer contract, raising outside capital, granting equity incentives, or receiving an LOI in a potential acquisition. **Can you help if my startup is moving to Texas from another state?** Yes. I can help evaluate whether it makes more sense to keep the existing entity, register it to do business in Texas, form a new Texas entity for part of the business, or consider a broader restructuring. I also help with the related contract, governance, equity, employment, and IP documentation issues that often come with a move. **Do I need to register my Delaware or other out-of-state startup to do business in Texas?** Sometimes. A company formed outside Texas may need to register in Texas if it is transacting business here. Whether registration is required depends on the company’s actual activities in Texas, including the nature of its operations, personnel, and business presence in the state. **What is foreign qualification in Texas for a startup?** Foreign qualification generally refers to registering an out-of-state entity to do business in Texas. For startups, that question often comes up when a Delaware corporation or another non-Texas entity opens operations, hires, signs contracts, or otherwise develops a meaningful presence in Texas. **Does moving a startup to Texas mean I should reincorporate in Texas?** Not necessarily. Some companies remain in their original state of formation and register to do business in Texas, while others evaluate whether a Texas entity or a broader restructuring makes sense. The answer depends on the company’s capitalization, investor expectations, tax considerations, governance, and long-term plans. **Can a Texas startup lawyer help if my company is based in Austin, Houston, Dallas, or another Texas city?** Yes. Many startup legal matters can be handled efficiently across Texas, whether the company is based in Austin, Houston, Dallas-Fort Worth, San Antonio, or another market. For many founders, the more important issue is working with counsel who regularly handles startup formation, financing, contracts, and acquisition work. **Should a startup in Texas form as a Texas LLC or a Delaware C-Corp?** That depends on the company’s goals. Many venture-backed startups choose a Delaware C-Corp, while some founder-led or closely held businesses may prefer a Texas LLC or other Texas entity. The right structure depends on fundraising plans, equity design, tax considerations, and how the business expects to grow. **Can we work together remotely if I’m in Texas?** Yes. Many matters can be handled efficiently by phone and video, while in-person meetings can still make sense for selected negotiations, planning sessions, or transaction milestones. ## Related Resources If you are looking for more detailed guidance on Texas startup formation, founder equity, startup financing, venture capital, commercial contracts, and acquisitions, these articles provide a useful starting point. - [Startup Incorporation: The Complete Guide](https://startuplawyer.com/incorporation/startup-incorporation-the-complete-guide) - [Startup Equity 101: Splits and Vesting](https://startuplawyer.com/equity/startup-equity-101-splits-and-vesting) - [Seed Funding: Complete SAFEs vs. Notes Guide](https://startuplawyer.com/seed-funding/seed-funding-complete-safes-vs-notes-guide) - [Venture Capital Term Sheet Survival Guide](https://startuplawyer.com/venture-capital/venture-capital-term-sheet-survival-guide) - [The Startup Commercial Contracts Guide](https://startuplawyer.com/contracts/the-startup-commercial-contracts-guide) - [The Startup Acquisition Process Guide](https://startuplawyer.com/acquisitions/the-startup-acquisition-process-guide) - [Working With a Startup Lawyer](https://startuplawyer.com/startup-lawyer/working-with-a-startup-lawyer) ## Talk to a Texas Startup Lawyer If you are forming a company, addressing founder equity, evaluating a financing, refining key contracts, or preparing for a potential acquisition, I’d be glad to discuss the matter. [Contact Ryan Roberts](https://startuplawyer.com/contact) to talk through the context, timing, and next steps. To learn more about my background and experience advising startups, visit my [Author page](https://startuplawyer.com/author). For a more detailed overview of my practice and background, visit my [law firm attorney profile](https://robertszimmerman.com/ryan-roberts/). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. 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We reserve the right to update or modify this disclaimer at any time without notice. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [CFIUS](https://startuplawyer.com/startup-law-glossary/cfius) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** CFIUS (the Committee on Foreign Investment in the United States) is an interagency U.S. government body that reviews certain foreign investments in U.S. businesses for national security risks and can impose mitigation measures or recommend that a transaction be blocked or unwound. In venture financings and M&A, CFIUS considerations can affect deal timing, covenants, investor eligibility, and closing conditions, particularly for sensitive technologies and foreign limited partners. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Operating Agreement](https://startuplawyer.com/startup-law-glossary/operating-agreement) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** An Operating Agreement is the core governing contract of a limited liability company (LLC) that sets forth the LLC’s ownership (members and their interests), management structure, voting and consent rights, distributions, transfer restrictions, and other governance and economic terms. In private equity, venture, and M&A, the Operating Agreement functions similarly to a corporation’s charter/bylaws and is a primary diligence document for control rights, profit allocation, and change-of-control provisions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Penny Warrant](https://startuplawyer.com/startup-law-glossary/penny-warrant) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** A Penny Warrant is a warrant structured with a de minimis exercise price (often $0.01 per share or similarly nominal) so the holder can obtain the underlying shares with little additional cash payment once the warrant becomes exercisable. In venture debt, PIPEs, and structured equity financings, Penny Warrants are used to deliver equity upside while minimizing future exercise friction, and their economic impact is primarily dilution rather than cash proceeds to the issuer. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup Lawyer](https://startuplawyer.com/startup-law-glossary/startup-lawyer) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** A Startup Lawyer is an attorney who advises startups and venture investors on formation, financings, equity compensation, IP, commercial contracting, and M&A, often with a focus on venture-market terms and startup-specific risk areas. In venture deals, the Startup Lawyer typically drafts and negotiates the financing documents, coordinates diligence and closing, and helps the company maintain good corporate hygiene as it scales. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [NVCA Docs](https://startuplawyer.com/startup-law-glossary/nvca-docs) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** NVCA Docs refers to the form venture financing documents published by the National Venture Capital Association (NVCA), including template charters, stock purchase agreements, investor rights agreements, voting agreements, and related closing deliverables for preferred stock rounds. In U.S. venture financings, NVCA Docs serve as a widely used market baseline that parties customize based on deal terms, company stage, and negotiated investor protections. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Series Pre-Seed](https://startuplawyer.com/startup-law-glossary/series-pre-seed) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** Series Pre-Seed is an informal term for a very early startup financing that precedes a seed round, typically used to fund initial product development, validation, and early hiring before institutional seed capital is raised. In practice, a Series Pre-Seed may be structured as SAFEs, convertible notes, or a small priced equity round, and terms often vary widely based on founder traction, market conditions, and the investor base. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Personal Guaranty](https://startuplawyer.com/startup-law-glossary/personal-guaranty) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** A Personal Guaranty is a contractual commitment by an individual (often a founder, executive, or sponsor) to be personally liable for specified obligations of a company or borrower if the company fails to perform, effectively providing creditors an additional source of recovery. In lending and certain acquisition structures, Personal Guaranties can be limited (e.g., to “bad acts” carve-outs) or full-recourse, and they materially change risk allocation for the guarantor. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Marked to Market](https://startuplawyer.com/startup-law-glossary/marked-to-market) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** Marked to Market (mark-to-market) refers to valuing an asset or liability based on its current fair market value rather than its historical cost, with gains and losses recognized as values change. In investing and finance, Marked to Market treatment affects reported performance and covenants, and in fund reporting it can drive NAV calculations and LP communications for positions whose values are updated periodically. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Intercreditor Agreement](https://startuplawyer.com/startup-law-glossary/intercreditor-agreement) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** An Intercreditor Agreement is an agreement among two or more creditor groups that governs their relative rights, priorities, and remedies with respect to a borrower, including lien priority, payment subordination, standstill periods, enforcement control, and turnover provisions. In leveraged finance, venture debt, and restructurings, an Intercreditor Agreement is critical to determining who can foreclose, who gets paid first, and how proceeds are shared in a downside scenario. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Forward Stock Split](https://startuplawyer.com/startup-law-glossary/forward-stock-split) **Published:** April 4, 2026 **Author:** Ryan Roberts **Content:** A Forward Stock Split is a corporate action that increases the number of outstanding shares by splitting each existing share into multiple shares (e.g., 2-for-1), reducing the per-share price proportionally while generally leaving overall equity value unchanged absent market effects. In startups and public companies, a Forward Stock Split is often used to improve share price optics and trading liquidity, and it typically requires board approval (and sometimes stockholder approval) and corresponding charter or listing compliance steps. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Zone of Insolvency](https://startuplawyer.com/startup-law-glossary/zone-of-insolvency) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Zone of Insolvency is a concept describing when a company is approaching insolvency such that creditor interests become increasingly relevant in board decision-making, and transactions may face heightened scrutiny for solvency and fraudulent transfer risk. In M&A and financing contexts, Zone of Insolvency considerations can affect fiduciary analysis, documentation, and the use of special committees, and operating in the Zone of Insolvency often prompts boards to seek enhanced financial advice and solvency analyses. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Zombie Equity](https://startuplawyer.com/startup-law-glossary/zombie-equity) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Zombie Equity refers to equity in a company that is economically unlikely to receive proceeds in an exit because senior securities (debt and/or preferred liquidation preferences) are expected to absorb all value, leaving common with little to no payout. In venture portfolios, Zombie Equity can persist when companies continue operating without a realistic path to clearing the preference stack, and Zombie Equity creates incentive misalignment and complicates retention and fundraising. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Workout Agreement](https://startuplawyer.com/startup-law-glossary/workout-agreement) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** A Workout Agreement is an agreement between a borrower and its creditors to restructure or modify debt terms outside of formal bankruptcy, often involving covenant relief, maturity extensions, forbearance, or revised repayment schedules. In distressed situations, a Workout Agreement can preserve value by avoiding insolvency proceedings, and Workout Agreement terms often include enhanced reporting, fees, and additional collateral or guarantees. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Working Capital Adjustment](https://startuplawyer.com/startup-law-glossary/working-capital-adjustment) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** Working Capital Adjustment is a purchase price adjustment mechanism in an M&A deal that reconciles actual closing working capital to a negotiated target level, increasing or decreasing the final purchase price accordingly. In deal economics, a Working Capital Adjustment is used to ensure the business is delivered with a normalized level of short-term assets and liabilities, and Working Capital Adjustment disputes often center on accounting policies, seasonality, and classification. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [White Label](https://startuplawyer.com/startup-law-glossary/white-label) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** White Label refers to a product or service produced by one company that another company rebrands and sells as its own, often under a reseller or OEM arrangement. In startup business models and diligence, White Label arrangements affect margins, customer ownership, IP rights, and dependency risk, and the White Label contract terms (exclusivity, termination, data rights) can be material. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [White Knight](https://startuplawyer.com/startup-law-glossary/white-knight) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** A White Knight is a friendly acquirer or investor that comes to the rescue of a target company facing a hostile takeover or other adverse situation, typically offering a more favorable deal or strategic alternative. In M&A defense, a White Knight can provide leverage and protect management’s preferred outcome, and White Knight strategies often involve expedited diligence and negotiated protections. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Weighted Average Anti-Dilution](https://startuplawyer.com/startup-law-glossary/weighted-average-anti-dilution) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Weighted Average Anti-Dilution is an anti-dilution mechanism that adjusts the conversion price of preferred stock in a down round based on a formula that considers both the lower issuance price and the number of shares issued, resulting in a more moderate adjustment than full ratchet. In VC term sheets, Weighted Average Anti-Dilution can be broad-based or narrow-based, and Weighted Average Anti-Dilution is a key lever for balancing investor protection with founder dilution. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Washout Round](https://startuplawyer.com/startup-law-glossary/washout-round) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Washout Round is an extreme down-round financing structured in a way that heavily dilutes (or effectively wipes out) prior common and sometimes earlier preferred holders, often through punitive pricing and reallocation of equity to new money and continuing insiders. In distressed venture situations, a Washout Round may be paired with pay-to-play provisions and recapitalization mechanics, and a Washout Round can create significant legal, fiduciary, and morale issues. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Warrant](https://startuplawyer.com/startup-law-glossary/warrant) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Warrant is a security that gives the holder the right to purchase a specified number of shares at a set price (exercise price) before an expiration date (or sometimes perpetually), similar to an option but typically issued to investors or lenders. In venture debt and structured financings, a Warrant provides equity upside to the lender, and Warrant coverage (percentage of the loan) and terms can materially affect dilution. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Voting Rights](https://startuplawyer.com/startup-law-glossary/voting-rights) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Voting Rights are the rights of shareholders (or classes of shareholders) to vote on corporate matters such as electing directors, approving mergers, and amending governing documents, with scope determined by law and the charter. In venture structures, Voting Rights can vary by class (common vs. preferred) and may include protective class votes, and Voting Rights allocation is a key part of control and governance negotiation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Voting Agreement](https://startuplawyer.com/startup-law-glossary/voting-agreement) **Published:** January 7, 2019 **Author:** Ryan Roberts **Content:** A Voting Agreement is a contract among certain shareholders that sets how they will vote on specified matters, commonly used in VC financings to establish board composition and voting commitments. In venture-backed companies, a Voting Agreement helps implement governance arrangements negotiated in the term sheet, and Voting Agreement provisions often cover director election, drag-along concepts, and protective voting mechanics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Voluntary Redemption](https://startuplawyer.com/startup-law-glossary/voluntary-redemption) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** Voluntary Redemption is a redemption of securities initiated by the issuer (or agreed by the parties) rather than triggered by a mandatory investor right, typically subject to legal limits and contractual conditions. In preferred stock structures, Voluntary Redemption can be used to return capital, simplify the cap table, or resolve investor positions, and Voluntary Redemption terms are often negotiated around price, timing, and consent requirements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Vintage Year](https://startuplawyer.com/startup-law-glossary/vintage-year) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** Vintage Year is the year a fund begins making investments (or is considered to have started its investment period), used to group funds by market cycle and compare performance across comparable time periods. In venture capital, Vintage Year matters because macro conditions heavily influence entry valuations and exit timing, and Vintage Year comparisons are common in LP diligence and benchmarking. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Vesting Schedule](https://startuplawyer.com/startup-law-glossary/vesting-schedule) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Vesting Schedule is the timetable and set of rules that determine when equity awards vest, such as a four-year schedule with a one-year cliff and monthly vesting thereafter. In venture-backed companies, a Vesting Schedule is used to retain founders and employees and align incentives, and Vesting Schedule terms can include acceleration on change in control or termination events. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Vesting](https://startuplawyer.com/startup-law-glossary/vesting) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Vesting is the process by which a person earns equity or benefits over time or upon achieving milestones, typically through a schedule that determines when the equity becomes vested and non-forfeitable. In startups, Vesting aligns incentives and protects the company if someone leaves early, and Vesting terms commonly include cliffs, acceleration, and repurchase rights for unvested shares. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Vested](https://startuplawyer.com/startup-law-glossary/vested) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Vested describes equity or benefits that have been earned and are no longer subject to forfeiture, typically because time-based or performance-based conditions have been satisfied. In startup equity, once an award is Vested the holder generally keeps it even if they leave (subject to exercise rules for options), and tracking what is Vested is central to cap table and retention planning. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Venture Debt](https://startuplawyer.com/startup-law-glossary/venture-debt) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** Venture Debt is a form of debt financing provided to venture-backed companies, typically alongside or after an equity round, often including warrants and covenants and secured by a lien on company assets. In runway management, Venture Debt can extend cash life with less immediate dilution than equity, and Venture Debt providers underwrite to equity sponsor support, revenue traction, and downside collateral value. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Venture Capitalist (VC)](https://startuplawyer.com/startup-law-glossary/venture-capitalist-vc) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Venture Capitalist (VC) is an investor (or investment professional) who invests in high-growth private companies, typically through a venture fund, and supports portfolio companies through governance and strategic help. In financings, a Venture Capitalist (VC) may lead rounds, negotiate terms, take board seats, and provide follow-on capital, and the Venture Capitalist (VC) role is central to the venture ecosystem. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Venture Capital Limited Partnership](https://startuplawyer.com/startup-law-glossary/venture-capital-limited-partnership) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Venture Capital Limited Partnership is the common legal structure used to form a venture fund, where limited partners contribute capital and a general partner manages investments, with economics defined by the limited partnership agreement. In fund formation, the Venture Capital Limited Partnership structure provides pass-through taxation (in many cases) and limited liability for LPs, and Venture Capital Limited Partnership documents set governance, fees, carry, and restrictions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Venture Capital Financing](https://startuplawyer.com/startup-law-glossary/venture-capital-financing) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Venture Capital Financing is a funding round in which a company raises capital from venture investors, typically through the sale of preferred stock (or occasionally convertible instruments) with negotiated economic and governance terms. In growth planning, Venture Capital Financing can extend runway and accelerate milestones, and Venture Capital Financing terms set valuation, dilution, and investor rights. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Venture Capital](https://startuplawyer.com/startup-law-glossary/venture-capital) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Venture Capital is a form of private equity investing focused on funding high-growth private companies, typically in exchange for preferred equity and governance rights, with returns driven by a small number of large exits. In the startup ecosystem, Venture Capital funds product development and scaling, and Venture Capital investors often provide strategic support, recruiting help, and follow-on funding. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Venture-Backed Startup](https://startuplawyer.com/startup-law-glossary/venture-backed-startup) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Venture-Backed Startup is a startup that has raised institutional venture capital (or similar) financing and is pursuing a growth strategy aligned with venture-scale outcomes. Because venture capital expectations include high growth and large exits, a Venture-Backed Startup typically optimizes for market share, speed, and scalable economics, and Venture-Backed Startup governance often includes a formal board and preferred investor rights. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [VC Fund](https://startuplawyer.com/startup-law-glossary/vc-fund) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A VC Fund is an investment fund that pools capital from limited partners to invest primarily in early-stage and growth-stage private companies with high growth potential. In the venture ecosystem, a VC Fund is managed by general partners who make investment and follow-on decisions, and VC Fund terms (fees, carry, reserves) shape how returns are produced and distributed. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Valuation](https://startuplawyer.com/startup-law-glossary/valuation) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Valuation is the process of estimating the economic value of a company or asset, often expressed as enterprise value or equity value and supported by methodologies like comps, precedents, and discounted cash flow. In venture capital and M&A, Valuation drives price per share, dilution, and return expectations, and Valuation can be influenced by market conditions, growth, margins, and capital structure. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Utility Token](https://startuplawyer.com/startup-law-glossary/utility-token) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Utility Token is a token intended primarily to provide access to a product or service (utility) rather than to represent an investment claim, though legal treatment depends on facts and how it is marketed and sold. In token design and compliance, Utility Token characterization is often asserted to reduce securities law risk, and Utility Token features (consumptive use, decentralization, distribution) are assessed in that context. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Unsecured Debt](https://startuplawyer.com/startup-law-glossary/unsecured-debt) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Unsecured Debt is debt that is not backed by specific collateral, meaning the lender relies primarily on the borrower’s general creditworthiness and has a lower priority claim than secured creditors in a liquidation. In capital structures, Unsecured Debt typically carries higher interest than secured debt to compensate for risk, and Unsecured Debt terms can include covenants and guarantees to mitigate the lack of collateral. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Unrelated Business Taxable Income](https://startuplawyer.com/startup-law-glossary/unrelated-business-taxable-income) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** Unrelated Business Taxable Income (UBTI) is income earned by a tax-exempt organization from a trade or business that is not substantially related to its exempt purpose, which can be subject to tax despite the organization’s tax-exempt status. In fund structuring, Unrelated Business Taxable Income is important for pension funds and endowments, and Unrelated Business Taxable Income exposure can drive the use of blockers and limitations on leverage. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Underwriter](https://startuplawyer.com/startup-law-glossary/underwriter) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** An Underwriter is a financial institution that helps an issuer sell securities in a public offering by purchasing securities from the issuer and reselling them to investors, and/or by managing the distribution and pricing process. In IPOs, the Underwriter runs the roadshow, bookbuilding, and stabilization activities, and Underwriter selection can influence valuation, investor mix, and aftermarket performance. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Underwater](https://startuplawyer.com/startup-law-glossary/underwater) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Underwater describes a security or position whose current value is below its cost basis or strike price, such as stock options with an exercise price above the current fair market value. In venture-backed companies, Underwater options can hurt retention and recruiting, and Underwater conditions often lead to repricings, option exchanges, or refresh grants. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [UCC Financing Statement](https://startuplawyer.com/startup-law-glossary/ucc-financing-statement) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** UCC Financing Statement (often a “UCC-1”) is a public filing that perfects a secured party’s security interest in specified collateral under Article 9 of the UCC, establishing notice to third parties. In venture debt, filing a UCC Financing Statement is a standard closing step, and UCC Financing Statement searches are a key diligence item to confirm existing liens and lien priority. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [UCC](https://startuplawyer.com/startup-law-glossary/ucc) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** The UCC (a.k.a. the Uniform Commercial Code) is a set of model laws adopted (with variations) by U.S. states that governs many commercial transactions, including secured transactions, sales of goods, and negotiable instruments. In venture debt and M&A diligence, UCC rules and filings are used to establish and search for security interests, and UCC concepts are central to lien priority and collateral enforcement. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Tranche](https://startuplawyer.com/startup-law-glossary/tranche) **Published:** August 22, 2011 **Author:** Ryan Roberts **Content:** A tranche is a portion of a financing, investment, or distribution that is released or funded in separate parts, often based on timing, milestones, or conditions. In venture debt and structured financings, Tranche funding can reduce lender risk and align capital with performance, and Tranche mechanics are negotiated around triggers, availability periods, and covenants. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Trade Secret](https://startuplawyer.com/startup-law-glossary/trade-secret) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** A Trade Secret is confidential business information that derives independent economic value from not being generally known and is subject to reasonable efforts to maintain secrecy (e.g., access controls and NDAs). In startup value and M&A diligence, Trade Secret protection can be as important as patents, and Trade Secret status can be lost if confidentiality measures are not consistently applied. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Tokens](https://startuplawyer.com/startup-law-glossary/tokens) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Tokens are digital units recorded on a blockchain that can represent utility (access/usage), governance rights, or economic claims, depending on design and legal characterization. In crypto fundraising and product design, Tokens may be sold, distributed, or earned, and whether Tokens are treated as securities depends on facts, marketing, and purchaser expectations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Timing Risk](https://startuplawyer.com/startup-law-glossary/timing-risk) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Timing Risk is the risk that an outcome depends on events occurring within a favorable window and that delays (or moving too early) will reduce value or prevent a transaction from closing. In venture fundraising and M&A, Timing Risk can include market window risk, runway constraints, product readiness, and regulatory timelines, and managing Timing Risk often drives process speed and contingency planning. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Time Value of Money](https://startuplawyer.com/startup-law-glossary/time-value-of-money) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** The Time Value of Money is the finance principle that a dollar today is worth more than a dollar in the future because today’s dollar can be invested to earn a return and because future cash flows are subject to risk. In valuation, Time Value of Money underpins discounting methods like DCF and IRR, and Time Value of Money assumptions (discount rates) can materially change deal pricing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Terms of Service](https://startuplawyer.com/startup-law-glossary/terms-of-service) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Terms of Service (sometimes referred to as “Terms of Use”) are the contractual terms that govern a customer’s or user’s access to and use of a product or service, typically covering usage restrictions, payment terms, IP, warranties, liability limits, and dispute resolution. In startup diligence and M&A, Terms of Service are reviewed to assess risk allocation, enforceability, and revenue mechanics, and inconsistencies between product behavior and Terms of Service can create legal exposure. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Term Sheet](https://startuplawyer.com/startup-law-glossary/term-sheet) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Term Sheet is a document that summarizes the key proposed terms of an investment or acquisition, often serving as the basis for drafting definitive agreements and guiding diligence and negotiation. In venture capital, a Term Sheet typically covers valuation, security type, governance, investor rights, and closing conditions, and a Term Sheet may be non-binding except for provisions like exclusivity and confidentiality. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Tender Offer](https://startuplawyer.com/startup-law-glossary/tender-offer) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** A Tender Offer is a public, open solicitation to shareholders to sell their shares at a specified price and within a specified time period, often used in public-company acquisitions or to repurchase shares. In M&A strategy, a Tender Offer can be used to bypass a resistant board or accelerate control acquisition, and Tender Offer rules trigger detailed disclosure, timing, and procedural requirements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Ten Bagger](https://startuplawyer.com/startup-law-glossary/ten-bagger) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Ten Bagger is an investment that returns 10x the original invested capital, a benchmark often used in venture capital to describe outlier winners that drive overall fund performance. In portfolio construction and underwriting, targeting potential Ten Bagger outcomes informs risk-taking and ownership goals, and a Ten Bagger can compensate for many losses in a power-law return distribution. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Technology Transfer Agreement](https://startuplawyer.com/startup-law-glossary/technology-transfer-agreement) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** Technology Transfer Agreement is a contract that governs the transfer or licensing of technology, know-how, patents, software, or research results from one party to another, often including terms on ownership, improvements, confidentiality, and commercialization obligations. In university spinouts and corporate partnerships, a Technology Transfer Agreement is central to IP rights and value creation, and Technology Transfer Agreement restrictions (like field-of-use limits or consent requirements) are key diligence items for investors and acquirers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Tax-Free Reorganization](https://startuplawyer.com/startup-law-glossary/tax-free-reorganization) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** A Tax-Free Reorganization is a corporate transaction that qualifies under specific tax code provisions (in the U.S., generally Section 368) to allow certain mergers or exchanges to occur without immediate tax recognition to the parties, provided statutory and structural requirements are met. In M&A structuring, a Tax-Free Reorganization is often used in stock-for-stock deals to preserve tax deferral for shareholders, and Tax-Free Reorganization qualification drives deal form, consideration mix, and covenants. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Taxable Event](https://startuplawyer.com/startup-law-glossary/taxable-event) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Taxable Event is an action or transaction that triggers a tax liability under applicable law, such as receiving compensation, selling securities, certain option exercises, or recognizing income in a reorganization that does not qualify as tax-free. In venture and M&A planning, identifying a Taxable Event is critical for structuring and communications, and Taxable Event timing can influence employee decisions, rollover structures, and withholding obligations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Takeover](https://startuplawyer.com/startup-law-glossary/takeover) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Takeover is the acquisition of control of a company, typically by purchasing a majority of voting power or by completing a merger or tender offer that results in control transfer. In public-company M&A, a Takeover can be friendly or hostile, and Takeover dynamics involve governance defenses, regulatory considerations, and shareholder communications. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Takedown](https://startuplawyer.com/startup-law-glossary/takedown) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** The Takedown is a discrete sale of securities from an effective shelf registration statement (or similar registered framework), allowing an issuer to access public markets in smaller tranches over time rather than conducting one large offering. In capital markets, a Takedown provides flexibility to raise capital when market windows are favorable, and Takedown timing and size are typically coordinated with underwriters and disclosure updates. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Tag Along Rights](https://startuplawyer.com/startup-law-glossary/tag-along-rights) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Tag Along Rights (co-sale rights) give certain shareholders the right to participate in a sale of shares by another shareholder (often a founder), allowing them to sell a proportional amount of their shares on the same terms. In private company secondaries, Tag Along Rights protect minority holders from being left behind in liquidity events, and Tag Along Rights are commonly included in ROFR/co-sale agreements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Syndication](https://startuplawyer.com/startup-law-glossary/syndication) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Syndication is the practice of multiple investors participating together in a financing round, often with a lead investor setting terms and others joining for allocation and diversification. In venture capital, Syndication expands capital available and can add strategic value via different investor networks, and Syndication choices affect governance, signaling, and follow-on dynamics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Sweat Equity](https://startuplawyer.com/startup-law-glossary/sweat-equity) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Sweat Equity refers to ownership earned through labor, time, or contribution of services rather than through cash investment, commonly associated with founders and early employees building the company. In startup formation, Sweat Equity is typically reflected in founder stock or option grants with vesting, and documenting Sweat Equity properly is important for tax, IP assignment, and cap table clarity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Super Pro Rata Rights](https://startuplawyer.com/startup-law-glossary/super-pro-rata-rights) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Super Pro Rata Rights are enhanced participation rights that allow an investor to buy more than their standard pro rata share in future financings, enabling the investor to increase ownership over time. In venture rounds, Super Pro Rata Rights are typically negotiated by highly desired investors, and Super Pro Rata Rights can meaningfully reduce allocation available to new investors and increase dilution for others. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Supermajority Voting](https://startuplawyer.com/startup-law-glossary/supermajority-voting) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Supermajority Voting is a voting requirement that sets a higher-than-simple-majority threshold (e.g., 66 2/3% or 75%) to approve certain actions, providing additional protection to minority holders or specific classes. In VC and M&A governance, Supermajority Voting is used for major decisions like selling the company or amending key charter provisions, and Supermajority Voting thresholds can materially affect control dynamics and deal certainty. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Super Angel](https://startuplawyer.com/startup-law-glossary/super-angel) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Super Angel is an angel investor who invests at high volume and meaningful check sizes, often leading or anchoring seed rounds and providing hands-on help similar to a small seed fund. In early-stage fundraising, a Super Angel can provide speed, signaling, and operator support, and Super Angel involvement may influence valuation, syndication, and subsequent institutional interest. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Subsidiary](https://startuplawyer.com/startup-law-glossary/subsidiary) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Subsidiary is a company that is controlled by another company (the parent), typically through majority ownership of voting stock or other control rights. In M&A and corporate structuring, Subsidiary relationships matter for consolidation, guarantees, liens, and regulatory approvals, and Subsidiary lists are standard diligence schedules in financings and acquisitions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Subscription Agreement](https://startuplawyer.com/startup-law-glossary/subscription-agreement) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Subscription Agreement is the contract through which an investor agrees to purchase securities in an offering and makes representations about eligibility (e.g., accredited status), investment intent, and other compliance-related matters. In private financings, the Subscription Agreement is a key closing document used to document the sale and support exemption compliance, and Subscription Agreement terms typically include investor questionnaires and signature blocks. The document can also be called a Purchase Agreement. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Subordinated Debt](https://startuplawyer.com/startup-law-glossary/subordinated-debt) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Subordinated Debt is debt that ranks below senior debt in priority of repayment, meaning it is repaid after senior lenders in a liquidation or default, and it often carries higher interest to compensate for higher risk. In acquisition financing and mezzanine structures, Subordinated Debt can provide additional leverage capacity, and Subordinated Debt terms are typically governed by intercreditor agreements and subordination provisions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Strike Price](https://startuplawyer.com/startup-law-glossary/strike-price) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The Strike Price is the fixed price at which an option holder can purchase the underlying shares when exercising a stock option, typically set at or above fair market value at the time of grant for tax compliance purposes. In equity compensation, Strike Price level affects employee upside and dilution dynamics, and Strike Price setting is often supported by a 409A valuation for private companies. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Strategic Investment](https://startuplawyer.com/startup-law-glossary/strategic-investment) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Strategic Investment is an investment made by a corporate or strategic party primarily to advance a business objective (such as partnership access, product integration, distribution, or competitive positioning) rather than purely to maximize financial return. In venture deals, a Strategic Investment can provide commercial leverage and credibility, and Strategic Investment terms may include commercial agreements, information rights, or restrictions designed to protect the strategic investor’s interests. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stockholders Consent](https://startuplawyer.com/startup-law-glossary/stockholders-consent) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Stockholders Consent is a written consent signed by the required percentage of stockholders to approve a corporate action without holding a formal meeting, as permitted by corporate law and the company’s governing documents. In venture-backed companies, Stockholders Consent is commonly used to approve financings, option plan amendments, or M&A transactions efficiently, and Stockholders Consent packages are key closing deliverables coordinated alongside board consents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stock Split](https://startuplawyer.com/startup-law-glossary/stock-split) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Stock Split is a corporate action that increases the number of outstanding shares by dividing each share into multiple shares (e.g., 2-for-1), which reduces the per-share price proportionally while generally leaving total equity value unchanged absent market effects. In startups, a Stock Split often occurs as part of a recapitalization or before an IPO to adjust share price optics, and Stock Split execution requires board (and sometimes stockholder) approval and charter updates. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stock Purchase Agreement](https://startuplawyer.com/startup-law-glossary/stock-purchase-agreement) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** A Stock Purchase Agreement (SPA) is a definitive agreement for the purchase and sale of equity securities, used both in financings (investors buying shares from the company) and in M&A (a buyer buying shares from existing holders or via a merger structure). In venture financings, the Stock Purchase Agreement sets the investment amount, price per share, closing conditions, and key representations, and the Stock Purchase Agreement is one of the core closing documents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stock Plan](https://startuplawyer.com/startup-law-glossary/stock-plan) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Stock Plan (equity incentive plan) is a formal plan approved by the board (and often stockholders) that authorizes a pool of shares for equity awards such as stock options, RSUs, restricted stock, and other equity-based compensation. In venture-backed companies, the Stock Plan governs grant mechanics, administration, and compliance (including Rule 701), and Stock Plan amendments (like increasing the share reserve) are common in later financings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stock Options](https://startuplawyer.com/startup-law-glossary/stock-options) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Stock Options are contractual rights that give a holder the ability to purchase company shares in the future at a set exercise price, typically subject to vesting and an expiration date. In startup compensation, Stock Options are a primary incentive tool, and Stock Options economics depend on strike price, vesting schedule, dilution, and eventual liquidity outcomes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stockholders](https://startuplawyer.com/startup-law-glossary/stockholders) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Stockholders are individuals or entities that own shares of a corporation, giving them economic rights (and usually voting rights) according to the class of stock they hold. In governance and transactions, Stockholders approve certain actions (like mergers and charter amendments) and receive proceeds in exits, and Stockholders’ rights and priorities are determined by the charter, bylaws, and stockholder agreements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Startup](https://startuplawyer.com/startup-law-glossary/startup) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Startup is an early-stage company designed to develop and scale a product or service under conditions of uncertainty, typically aiming for rapid growth and a repeatable business model. In venture capital, a Startup is often characterized by high risk, high potential upside, and reliance on equity financing, and Startup success is commonly measured by traction, market size, and scalability. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stalking Horse](https://startuplawyer.com/startup-law-glossary/stalking-horse) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Stalking Horse is an initial bidder in a sale process (often in bankruptcy but also in some non-bankruptcy auctions) that sets a baseline offer and deal terms to encourage competitive bidding, typically receiving protections like a break fee or expense reimbursement. In auction dynamics, the Stalking Horse provides price discovery and deal momentum, and Stalking Horse protections are negotiated to balance bidder risk with maximizing outcomes for the seller. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Staggered Board](https://startuplawyer.com/startup-law-glossary/staggered-board) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Staggered Board (classified board) is a board structure where directors are divided into classes and only a portion of directors are up for election each year, which can make it harder to replace the board quickly. In public-company governance and takeover defense, a Staggered Board can deter hostile bids by slowing proxy fights, and Staggered Board provisions are often scrutinized by investors and governance advisors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Stacked Preference](https://startuplawyer.com/startup-law-glossary/stacked-preference) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Stacked Preference refers to a capital structure where multiple rounds of preferred stock each have liquidation preferences that stack in seniority (often with later rounds senior to earlier ones), meaning proceeds are paid out in layers before common receives anything. In down markets, Stacked Preference can create significant overhang and misalignment, and Stacked Preference is a key consideration when evaluating exit values and recap options. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Spinoff](https://startuplawyer.com/startup-law-glossary/spinoff) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Spinoff is a corporate transaction in which a company separates a business unit or subsidiary into an independent company, typically by distributing shares of the new entity to existing shareholders. In M&A and corporate strategy, a Spinoff is used to unlock value, focus operations, or prepare assets for sale, and Spinoff execution involves tax, governance, IP, and transitional services planning. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Special Purpose Vehicle](https://startuplawyer.com/startup-law-glossary/special-purpose-vehicle) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Special Purpose Vehicle (SPV) is a separate legal entity created for a specific, limited purpose, such as pooling investor capital into one vehicle to invest in a single deal, holding assets, isolating liabilities, or facilitating structured finance. In venture investing, a Special Purpose Vehicle is often used for syndicates and single-asset investments, and Special Purpose Vehicle governance, fees, and reporting are key diligence items for participants. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Special Purpose Acquisition Company](https://startuplawyer.com/startup-law-glossary/special-purpose-acquisition-company) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Special Purpose Acquisition Company (SPAC) is a publicly traded shell company formed to raise money in an IPO and then acquire or merge with a private operating company (the “de-SPAC” transaction), taking it public. In capital markets, Special Purpose Acquisition Company structures include trust accounts, sponsor promotes, and redemption rights, and Special Purpose Acquisition Company transactions have unique regulatory, disclosure, and valuation dynamics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Sole Proprietor](https://startuplawyer.com/startup-law-glossary/sole-proprietor) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Sole Proprietor is an individual who owns and operates a business directly without forming a separate legal entity, meaning the owner and business are legally the same and the owner has unlimited personal liability for business obligations. In startup formation, Sole Proprietor status is usually a temporary stage before incorporation, and Sole Proprietor arrangements are generally incompatible with venture financing due to liability and equity issuance limitations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Soft Control vs. Hard Control](https://startuplawyer.com/startup-law-glossary/soft-control-vs-hard-control) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Soft Control vs. Hard Control describes the difference between influence-based control (soft control) and legally enforceable control (hard control) in governance and deal contexts. In venture boards, Soft Control vs. Hard Control shows up as persuasion, relationships, and signaling versus formal rights like protective provisions, board majority, or voting control, and understanding Soft Control vs. Hard Control helps founders anticipate how decisions will be made in practice. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Small Business Investment Company](https://startuplawyer.com/startup-law-glossary/small-business-investment-company) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** A Small Business Investment Company (SBIC) is a privately managed investment fund licensed by the U.S. Small Business Administration that can use SBA-guaranteed leverage to invest in qualifying small businesses under program rules. In private equity and venture, a Small Business Investment Company can provide additional capital through leverage, and Small Business Investment Company compliance requirements affect fund structure, reporting, and eligible investments. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Small Business Innovation Research Program](https://startuplawyer.com/startup-law-glossary/small-business-innovation-research-program) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** The Small Business Innovation Research Program (SBIR) is a U.S. federal program that provides competitive grants and contracts to small businesses to support R&D and commercialization of innovative technologies, often through agencies like DoD, NIH, and NSF. For deep-tech and biotech startups, Small Business Innovation Research Program funding can be non-dilutive capital, and Small Business Innovation Research Program awards can serve as validation in later fundraising. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Small Business Administration](https://startuplawyer.com/startup-law-glossary/small-business-administration) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** The Small Business Administration (SBA) is a U.S. government agency that supports small businesses through programs including loan guarantees, contracting support, and oversight of the SBIC program. In venture and private equity ecosystems, Small Business Administration initiatives can influence financing availability for certain companies and funds, and the Small Business Administration is specifically relevant when a fund is structured as or partners with an SBIC. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Sliding Fee Scale](https://startuplawyer.com/startup-law-glossary/sliding-fee-scale) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Sliding Fee Scale is a fee structure where the fee rate changes based on size, time, performance, or other thresholds (e.g., management fees that step down after the investment period or placement fees that decline at higher raise amounts). In fund and deal economics, a Sliding Fee Scale is used to align cost with scale and incentivize larger commitments, and Sliding Fee Scale terms should be clearly defined to avoid disputes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Single Trigger Acceleration](https://startuplawyer.com/startup-law-glossary/single-trigger-acceleration) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Single Trigger Acceleration is a vesting provision under which some or all unvested equity accelerates upon a single specified event, most commonly a change in control, without requiring a termination of employment. In M&A negotiations, Single Trigger Acceleration can affect retention planning and purchase price allocation, and Single Trigger Acceleration terms are often debated relative to double-trigger acceleration as a more buyer-friendly alternative. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Signaling Risk](https://startuplawyer.com/startup-law-glossary/signaling-risk) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Signaling Risk is the risk that a company’s fundraising or performance signal is interpreted negatively by the market, such as when existing investors do not participate in a follow-on round or a round is smaller than expected. In venture financing, Signaling Risk can reduce demand from new investors and pressure terms, and managing Signaling Risk often involves coordinated insider participation, clear messaging, and careful process control. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Side Letters](https://startuplawyer.com/startup-law-glossary/side-letters) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** Side Letters are separate agreements between a fund or company and a specific investor that grant customized terms not included in the main governing documents, such as fee breaks, reporting, MFN rights, or special consents. In fundraises and some VC rounds, Side Letters are used to accommodate institutional requirements, and Side Letters must be managed carefully to avoid conflicts and ensure disclosure consistency. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Shell Corporation](https://startuplawyer.com/startup-law-glossary/shell-corporation) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Shell Corporation is a company with little or no active business operations and minimal assets, often formed to hold assets, facilitate a transaction, or serve as a vehicle for a merger or restructuring. In public markets, Shell Corporation status can raise regulatory scrutiny and disclosure requirements (e.g., reverse mergers), and in deal structuring, a Shell Corporation is sometimes used for organizational separation or acquisition mechanics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Shareholders Agreement](https://startuplawyer.com/startup-law-glossary/shareholders-agreement) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** A Shareholders Agreement is a contract among a company and some or all of its shareholders that governs rights and obligations such as transfer restrictions, voting arrangements, information rights, dispute resolution, and exit-related provisions. In private companies, a Shareholders Agreement complements the charter and bylaws, and Shareholders Agreement terms often cover ROFR/ROFO, tag-along, drag-along, and governance mechanics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Series Seed Financing](https://startuplawyer.com/startup-law-glossary/series-seed-financing) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Series Seed Financing is a small financing, often the first financing that a startup goes through, that occurs before a full series A financing. It’s a standardized seed-stage preferred equity financing framework (popularized by YC/others) that uses a simplified, more founder-friendly set of documents compared to NVCA Series A documents. In early-stage rounds, Series Seed Financing can reduce legal time and costs while still providing key investor protections, and Series Seed Financing terms are often used when a company wants a priced seed round rather than SAFEs/notes There was also a well-known set of seed financing documents called “Series Seed”. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Series FF Stock](https://startuplawyer.com/startup-law-glossary/series-ff-stock) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Series FF Stock is a type of preferred stock issued to founders upon incorporation, usually in addition to common stock issued at incorporation. Series FF Stock is typically convertible into the type of stock issued to investors at a subsequent equity financing round, in order to facilitate a startup founder’s sale of shares to an investor (i.e., a secondary transaction). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Series B Round](https://startuplawyer.com/startup-law-glossary/series-b-round) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Series B Round is a priced equity financing that typically follows Series A, used to scale a company that has demonstrated product-market fit by expanding go-to-market, increasing headcount, and accelerating growth. In venture capital, a Series B Round often brings in additional investors or growth funds, and Series B Round terms may include a larger option pool refresh and more complex preferences depending on leverage. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Series AA Round](https://startuplawyer.com/startup-law-glossary/series-aa-round) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Series AA Round was a reference to an angel round of startup financing using the YCombinator-developed class of preferred stock called the “Series AA Preferred Shares.” Now, a Series AA Round can be informal label used by some startups and investors to describe an intermediate financing between Series A and Series B, often reflecting an extension, step-up, or additional capital raised after Series A but before a full Series B. In practice, a Series AA Round may be used to reach specific milestones or capitalize on momentum, and Series AA Round terms can resemble either a strong Series A extension or an early growth round depending on market context ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Series A Round](https://startuplawyer.com/startup-law-glossary/series-a-round) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Series A Round is a company’s first major institutional priced equity financing, typically following seed funding, intended to scale product development and go-to-market with meaningful capital and governance structure. In venture capital, a Series A Round often introduces a lead investor, a formal board, and standardized preferred terms, and the Series A Round valuation and option pool decisions can shape dilution for years. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Series A Preferred Stock](https://startuplawyer.com/startup-law-glossary/series-a-preferred-stock) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Series A Preferred Stock is the class of preferred equity typically issued in a company’s first major institutional priced round (the Series A), with negotiated rights such as liquidation preference, conversion, protective provisions, and board representation. In venture financings, Series A Preferred Stock terms often set the baseline governance and investor protections for later rounds, and Series A Preferred Stock becomes a key reference point for cap table economics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Senior Securities](https://startuplawyer.com/startup-law-glossary/senior-securities) **Published:** January 28, 2014 **Author:** Ryan Roberts **Content:** Senior Securities are securities that have priority over other securities with respect to payment of dividends, interest, or liquidation proceeds, such as senior debt or preferred equity that ranks ahead of common stock or junior preferred. In capital structure discussions, Senior Securities determine payout order and control leverage, and issuing new Senior Securities can trigger protective provisions or require investor consents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Senior Debt](https://startuplawyer.com/startup-law-glossary/senior-debt) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Senior Debt is debt that has priority over other debt and equity claims in repayment, typically secured by collateral and first in line in a liquidation or enforcement scenario. In acquisition finance and venture debt, Senior Debt usually carries lower interest rates than junior debt due to its priority position, and Senior Debt covenants and collateral packages are central to lender protections. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Seed Stage](https://startuplawyer.com/startup-law-glossary/seed-stage) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** The Seed Stage is the early phase of a startup’s lifecycle when the company is building the initial product, testing the market, and establishing early traction, typically before a full Series A institutional scale-up. In venture capital, Seed Stage financings are often smaller and higher-risk, and Seed Stage investors focus on team, problem, initial product signal, and market potential. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Seed Preferred](https://startuplawyer.com/startup-law-glossary/seed-preferred) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Seed Preferred is a class of preferred stock issued in a seed-stage priced equity financing, typically with simpler terms than later preferred series but still including key rights like liquidation preference and protective provisions. In early priced rounds, Seed Preferred can be used instead of (or after) SAFEs/notes, and Seed Preferred documentation often follows streamlined templates such as Series Seed. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Seed Capital](https://startuplawyer.com/startup-law-glossary/seed-capital) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Seed Capital is early-stage funding used to build an initial product, validate a market, hire a small team, and reach milestones necessary to raise a larger priced round. In venture financing, Seed Capital can come from angels, micro VCs, seed funds, or accelerators, and Seed Capital is often raised via SAFEs, convertible notes, or seed preferred equity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Security Interest](https://startuplawyer.com/startup-law-glossary/security-interest) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Security Interest is a legal interest in personal property or fixtures granted by a debtor to a secured party to secure repayment or performance, giving the secured party rights in the collateral upon default. In venture debt and acquisition financing, a Security Interest is documented in security agreements and perfected (often by UCC filings), and Security Interest priority and scope are critical to lender risk and intercreditor negotiations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Security](https://startuplawyer.com/startup-law-glossary/security) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Security is a financial instrument that represents an ownership interest, a creditor relationship, or a contractual right to economic value, such as stock, bonds, notes, options, warrants, or certain tokens (depending on facts and law). In fundraising, whether an instrument is a Security determines which securities laws apply, and Security classification drives registration/exemption requirements, transfer restrictions, and disclosure obligations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Securities Exchange Act of 1934](https://startuplawyer.com/startup-law-glossary/securities-exchange-act-of-1934) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** The Securities Exchange Act of 1934 is a U.S. federal law that regulates secondary trading of securities and created the framework for ongoing public-company reporting (e.g., Forms 10-K, 10-Q, 8-K), proxy rules, and certain anti-fraud provisions like Rule 10b-5. In public-company M&A and post-IPO life, Securities Exchange Act of 1934 compliance drives disclosure, insider trading policies, and governance processes, and Securities Exchange Act of 1934 reporting is central to market transparency. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Securities and Exchange Commission](https://startuplawyer.com/startup-law-glossary/securities-and-exchange-commission) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** The Securities and Exchange Commission (SEC) is the primary U.S. federal regulator responsible for administering and enforcing securities laws, overseeing public markets, broker-dealers, investment advisers, and disclosure obligations. In IPOs, private offerings, and M&A involving public companies, Securities and Exchange Commission (SEC) rules shape registration, exemptions, reporting, and enforcement risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Securities Act of 1933](https://startuplawyer.com/startup-law-glossary/securities-act-of-1933) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** The Securities Act of 1933 is a foundational U.S. federal law governing the offer and sale of securities, requiring registration of securities offerings unless an exemption applies and imposing liability for material misstatements or omissions. In venture fundraising, the Securities Act of 1933 drives reliance on private offering exemptions like Regulation D, and Securities Act of 1933 compliance is a key diligence focus for later financings and exits. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Secured Debt](https://startuplawyer.com/startup-law-glossary/secured-debt) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Secured Debt is debt that is backed by collateral, giving the lender a security interest in specified assets and priority rights to those assets in a default or insolvency. In venture debt and acquisition financing, Secured Debt terms define collateral scope, lien priority, and covenants, and Secured Debt structures often require intercreditor arrangements when multiple lenders are involved. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Secondary Sale](https://startuplawyer.com/startup-law-glossary/secondary-sale) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Secondary Sale is a transaction where existing shareholders sell their shares to a new buyer (or back to the company) rather than the company issuing new shares, meaning the company typically does not receive primary capital. In startups, a Secondary Sale can provide liquidity for founders and employees, and Secondary Sale terms often include ROFR compliance, transfer restrictions, and sometimes company or investor approval rights. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Secondary Market](https://startuplawyer.com/startup-law-glossary/secondary-market) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Secondary Market is a market where existing securities are bought and sold between investors rather than being issued by the company, including both public exchanges and private secondary transactions. In venture capital, the Secondary Market refers to private company share sales (often via tender offers or brokered secondaries), and Secondary Market activity can provide liquidity to employees and early investors while affecting price discovery and cap table composition. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Secondary Buy-Out](https://startuplawyer.com/startup-law-glossary/secondary-buy-out) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Secondary Buy-Out is a private equity transaction where one private equity firm sells a portfolio company to another private equity firm (as opposed to selling to a strategic buyer or going public). In deal markets, a Secondary Buy-Out is often driven by differing value-creation strategies or fund timing, and Secondary Buy-Out transactions can include leverage refinancings and management rollovers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Second Bite of the Apple](https://startuplawyer.com/startup-law-glossary/second-bite-of-the-apple) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Second Bite of the Apple is a phrase used when founders, executives, or early investors get a second opportunity to realize value—often by rolling equity into a new deal, retaining a stake after a partial sale, or participating in a recap and later exit again. In private equity and M&A, Second Bite of the Apple structures are used to keep management aligned post-transaction, and Second Bite of the Apple economics depend on rollover percentages, new equity incentives, and future exit valuation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Search Fund](https://startuplawyer.com/startup-law-glossary/search-fund) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** A Search Fund is an investment vehicle through which entrepreneurs raise capital from investors to search for, acquire, and then operate a privately held company, typically a small-to-mid-sized business. In the ETA (entrepreneurship through acquisition) model, a Search Fund provides funding for the search phase and then additional capital for the acquisition, and Search Fund returns depend heavily on deal sourcing, leverage, and operator execution. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Scale Up](https://startuplawyer.com/startup-law-glossary/scale-up) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** Scale Up is the phase and set of actions focused on growing a business from early traction into repeatable, efficient expansion—often involving hiring, process design, and expanding sales and operations. In startup operating language, to Scale Up is to make growth repeatable and resilient, and Scale Up initiatives are often tied to milestone-based fundraising and go-to-market maturation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Scalability](https://startuplawyer.com/startup-law-glossary/scalability) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Scalability is the ability of a business model, product, team, or infrastructure to support significantly increased demand and growth without a proportional increase in costs or complexity. In venture underwriting, Scalability is a core driver of venture-scale outcomes, and Scalability is assessed through unit economics, operational processes, and technology architecture. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Sarbanes-Oxley Act of 2002](https://startuplawyer.com/startup-law-glossary/sarbanes-oxley-act-of-2002) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** The Sarbanes-Oxley Act of 2002 (SOX) is a U.S. law that strengthened corporate governance, internal controls, audit oversight, and financial reporting requirements for public companies, with significant compliance and liability implications. In IPO readiness, Sarbanes-Oxley Act of 2002 planning drives investments in controls, audit processes, and governance, and Sarbanes-Oxley Act of 2002 compliance (including Sections 302 and 404) is a major milestone for newly public companies. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Safe Harbor](https://startuplawyer.com/startup-law-glossary/safe-harbor) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Safe Harbor is a legal provision or regulatory framework that protects a party from liability or enforcement if specific conditions are met, providing clearer compliance boundaries. In securities and M&A contexts, Safe Harbor concepts appear in rules like Rule 144, Regulation S, and forward-looking statement protections, and relying on a Safe Harbor requires careful adherence to the Safe Harbor requirements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [S-Corporation](https://startuplawyer.com/startup-law-glossary/s-corporation) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** An S-Corporation is a corporation that has elected S status for U.S. federal tax purposes (via Form 2553), allowing income and losses to generally pass through to shareholders instead of being taxed at the corporate level, subject to strict eligibility limits. In venture-backed startups, S-Corporation status is often avoided because many institutional investors are ineligible shareholders and because S-Corporation constraints can limit equity and financing flexibility. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [SAFT](https://startuplawyer.com/startup-law-glossary/saft) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A SAFT (Simple Agreement for Future Tokens) is an early-stage crypto financing instrument in which purchasers invest now in exchange for the right to receive tokens in the future if/when a network launches, often intended to structure the sale as an investment contract at the time of purchase. In token project fundraising, a SAFT is used to align capital raising with later token delivery, and SAFT terms are evaluated closely for securities law compliance and token economics implications. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [SAFE](https://startuplawyer.com/startup-law-glossary/safe) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A SAFE (Simple Agreement for Future Equity) is a common early-stage financing instrument that is not debt and typically converts into equity in a future priced round based on a valuation cap and/or discount, with no maturity date or interest. In seed financings, a SAFE is used to raise capital quickly with standardized terms, and SAFE terms can materially affect dilution when the SAFE converts. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Runway vs. Leverage](https://startuplawyer.com/startup-law-glossary/runway-vs-leverage) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Runway vs. Leverage refers to the tradeoff between optimizing for more time to reach milestones (runway) and preserving negotiating power (leverage) in fundraising or M&A discussions. In practice, Runway vs. Leverage is a recurring strategic choice: raising earlier can improve Runway but may dilute more, while waiting can improve leverage if milestones hit—yet can reduce leverage if Runway becomes tight. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Runway](https://startuplawyer.com/startup-law-glossary/runway) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Runway is the amount of time a company can continue operating before it runs out of cash, typically calculated as current cash balance divided by net burn rate. In venture planning, Runway drives fundraising timelines and risk management, and maintaining adequate Runway is a core board-level metric used to avoid forced financings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 701](https://startuplawyer.com/startup-law-glossary/rule-701) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Rule 701 is an SEC exemption that allows private companies to issue equity compensation (such as stock options and RSUs) to employees, consultants, and advisors without registering the securities, subject to limits and disclosure requirements above certain thresholds. In startup equity programs, Rule 701 is essential for compliant option grants, and Rule 701 disclosure packages are a common diligence request in later-stage financings and M&A. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 506](https://startuplawyer.com/startup-law-glossary/rule-506) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 506 is the most commonly used Regulation D safe harbor for private offerings, with two main paths: Rule 506(b) (no general solicitation, limited non-accredited participation) and Rule 506(c) (general solicitation allowed with accredited investor verification). In venture financings, Rule 506 is the standard exemption used for priced rounds and many SAFEs/notes, and Rule 506 offerings typically require Form D filings and state notice filings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 505](https://startuplawyer.com/startup-law-glossary/rule-505) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 505 was a Regulation D exemption that historically permitted certain private offerings up to a dollar limit, but it was repealed by the SEC and is no longer available for new offerings. In legacy documents and discussions, Rule 505 may still appear, and understanding Rule 505 helps interpret older financing history and compliance references. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 504](https://startuplawyer.com/startup-law-glossary/rule-504) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 504 is a Regulation D exemption that allows eligible issuers to raise up to a specified amount in a 12-month period (subject to SEC updates) with fewer federal restrictions than Rule 506, though state “blue sky” laws may impose additional requirements. In small financings, Rule 504 can be useful for certain early-stage issuers, and Rule 504 terms are often paired with state registration or state exemption filings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 503](https://startuplawyer.com/startup-law-glossary/rule-503) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 503 was the Regulation D rule that required issuers to file a Form D notice after certain private offerings, but the rule has been removed and the filing requirement now resides in Rule 503 under amended numbering and related SEC rules (often still referred to in practice as the Form D filing requirement). In fundraising operations, “Rule 503” is still used colloquially to mean timely Form D filings, and Rule 503 compliance (in that sense) helps support exemption hygiene and state notice filings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 502](https://startuplawyer.com/startup-law-glossary/rule-502) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 502 is part of Regulation D and sets conditions for certain private offerings, including limits on general solicitation (for 506(b)), information requirements for non-accredited investors (where permitted), and rules governing resale restrictions and integration. In practice, Rule 502 compliance shapes how a private raise is marketed and documented, and Rule 502 provisions are often referenced in counsel checklists and closing deliverables. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 501](https://startuplawyer.com/startup-law-glossary/rule-501) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 501 is part of Regulation D and includes key definitions used in private offerings, most notably the definition of “accredited investor,” along with other terms relevant to Regulation D compliance. In venture fundraising, Rule 501 is foundational because it governs who qualifies as an accredited investor, and Rule 501 definitions drive offering structure, disclosure expectations, and investor verification practices. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 145](https://startuplawyer.com/startup-law-glossary/rule-145) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 145 is an SEC rule that treats certain transactions—such as mergers, consolidations, reclassifications, and asset transfers that involve an exchange of securities—as sales of securities, triggering registration or an exemption and affecting resale restrictions for recipients. In stock-for-stock M&A, Rule 145 can determine whether shareholders receive “restricted securities” and how they may resell, and Rule 145 analysis is typically part of securities law structuring and disclosure planning. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rule 144](https://startuplawyer.com/startup-law-glossary/rule-144) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Rule 144 is an SEC rule that provides a safe harbor for the public resale of restricted and control securities if certain conditions are met, such as holding periods, current public information, volume limitations, manner-of-sale requirements, and filing notices (for affiliates). In venture-backed exits, Rule 144 is relevant when selling founder or investor shares after an IPO, and Rule 144 compliance helps determine when shares can become freely tradable. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Royalties](https://startuplawyer.com/startup-law-glossary/royalties) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Royalties are payments made to a rights holder for the ongoing use of an asset such as intellectual property, content, or natural resources, typically calculated as a percentage of revenue, per-unit amount, or other usage-based metric. In licensing and some venture debt structures, Royalties can be used as a financing or monetization mechanism, and Royalties obligations are a key diligence item because they can reduce gross margin and constrain transfers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Round](https://startuplawyer.com/startup-law-glossary/round) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Round is a discrete financing event in which a company raises capital under a defined set of terms, such as a seed round, Series A, or bridge round, typically documented with a term sheet and closing documents. In venture capital, a Round establishes a valuation reference point and can reset governance and investor rights, and the Round’s structure (priced equity vs. convertible) affects dilution and signaling. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rollup](https://startuplawyer.com/startup-law-glossary/rollup) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Rollup is an acquisition strategy where a buyer consolidates multiple smaller companies in the same industry into a larger platform to gain scale, improve margins, and create a higher-valued combined entity. In private equity and strategic M&A, a Rollup can rely on repeatable deal processes and integration playbooks, and Rollup success depends heavily on integration execution and valuation discipline. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rolling Close](https://startuplawyer.com/startup-law-glossary/rolling-close) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Rolling Close is a financing structure where investors are admitted and the company closes subscriptions in multiple tranches over a defined period rather than all at once, often to allow faster access to initial capital while continuing to raise. In seed rounds and SPVs, a Rolling Close can reduce fundraising timeline risk, and Rolling Close mechanics require clear documentation on pricing, MFN provisions (if any), and when investor rights become effective. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Road Show](https://startuplawyer.com/startup-law-glossary/road-show) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Road Show is the structured series of meetings and presentations where an issuer’s management and underwriters market a securities offering to potential investors, most commonly in connection with an IPO or follow-on offering. In an IPO process, the Road Show helps build demand and inform pricing, and Road Show messaging is tightly coordinated to comply with securities law communication rules. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Risk Tolerance](https://startuplawyer.com/startup-law-glossary/risk-tolerance) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Risk Tolerance is the amount of uncertainty, potential loss, and volatility an investor, founder, or organization is willing to accept in pursuit of expected returns or strategic outcomes. In venture capital decisions, Risk Tolerance influences portfolio construction, follow-on reserves, and appetite for concentrated bets, and aligning Risk Tolerance among stakeholders can reduce friction in financing and exit discussions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Rights Offering](https://startuplawyer.com/startup-law-glossary/rights-offering) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Rights Offering is an offering in which existing shareholders receive transferable or non-transferable rights to purchase additional shares, typically pro rata to their current ownership, often at a discount to market price. In capital raising, a Rights Offering can help a company raise funds while giving current holders priority access, and Rights Offering mechanics include subscription rights, oversubscription privileges, and deadlines. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Right of Rescission](https://startuplawyer.com/startup-law-glossary/right-of-rescission) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The Right of Rescission is a legal right that allows an investor to unwind a securities transaction and receive their money back (and sometimes interest) if the offering violated securities laws or involved material misstatements or omissions. In private offerings, a Right of Rescission can arise from improper exemption compliance or disclosure failures, and managing Right of Rescission risk is a key reason companies follow Regulation D procedures carefully. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Right of First Refusal and Co-Sale Agreement](https://startuplawyer.com/startup-law-glossary/right-of-first-refusal-and-co-sale-agreement) **Published:** January 7, 2019 **Author:** Ryan Roberts **Content:** The Right of First rRefusal and Co-sale Agreement is a common startup financing document that grants certain parties (often the company and major investors) a right of first refusal on share transfers and also gives investors co-sale (tag-along) rights to sell alongside a founder or other selling shareholder. In practice, a Right of First Refusal and Co-Sale Agreement is used to manage secondary sales and maintain cap table control, and the Right of First Refusal and Co-Sale Agreement sets the mechanics, notice requirements, and exceptions for permitted transfers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Right of First Refusal](https://startuplawyer.com/startup-law-glossary/right-of-first-refusal) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Right of First Refusal (ROFR) is a contractual right that allows the holder (often the company and/or certain investors) to match a third-party offer before a shareholder can sell their shares to that third party. In private company cap tables, a Right of First Refusal helps control who becomes a shareholder, and the Right of First Refusal process typically includes notice, matching timelines, and permitted transfer exceptions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Right of First Offer](https://startuplawyer.com/startup-law-glossary/right-of-first-offer) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** The Right of First Offer (ROFO) is a contractual right that requires a selling party to first offer an asset or shares to the ROFO holder (often on terms proposed by the seller) before selling to a third party. In private company secondaries and M&A-related transfers, a Right of First Offer is used to give existing investors or the company a first look at liquidity opportunities, and Right of First Offer terms specify notice, timelines, matching/negotiation mechanics, and exceptions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Revlon Duties](https://startuplawyer.com/startup-law-glossary/revlon-duties) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Revlon Duties are fiduciary duties under Delaware law that can be triggered when a company initiates a sale or break-up process, requiring the board to focus on maximizing immediate value for stockholders (often described as getting the best price reasonably available), subject to context and case law nuances. In M&A, Revlon Duties influence process design, auction vs. single-bidder decisions, defensive measures, and board documentation, and alleged Revlon Duties breaches are a common basis for deal litigation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reverse Vesting](https://startuplawyer.com/startup-law-glossary/reverse-vesting) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Reverse Vesting is an equity arrangement where shares are issued upfront (often to founders) but are subject to the company’s right to repurchase unvested shares if the holder leaves, effectively creating vesting through repurchase rights. In startup founder equity, Reverse Vesting aligns incentives and protects the cap table, and Reverse Vesting terms typically mirror standard vesting schedules and acceleration provisions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reverse Stock Split](https://startuplawyer.com/startup-law-glossary/reverse-stock-split) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Reverse Stock Split is a corporate action that reduces the number of outstanding shares by combining multiple shares into a single share (e.g., 10-for-1), which increases the per-share price proportionally while generally leaving total equity value unchanged absent market effects. In public markets and some late-stage private restructurings, a Reverse Stock Split is used to meet listing requirements, reduce shareholder counts, or reset share price optics, and Reverse Stock Split mechanics require board and often shareholder approval. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reverse Engineer](https://startuplawyer.com/startup-law-glossary/reverse-engineer) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Reverse Engineering means to analyze a product, software, or system to determine how it works or how it was built, often by deconstructing or examining outputs to infer underlying design. In IP and M&A diligence, Reverse Engineer restrictions frequently appear in licenses and NDAs, and Reverse Engineer activity can create trade secret, copyright, or contract risk depending on jurisdiction and agreement terms. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reverse Dilution](https://startuplawyer.com/startup-law-glossary/reverse-dilution) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Reverse Dilution is an informal term sometimes used to describe situations where an investor’s percentage ownership increases (or is protected) relative to others due to structure, such as anti-dilution adjustments, recapitalizations, or conversion mechanics that shift shares toward one class. In cap table dynamics, Reverse Dilution effects can occur in down rounds with aggressive anti-dilution provisions, and Reverse Dilution outcomes are often contentious because they can disproportionately impact founders, employees, and smaller investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reverse Break Up Fee](https://startuplawyer.com/startup-law-glossary/reverse-break-up-fee) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** A Reverse Break Up Fee is a fee paid by the buyer to the seller if the transaction fails to close due to specified reasons, often including financing failure (if allowed), regulatory failure, or buyer breach. In M&A negotiations, a Reverse Break Up Fee is used to allocate deal certainty risk and incentivize buyer performance, and Reverse Break Up Fee size and triggers are closely tied to remedy caps and specific performance rights. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Return on Investment](https://startuplawyer.com/startup-law-glossary/return-on-investment) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** The Return on Investment (ROI) is a measure of gain or loss relative to the amount invested, commonly expressed as a multiple (e.g., 3.0x) or percentage. In venture capital, Return on Investment is used alongside IRR to evaluate performance, and Return on Investment comparisons depend on timing, dilution, and whether returns are realized or marked to market. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Restriction on Sales](https://startuplawyer.com/startup-law-glossary/restriction-on-sales) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Restriction on Sales is a limitation—imposed by securities laws and/or contract—on when, how, or to whom securities can be transferred, such as lockups, right-of-first-refusal provisions, or Rule 144 holding periods. In private companies, Restriction on Sales provisions help control the cap table and maintain exemption compliance, and Restriction on Sales issues are a common diligence focus in secondaries and M&A. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Restricted Stock Purchase Agreement](https://startuplawyer.com/startup-law-glossary/restricted-stock-purchase-agreement) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Restricted Stock Purchase Agreement (RSPA) is the contract under which an individual purchases restricted stock from a company, setting out the number of shares, purchase price, vesting schedule, company repurchase rights, and transfer restrictions. In startup equity administration, the Restricted Stock Purchase Agreement is a core document for founder and early employee grants, and the Restricted Stock Purchase Agreement typically coordinates with 83(b) election timing and IP assignment obligations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Restricted Stock](https://startuplawyer.com/startup-law-glossary/restricted-stock) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Restricted Stock is company stock issued to an employee or founder that is subject to restrictions such as vesting, company repurchase rights, or transfer limitations until certain conditions are met. In startups, Restricted Stock is often used for founder equity grants early on, and Restricted Stock recipients commonly consider filing an 83(b) election to potentially improve tax treatment. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Residuals Clause](https://startuplawyer.com/startup-law-glossary/residuals-clause) **Published:** January 7, 2019 **Author:** Ryan Roberts **Content:** A Residuals Clause is a contract provision (often in NDAs or services agreements) stating that the recipient may use information retained in unaided memory, provided they do not intentionally memorize or use confidential materials, which can limit confidentiality protections. In commercial and M&A contexts, a Residuals Clause is controversial because it can weaken trade secret protection, and Residuals Clause scope (who it applies to, what information, and time limits) is heavily negotiated. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reserves](https://startuplawyer.com/startup-law-glossary/reserves) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Reserves are amounts set aside for a specific purpose, such as a fund setting aside capital for follow-on investments or a company setting aside an accounting reserve for expected losses or liabilities. In venture capital, Reserves planning is central to follow-on strategy and ownership maintenance, and Reserves policies influence pacing, portfolio support, and fund risk management. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reserved Shares](https://startuplawyer.com/startup-law-glossary/reserved-shares) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Reserved Shares are shares that a company has set aside for future issuance, most commonly for the equity incentive plan (option pool), warrants, convertible instruments, or strategic issuances. In cap table analysis, Reserved Shares are included on a fully diluted basis to model ownership and dilution, and Reserved Shares levels are often negotiated in financing rounds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Repurchase Option](https://startuplawyer.com/startup-law-glossary/repurchase-option) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Repurchase Option is a contractual right (often held by the company) to buy back shares from a holder under specified circumstances, such as if a founder leaves before vesting or if shares are subject to transfer restrictions. In startup equity, a Repurchase Option is used to enforce vesting and protect the cap table, and Repurchase Option terms include price (cost vs. fair market value), timing, and exercise procedures. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Representations and Warranties](https://startuplawyer.com/startup-law-glossary/representations-and-warranties) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Representations and Warranties are statements of fact made by parties in a contract (especially in M&A and financings) about the business, authority, financials, compliance, and other matters, which allocate risk and serve as a basis for remedies if untrue. In deal documents, Representations and Warranties drive diligence focus and indemnification exposure, and Representations and Warranties are often qualified by materiality, knowledge, and disclosure schedules. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reincorporation Merger](https://startuplawyer.com/startup-law-glossary/reincorporation-merger) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** A Reincorporation Merger is a legal restructuring where an entity changes its state (or country) of incorporation by merging into a new entity formed in the desired jurisdiction, with the surviving entity holding the business. In startup cleanups, a Reincorporation Merger is often used to move into Delaware, and Reincorporation Merger planning considers tax, contracts, IP assignments, and stakeholder consents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Regulation S](https://startuplawyer.com/startup-law-glossary/regulation-s) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Regulation S is a U.S. safe harbor that provides that certain offers and sales of securities made outside the United States are not subject to SEC registration, provided specific offshore transaction and directed selling efforts conditions are met. In cross-border financings, Regulation S is used to include non-U.S. investors, and Regulation S compliance is coordinated with Regulation D and transfer restrictions to prevent flow-back into U.S. markets. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Regulation D](https://startuplawyer.com/startup-law-glossary/regulation-d) **Published:** January 8, 2010 **Author:** Ryan Roberts **Content:** Regulation D (Reg D) is a set of SEC rules that provides common exemptions from registration for private offerings, most notably Rules 504, 506(b), and 506(c), which set conditions around investor type, solicitation, and disclosures. In venture financings, Regulation D (especially Rule 506(b)) is the standard exemption path, and Regulation D compliance includes Form D filings and resale restrictions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Regulation Crowdfunding](https://startuplawyer.com/startup-law-glossary/regulation-crowdfunding) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Regulation Crowdfunding (Reg CF) is a U.S. securities exemption that allows eligible companies to raise capital from the public through FINRA-registered online funding portals or broker-dealers, subject to offering limits, disclosure requirements, and investor caps. For startups, Regulation Crowdfunding can broaden access to capital and customers, and Regulation Crowdfunding raises require careful cap table, disclosure, and communications management. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Regulation A+](https://startuplawyer.com/startup-law-glossary/regulation-a-2) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Regulation A+ is the common nickname for the modernized Regulation A framework (post-2015 amendments) that created Tier 1 and Tier 2 offerings with different limits and reporting requirements. In practice, Regulation A+ (especially Tier 2) is used to raise larger amounts and reach retail investors, and Regulation A+ offerings require careful coordination of audits, blue-sky preemption (for Tier 2), and marketing compliance. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Regulation A](https://startuplawyer.com/startup-law-glossary/regulation-a) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Regulation A is a U.S. securities offering exemption sometimes called a “mini-IPO” that allows eligible issuers to raise capital from the public with lighter ongoing reporting than a full public registration, subject to offering limits and qualification by the SEC. For growth-stage companies, Regulation A can expand the investor base beyond accredited investors, and Regulation A offerings still require offering circular disclosures and compliance planning. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Registration Rights](https://startuplawyer.com/startup-law-glossary/registration-rights) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Registration Rights are contractual rights that allow investors to require (demand) a company to register their shares for public resale or to include their shares in a company-initiated registration, typically after an IPO or when the company becomes eligible. In venture financings, Registration Rights are set out in an investor rights agreement, and Registration Rights include concepts like demand rights, piggy-back rights, S-3 eligibility, and underwriter cutbacks. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Registration](https://startuplawyer.com/startup-law-glossary/registration) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Registration is the process of filing a registration statement with the SEC (or other regulator) to offer or sell securities publicly, including required disclosures and review, and it can also refer to registering securities for resale. In capital markets transactions, Registration determines whether an offering is public or exempt, and Registration timing and eligibility can materially affect liquidity planning and financing strategy. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Registrable Securities](https://startuplawyer.com/startup-law-glossary/registrable-securities) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Registrable Securities are securities that a holder is entitled to have registered for resale under a company’s registration rights agreement, subject to negotiated exclusions (such as shares sold under Rule 144, shares subject to lockups, or shares that can be freely sold). In IPO readiness and follow-on offerings, Registrable Securities definitions determine who can demand or participate in registrations, and Registrable Securities scope can affect overhang and offering size. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Registered Offering](https://startuplawyer.com/startup-law-glossary/registered-offering) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Registered Offering is a securities offering that is registered with the SEC (or other regulator) through a registration statement, allowing sales to the public subject to detailed disclosure and ongoing compliance. In capital markets, a Registered Offering provides broader distribution and liquidity, and Registered Offering processes typically involve underwriters, a prospectus, and heightened liability standards. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Registered Agent](https://startuplawyer.com/startup-law-glossary/registered-agent) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** A Registered Agent is a designated person or service company authorized to receive service of process and official government correspondence on behalf of an entity in a particular jurisdiction. In corporate compliance and diligence, maintaining an active Registered Agent helps keep the company in good standing, and Registered Agent information is part of standard formation and annual filing requirements. A corporation’s registered agent must be physically located within the relevant state. For example, if your Texas company is incorporated in Delaware, your company will need to hire a registered agent in Delaware. If your Texas company is incorporated in Texas, you or another shareholder or officer could be the Texas registered agent (assuming each resides in Texas). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Redline](https://startuplawyer.com/startup-law-glossary/redline) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Redline is a document comparison that shows proposed edits to a draft agreement, typically by tracking insertions and deletions to highlight changes between versions. In deal negotiations, the Redline is the primary way parties exchange contractual changes efficiently, and reviewing a Redline carefully is critical to avoid inadvertently accepting unfavorable terms. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Redemption Right](https://startuplawyer.com/startup-law-glossary/redemption-right) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Redemption Right is an investor right (commonly in preferred stock) that allows the holder to require the company to repurchase the investor’s shares after a certain time or upon specified conditions, subject to legal limits on available funds. In VC deals, a Redemption Right is a potential liquidity lever and negotiating tool, and Redemption Right provisions are more common in later-stage or structured rounds than in seed-stage financings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Recapitalization](https://startuplawyer.com/startup-law-glossary/recapitalization) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Recapitalization is a restructuring of a company’s capital structure, such as exchanging debt for equity, issuing new classes of securities, changing share rights, or reorganizing the cap table to address financing needs or return capital. In venture and private equity, a Recapitalization can be used to raise new money, provide liquidity through dividends, or reset preferences after a down cycle, and Recapitalization transactions often require complex consents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Reasonable (Deal Context)](https://startuplawyer.com/startup-law-glossary/reasonable-deal-context) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Reasonable (in a deal context) refers to a legal and commercial standard used in contracts and negotiations to describe conduct or outcomes that a prudent party would view as appropriate under the circumstances, often leaving room for interpretation. In M&A and financing agreements, Reasonable appears in phrases like “reasonable efforts” or “reasonably acceptable,” and disputes about what is Reasonable (Deal Context) can turn on facts, market practice, and negotiation history. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Ratchet](https://startuplawyer.com/startup-law-glossary/ratchet) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Ratchet is a term used for mechanisms that adjust economics based on future outcomes, most commonly anti-dilution adjustments (like full ratchet) or earnout/price adjustment features that “ratchet” up or down based on performance. In venture and M&A contexts, a Ratchet is used to allocate risk when valuation is uncertain, and Ratchet structures can materially shift ownership or payouts depending on results. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Quorum](https://startuplawyer.com/startup-law-glossary/quorum) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Quorum is the minimum number of voting members (such as directors at a board meeting or shareholders at a stockholder meeting) that must be present to validly conduct business and take official action. In corporate governance, Quorum requirements are set by statute and bylaws/charter, and Quorum rules matter in financings and M&A when approvals must be obtained on tight timelines. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Quiet Period](https://startuplawyer.com/startup-law-glossary/quiet-period) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** A Quiet Period is a restricted communications window around certain securities offerings (most notably an IPO) during which the issuer and underwriters limit public statements to reduce the risk of impermissible “gun-jumping” and to ensure offering communications comply with securities laws. In IPO process management, the Quiet Period affects PR, marketing, and investor communications, and Quiet Period violations can delay offerings or create regulatory issues. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Quasi-Public Corporation](https://startuplawyer.com/startup-law-glossary/quasi-public-corporation) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Quasi-Public Corporation is an informal term often used to describe a large private company that operates with many public-company-like characteristics (e.g., extensive reporting to investors, complex governance, broad shareholder base, and regular secondary liquidity) without being publicly listed. In late-stage venture markets, a Quasi-Public Corporation may face public-company-style scrutiny from investors and regulators, and Quasi-Public Corporation dynamics can affect valuation, disclosure expectations, and transaction execution. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Qualified Small Business Stock](https://startuplawyer.com/startup-law-glossary/qualified-small-business-stock) **Published:** April 1, 2026 **Author:** Ryan Roberts **Content:** Qualified Small Business Stock (QSBS) is stock that may qualify for favorable U.S. tax treatment under Internal Revenue Code Section 1202, potentially allowing eligible holders to exclude a portion (or all) of capital gains if requirements are met (including holding period and issuer eligibility). In venture-backed startups, Qualified Small Business Stock (QSBS) planning is often discussed with founders and early employees, and QSBS eligibility can influence entity choice, asset tests, and timing of stock issuance. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Qualified Financing](https://startuplawyer.com/startup-law-glossary/qualified-financing) **Published:** June 22, 2010 **Author:** Ryan Roberts **Content:** A Qualified Financing is a financing round that meets pre-defined criteria in a convertible note or SAFE (commonly a minimum amount raised and/or a priced preferred equity round), which triggers automatic conversion of the instrument into equity. In seed documentation, Qualified Financing definitions are critical because they determine when conversion happens and at what price, and a Qualified Financing threshold can be negotiated to protect both founders and early investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Put Right](https://startuplawyer.com/startup-law-glossary/put-right) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Put Right is a contractual right that allows the holder to require another party (often the company or a counterparty) to purchase the holder’s securities at a specified price or formula, sometimes after a certain time or upon specified events. In venture and private equity terms, a Put Right can function as a liquidity backstop, and Put Right provisions are less common in early-stage VC but may appear in structured or later-stage deals. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Purchase Agreement](https://startuplawyer.com/startup-law-glossary/purchase-agreement) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** A Purchase Agreement is the definitive contract that sets the binding terms of a sale transaction, such as a stock purchase agreement or asset purchase agreement, including price, representations and warranties, covenants, closing conditions, and indemnification. In M&A execution, the Purchase Agreement is the core document that governs risk allocation, and the Purchase Agreement typically drives closing deliverables and post-close remedies. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pump and Dump](https://startuplawyer.com/startup-law-glossary/pump-and-dump) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Pump and Dump is a form of securities fraud where perpetrators artificially inflate (“pump”) the price of a stock or token using misleading statements or hype, then sell (“dump”) their holdings at the higher price, leaving others with losses when the price falls. In compliance and diligence, Pump and Dump risk is a red flag around promotions, influencer marketing, thinly traded securities, and certain crypto projects, and Pump and Dump allegations can trigger regulatory enforcement and reputational damage. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Public Offering](https://startuplawyer.com/startup-law-glossary/public-offering) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Public Offering is a registered sale of securities to the public under applicable securities laws, typically involving a registration statement and prospectus delivered to investors. For issuers, a Public Offering can provide large-scale capital and liquidity, and Public Offering processes carry heightened disclosure obligations and liability standards. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Public Company](https://startuplawyer.com/startup-law-glossary/public-company) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Public Company is a company whose shares are publicly traded on a stock exchange or over-the-counter market and that is subject to ongoing public reporting, disclosure, and governance requirements. In venture outcomes, becoming a Public Company is a major liquidity pathway, and Public Company status increases compliance costs while providing access to broader capital markets. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Public Benefit LLC](https://startuplawyer.com/startup-law-glossary/public-benefit-llc) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Public Benefit LLC is a limited liability company structure (available in certain jurisdictions) designed to pursue one or more stated public benefits alongside profit, with operating agreement provisions that embed the mission and governance approach. For impact-oriented founders, a Public Benefit LLC can provide flexibility similar to a standard LLC, and Public Benefit LLC terms often address how managers balance financial returns with the Public Benefit LLC purpose. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Public Benefit Corporation](https://startuplawyer.com/startup-law-glossary/public-benefit-corporation) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Public Benefit Corporation (PBC) is a for-profit corporate form (in jurisdictions that authorize it, such as Delaware) that requires the company to balance stockholder value with a stated public benefit purpose and the interests of those materially affected by the company’s conduct. In mission-driven startups, a Public Benefit Corporation can provide governance cover for impact objectives, and Public Benefit Corporation status may affect investor expectations around fiduciary duties and reporting. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Proxy Voting](https://startuplawyer.com/startup-law-glossary/proxy-voting) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Proxy Voting is the practice of authorizing another person or entity to vote a shareholder’s shares, typically via a written proxy, and it is also used to describe institutional investors voting shares according to proxy advisor recommendations and internal policies. In governance and M&A, Proxy Voting can determine outcomes on mergers, director elections, and shareholder proposals, and Proxy Voting mechanics are governed by corporate law, bylaws, and solicitation rules. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Protective Provisions](https://startuplawyer.com/startup-law-glossary/protective-provisions) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Protective Provisions are consent rights (veto rights) granted to preferred stockholders that require a separate class or series vote before the company can take certain actions (e.g., amend the charter, issue senior securities, sell the company, or change the board size). In VC governance, Protective Provisions provide Negative Control and downside protection, and Protective Provisions are among the most negotiated terms in a preferred financing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Prospectus](https://startuplawyer.com/startup-law-glossary/prospectus) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** is a formal disclosure document used in registered securities offerings that provides material information about the issuer, the securities being offered, risks, and financial statements. In IPOs and other registered offerings, the Prospectus is central to investor decision-making and regulatory compliance, and the Prospectus content is subject to SEC review and liability standards. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pro Rata](https://startuplawyer.com/startup-law-glossary/pro-rata) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Pro Rata means “in proportion” and is commonly used to describe an investor’s right to participate in a financing in proportion to their existing ownership to maintain percentage ownership. In venture capital, Pro Rata allocation is a key driver of follow-on strategy, and Pro Rata rights are typically documented in the investor rights agreement and may be subject to thresholds or available round capacity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Proprietary Rights](https://startuplawyer.com/startup-law-glossary/proprietary-rights) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Proprietary Rights are legal rights in intangible assets such as intellectual property, confidential information, trade secrets, software, data, and related know-how that a company owns or controls. In venture and M&A diligence, Proprietary Rights are assessed for ownership, assignments, licensing restrictions, and infringement risk because Proprietary Rights often underpin competitive advantage. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Promote](https://startuplawyer.com/startup-law-glossary/promote) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Promoteis the share of investment profits allocated to the sponsor/manager above a certain return threshold, most commonly used in real estate and private equity waterfalls and similar in concept to carried interest. In deal economics, the Promote is intended to reward performance and alignment, and the Promote structure is typically defined by tiers, hurdles, and catch-up mechanics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Promissory Note](https://startuplawyer.com/startup-law-glossary/promissory-note) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Promissory Note is a written debt instrument in which a borrower promises to repay a specified principal amount to a lender under stated terms, including interest, maturity, and repayment mechanics. In startup finance, a Promissory Note is often used for bridge funding or convertible debt, and the Promissory Note terms can include conversion triggers, discounts, and covenants. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Profits Interest](https://startuplawyer.com/startup-law-glossary/profits-interest) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Profits Interest is an equity interest in an LLC or partnership that entitles the holder to share in future profits and appreciation after a specified threshold (often the current fair market value) but typically does not grant a share of existing capital at grant. In private equity and startup LLC structures, a Profits Interest is used as an incentive tool similar to options, and Profits Interest tax treatment depends on meeting required conditions and holding periods. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pro Forma](https://startuplawyer.com/startup-law-glossary/pro-forma) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Pro Forma refers to financial statements or metrics presented “as if” a specific event had occurred (such as a merger, financing, or divestiture), used to show an adjusted view of performance or capitalization. In diligence and deal modeling, Pro Forma analysis helps stakeholders understand run-rate results, leverage, and synergies, and Pro Forma adjustments must be clearly defined and consistently applied. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Process Risk](https://startuplawyer.com/startup-law-glossary/process-risk) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Process Risk is the risk that a transaction, financing, or strategic initiative fails (or yields worse terms) due to execution issues such as timing, messaging, information leakage, poor auction dynamics, regulatory delays, or stakeholder misalignment. In M&A and fundraising, Process Risk can be reduced through tight project management, clean diligence materials, and a credible competitive process, and Process Risk is often priced into timelines and certainty discounts. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Private Placement Memorandum](https://startuplawyer.com/startup-law-glossary/private-placement-memorandum) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Private Placement Memorandum (PPM) is a disclosure document provided to prospective investors in a private offering, describing the issuer, risks, terms of the securities, use of proceeds, conflicts, and other material information. In fundraises (especially funds), a Private Placement Memorandum helps support compliance and investor diligence, and a well-drafted Private Placement Memorandum can reduce misrepresentation and suitability disputes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Private Placement](https://startuplawyer.com/startup-law-glossary/private-placement) **Published:** January 8, 2010 **Author:** Ryan Roberts **Content:** A Private Placement is a type of private offering in which securities are sold to a limited group of investors under an exemption from public registration requirements, often using standardized documentation and transfer restrictions. In venture capital and private credit, Private Placement rounds are the common mechanism for raising growth capital, and Private Placement terms define valuation, governance, and investor rights. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Private Offering](https://startuplawyer.com/startup-law-glossary/private-offering) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Private Offering is a sale of securities that is not registered with the SEC and instead relies on an exemption from registration (such as Regulation D), typically limited to accredited investors and subject to resale restrictions. In fundraising, a Private Offering requires careful attention to solicitation, disclosures, and investor qualification, and Private Offering compliance failures can create rescission risk and future financing complications. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Private Investment in Public Equities](https://startuplawyer.com/startup-law-glossary/private-investment-in-public-equities) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Private Investment in Public Equities (PIPE) is a private placement where investors buy securities directly from a public company, often at a negotiated price and with resale registration rights. In capital markets and de-SPAC contexts, Private Investment in Public Equities financings can provide faster access to capital than public offerings, and Private Investment in Public Equities structures can include common stock, preferred stock, or convertible securities. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Private Equity](https://startuplawyer.com/startup-law-glossary/private-equity) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Private Equity is an asset class and investment strategy involving investments in private companies (or taking public companies private) with the goal of improving value and exiting through a sale or public offering. In dealmaking, Private Equity firms often use leverage and operational initiatives, and Private Equity transactions may include buyouts, growth equity, and recapitalizations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Private Company](https://startuplawyer.com/startup-law-glossary/private-company) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Private Company is a company whose shares are not publicly traded on a stock exchange and that is not subject to the full public-company reporting regime, though it may still have legal and contractual disclosure obligations. In venture capital, most startups are Private Company issuers until an IPO or direct listing, and Private Company shares are typically illiquid and subject to transfer restrictions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Privacy Policy](https://startuplawyer.com/startup-law-glossary/privacy-policy) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Privacy Policy is a public-facing statement that describes how an organization collects, uses, shares, stores, and protects personal data, and what rights individuals have regarding that data. In startup diligence and compliance, a Privacy Policy must align with actual data practices and applicable laws (e.g., GDPR/CCPA), and inconsistencies in a Privacy Policy can create regulatory and litigation risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Price Per Share](https://startuplawyer.com/startup-law-glossary/price-per-share) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The Price Per Share is the amount paid for one share of stock in a financing or transaction, typically calculated from valuation divided by the relevant capitalization (often fully diluted shares). In venture rounds, Price Per Share drives the number of shares issued to investors and the resulting dilution, and Price Per Share also affects conversion prices, option strike benchmarking, and cap table modeling. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Price Cap](https://startuplawyer.com/startup-law-glossary/price-cap) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Price Cap is a maximum price used in certain financing instruments (such as a SAFE or convertible note valuation cap) to set the effective conversion price, ensuring early investors receive a minimum amount of equity if the next priced round is at a high valuation. In seed financings, a Price Cap aligns risk and reward for early capital, and the Price Cap is a central negotiation point that functions similarly to a capped pre-money valuation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Prepayment](https://startuplawyer.com/startup-law-glossary/prepayment) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Prepayment is the early repayment of a loan or debt obligation before its scheduled maturity, either voluntarily or due to mandatory triggers in the credit agreement. In venture debt and acquisition financing, Prepayment provisions often include premiums or make-whole amounts, and Prepayment flexibility can affect a company’s ability to refinance or exit without extra cost. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Preferred Stock](https://startuplawyer.com/startup-law-glossary/preferred-stock) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** Preferred stock is a class of equity that has certain rights, preferences, and privileges over common stock, typically including liquidation preference, protective provisions, and sometimes dividends or conversion features. In venture capital, Preferred Stock is the standard security for priced rounds, and Preferred Stock terms largely define the economic and control outcomes for founders and investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Preferred Return](https://startuplawyer.com/startup-law-glossary/preferred-return) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** The Preferred Return is the contractual minimum return that limited partners must receive from fund distributions before the general partner earns carried interest, typically expressed as an annual percentage (e.g., 8%), subject to the fund’s waterfall structure. In fund terms, Preferred Return is intended to align incentives and protect LPs, and Preferred Return mechanics interact with catch-up provisions, distribution timing, and clawbacks. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pre-Money Valuation](https://startuplawyer.com/startup-law-glossary/pre-money-valuation) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** A Pre-Money Valuation is a company’s agreed valuation immediately before new investment capital is added in a financing round, and it is used to determine the price per share and investor ownership. In venture deals, Pre-Money Valuation is negotiated alongside option pool sizing and other terms, and small changes in Pre-Money Valuation can materially affect dilution outcomes. Pre-Money Valuation = Post-Money Valuation – Investment ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pre-Money Shares](https://startuplawyer.com/startup-law-glossary/pre-money-shares) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Pre-Money Shares are the shares considered outstanding on a fully diluted basis immediately before a new financing closes, used to calculate price per share and ownership outcomes. In term sheet math, Pre-Money Shares typically include existing common, preferred on an as-converted basis, and the option pool (depending on the negotiated definition), and Pre-Money Shares definitions can shift dilution between founders and new investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Preemptive Rights](https://startuplawyer.com/startup-law-glossary/preemptive-rights) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Preemptive Rights are shareholders’ rights to purchase a proportionate share of new securities issued by a company, allowing them to maintain their ownership percentage and avoid dilution. In venture financing documents, Preemptive Rights are often granted to major investors (similar to participation/pro rata rights), and Preemptive Rights typically include exceptions for employee equity, strategic issuances, and other excluded securities. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Post-Money Valuation](https://startuplawyer.com/startup-law-glossary/post-money-valuation) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** A Post-Money Valuation is a company’s valuation immediately after a financing round closes, typically calculated as pre-money valuation plus the amount of new capital invested (with nuances depending on whether the option pool is included pre- or post-money). In venture term sheets, Post-Money Valuation determines investor ownership and dilution, and comparing Post-Money Valuation across rounds is common for signaling and performance assessment. Post-Money Valuation = Investment/Investor Ownership Percentage ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Portfolio Construction](https://startuplawyer.com/startup-law-glossary/portfolio-construction) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Portfolio Construction is the strategy and discipline of building an investment portfolio, including decisions about number of investments, check sizes, stage focus, sector concentration, reserves for follow-ons, and risk diversification. In venture capital, Portfolio Construction influences ownership outcomes and fund return distributions, and strong Portfolio Construction helps align pacing with a fund’s investment period and capital base. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Portfolio Company](https://startuplawyer.com/startup-law-glossary/portfolio-company) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Portfolio Company is a company in which a fund or investor has made an investment and that is part of the investor’s portfolio. In venture capital, a Portfolio Company is typically supported through board involvement, recruiting help, and follow-on capital decisions, and Portfolio Company performance drives fund-level returns. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Poison Pill](https://startuplawyer.com/startup-law-glossary/poison-pill) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Poison Pill is a shareholder rights plan adopted by a company’s board to deter hostile takeovers by making an acquisition prohibitively expensive (often by allowing existing shareholders to buy discounted shares if a bidder crosses an ownership threshold). In public-company M&A, a Poison Pill is a defensive tool that can buy time and force negotiations, and Poison Pill adoption can trigger investor scrutiny and litigation risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Placement Agent](https://startuplawyer.com/startup-law-glossary/placement-agent) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Placement Agentis an intermediary (often a registered broker-dealer) engaged to help an issuer raise capital by marketing a private placement to investors and assisting with process, investor targeting, and sometimes documentation. In private offerings, a Placement Agent is commonly compensated with fees and sometimes warrants, and using a Placement Agent can introduce regulatory and diligence considerations regarding solicitation and investor qualification. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Piggy-Back Rights](https://startuplawyer.com/startup-law-glossary/piggy-back-rights) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Piggy-Back Rights are registration rights that allow investors to include (“piggy-back”) their shares in a company’s registered public offering when the company (or another holder) initiates a registration statement. In venture-backed IPOs, Piggy-Back Rights provide a path for certain holders to obtain liquidity, and Piggy-Back Rights are typically subject to underwriter cutbacks and eligibility thresholds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Perpetual Warrant](https://startuplawyer.com/startup-law-glossary/perpetual-warrant) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Perpetual Warrant is a warrant that does not have a stated expiration date (or has an extremely long-dated term), allowing the holder to exercise into equity indefinitely, subject to the warrant’s conditions. In venture debt and structured financings, a Perpetual Warrant can be highly dilutive over time, and Perpetual Warrant terms are often negotiated to include call rights, cashless exercise mechanics, or other limits. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Payment in Kind](https://startuplawyer.com/startup-law-glossary/payment-in-kind) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Payment in Kind (PIK) is an interest or dividend feature where the issuer pays by adding the amount owed to the principal balance (or issuing additional securities) instead of paying cash. In leveraged finance and some preferred structures, Payment in Kind (PIK) preserves cash flow in the short term but increases leverage and payoff amounts over time, and Payment in Kind (PIK) terms are closely negotiated in credit agreements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pay to Play](https://startuplawyer.com/startup-law-glossary/pay-to-play) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Pay to Play is a financing provision that penalizes existing investors who do not participate in a subsequent round (often a down round) by reducing their preferred protections, such as converting some or all of their preferred stock into common. In recap and rescue financings, Pay to Play encourages insiders to support the company, and Pay to Play can materially shift economics between participating and non-participating investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Patent](https://startuplawyer.com/startup-law-glossary/patent) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Patent is an intellectual property right granted by a government that gives the patent holder the right to exclude others from making, using, selling, or importing the claimed invention for a limited period, subject to legal requirements and maintenance. In venture and M&A diligence, Patent strength, scope, ownership, and freedom-to-operate impact defensibility and valuation, and a robust Patent portfolio can be a key strategic asset. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pass Through Entity](https://startuplawyer.com/startup-law-glossary/pass-through-entity) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** A Pass Through Entity Entity is a business structure—such as a partnership, LLC (in many cases), or S corporation—where income and losses generally “pass through” to owners and are taxed at the owner level rather than being taxed at the entity level. In fund and holding-company structuring, Pass Through Entity status can be tax-efficient, but Pass Through Entity considerations may conflict with the preferences of certain institutional investors or cross-border stakeholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Participation Rights](https://startuplawyer.com/startup-law-glossary/participation-rights) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Participation Rights are investors’ contractual rights to participate in future financings, typically to maintain their ownership percentage by purchasing their pro rata share of newly issued securities. In VC documents, Participation Rights help investors avoid dilution and signal ongoing support, and Participation Rights are often limited by minimum ownership thresholds, excluded issuances, or allocation constraints in oversubscribed rounds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Participating Preferred Stock](https://startuplawyer.com/startup-law-glossary/participating-preferred-stock) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Participating Preferred Stock is preferred equity that, upon a liquidation event, receives its liquidation preference first and then also participates with common stockholders in the remaining proceeds (often on an as-converted basis), sometimes subject to a participation cap. In VC term negotiations, Participating Preferred Stock is considered investor-favorable because it increases downside protection and can boost returns in mid-range exits, and Participating Preferred Stock can materially reduce common shareholder payouts. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Pari Passu](https://startuplawyer.com/startup-law-glossary/pari-passu) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Pari Passu means “on equal footing” and describes securities or claims that rank equally in priority for payment or distribution, without one being senior to the other. In capital structures and liquidation waterfalls, Pari Passu treatment determines whether multiple series of preferred share proceeds pro rata, and Pari Passu drafting is important when stacking preferred rounds or layering debt. For example, if 10 people each loaned $10,000 and the startup desired to pay down the debt by $50,000, each person would receive a pay-down of $5,000 if their collective payment rights were pari passu with each other. Pari Passu can also be used for non-economic terms as well (e.g. registration rights). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Parachute Payment](https://startuplawyer.com/startup-law-glossary/parachute-payment) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Parachute Payment is a payment or benefit triggered by a change in control of a company, often tied to executive employment agreements and sometimes subject to special tax rules (e.g., U.S. golden parachute excise tax considerations under Section 280G). In M&A, Parachute Payment calculations can affect deal economics and closing deliverables, and Parachute Payment mitigation strategies may include cutbacks, shareholder approval, or restructuring compensation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Par Value](https://startuplawyer.com/startup-law-glossary/par-value) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** Par value is a nominal value assigned to a share of stock in a company’s charter, often a very small amount (e.g., $0.00001), which can affect legal capital and certain accounting entries. In startup formation and financings, Par Value is typically set low to minimize initial purchase price and tax implications for founder stock, and Par Value is distinct from fair market value or issue price. If a startup issues 8,000,000 shares with a $0.00001 par value, the minimum the founders would have to pay for those shares is $80. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Partnership](https://startuplawyer.com/startup-law-glossary/partnership) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Partnership is a business arrangement where two or more persons or entities carry on a business together, sharing profits, losses, and management as governed by law and any partnership agreement (including general partnerships and limited partnerships). In venture and fund contexts, Partnership structures are common for investment vehicles, and Partnership tax treatment (often pass-through) is a key driver of their use. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Paid-In Capital](https://startuplawyer.com/startup-law-glossary/paid-in-capital) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Paid-In Capital is the amount of money (or other consideration) investors have paid to a company in exchange for equity, often tracked as common stock at par value plus additional paid-in capital (APIC) in accounting. In financings, Paid-In Capital reflects historical equity funding and affects balance sheet presentation, and Paid-In Capital can also be relevant in tax, legal capital, and distribution analyses. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Oversubscription Privilege](https://startuplawyer.com/startup-law-glossary/oversubscription-privilege) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** An Oversubscription Privilege is a right (most common in rights offerings and certain securities structures) that allows an investor who exercised their basic subscription rights to purchase additional securities that remain unsubscribed, typically pro rata among those requesting extra. In offerings, Oversubscription Privilege helps ensure the issuer can raise the full amount while rewarding supportive holders, and the Oversubscription Privilege mechanics are defined in the offering documents and allocation rules. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Oversubscription](https://startuplawyer.com/startup-law-glossary/oversubscription) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Oversubscription occurs when investor demand for a financing round exceeds the amount of capital (or allocation) the company is willing to accept on the stated terms. In venture rounds, Oversubscription can strengthen pricing and terms for the company, and managing Oversubscription requires allocation decisions, potential up-sizing, and relationship considerations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Overhang](https://startuplawyer.com/startup-law-glossary/overhang) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Overhang refers to an anticipated future dilution or supply of shares that may depress perceived value or complicate financing/exit dynamics, such as a large option pool, heavy liquidation preferences, or a big block expected to sell post-lockup. In venture discussions, Overhang is used to describe cap table or liquidity pressure points, and Overhang considerations often influence valuation, secondary decisions, and structuring. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Outstanding Shares](https://startuplawyer.com/startup-law-glossary/outstanding-shares) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Outstanding Shares are the shares of a company that have been issued and are currently held by shareholders (excluding any shares repurchased and held as treasury, if applicable). In cap table and valuation work, Outstanding Shares are used to compute market capitalization and ownership percentages, and Outstanding Shares differ from authorized shares and fully diluted shares. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Ordinary Income Tax](https://startuplawyer.com/startup-law-glossary/ordinary-income-tax) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** Ordinary Income Tax is the tax applied to ordinary income (such as wages, interest, and many forms of compensation) at standard income tax rates, as distinct from preferential long-term capital gains rates. In equity compensation and deal structuring, Ordinary Income Tax is relevant because option exercises, NSOs, and certain bonus/transaction payments can generate Ordinary Income Tax rather than capital gains. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Option Pool Overhang](https://startuplawyer.com/startup-law-glossary/option-pool-overhang) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Option Pool Overhang refers to the dilutive impact (actual or anticipated) of a large unallocated option pool, or the expectation that a pool must be increased in the next financing to support hiring plans. In fundraising negotiations, Option Pool Overhang can pressure valuation because investors price in future dilution, and Option Pool Overhang is often discussed when aligning headcount plans with capitalization. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Option Pool](https://startuplawyer.com/startup-law-glossary/option-pool) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** An Option Pool is the reserve of equity (typically stock options, and sometimes RSUs) that a company sets aside to grant to employees, advisors, and directors as incentives. In venture rounds, the Option Pool size is negotiated because expanding the Option Pool dilutes existing shareholders, and the Option Pool is usually calculated on a fully diluted basis. The Option Pool is created pursuant to a written plan in order to satisfy Rule 701 which provides a registration exemption from Section 5 the 1933 Securities Act. Via the written plan, a startup pre-authorizes a certain amount of the company’s common stock which will be issued by the plan’s administrator (usually the startup’s board of directors or a committee selected by the board). For example, if the startup has 9,000,000 shares of common stock outstanding, it may elect to authorize 1,000,000 shares to be issued pursuant to the plan. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Optics](https://startuplawyer.com/startup-law-glossary/optics) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Optics refers to how a decision, transaction, or set of terms is perceived by stakeholders (investors, employees, customers, and the market), separate from the purely economic or legal substance. In venture financings and M&A, Optics can affect recruiting, follow-on fundraising, press narratives, and internal morale, and “good Optics” are often considered when choosing between comparable deal structures. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Operating Expenses](https://startuplawyer.com/startup-law-glossary/operating-expenses) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Operating Expenses are the ongoing costs required to run a business that are not directly tied to producing goods or delivering services (commonly including R&D, sales and marketing, and G&A). In financial planning and diligence, Operating Expenses drive burn rate and runway, and managing Operating Expenses is a core lever for extending cash life between financings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Officer](https://startuplawyer.com/startup-law-glossary/officer) **Published:** January 9, 2014 **Author:** Ryan Roberts **Content:** An Officer is an individual appointed by a company’s board (or authorized person) to hold an executive role—such as CEO, CFO, or Secretary—with authority and duties defined by law, the bylaws, and board resolutions. In governance and M&A diligence, Officer actions and Officer authority matter for approvals, signing power, compliance, and potential personal fiduciary exposure. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Offering Documents](https://startuplawyer.com/startup-law-glossary/offering-documents) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** The Offering Documents are the set of materials provided to investors in connection with a securities offering, such as a private placement memorandum, subscription agreement, investor questionnaire, term sheet, and related disclosures. In fundraising compliance, Offering Documents help satisfy disclosure obligations and define investor eligibility, and well-prepared Offering Documents can reduce litigation and regulatory risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Non-Solicitation](https://startuplawyer.com/startup-law-glossary/non-solicitation) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Non-Solicitation is a contractual restriction that limits a party’s ability to solicit or hire another party’s employees, contractors, customers, or vendors for a defined period and scope. In employment and M&A agreements, a Non-Solicitation is often used as a narrower alternative to non-competes, and Non-Solicitation enforceability and scope are common negotiation points. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Non-Qualified Stock Option](https://startuplawyer.com/startup-law-glossary/non-qualified-stock-option) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Non-Qualified Stock Option (NSO) is a stock option that does not qualify for ISO tax treatment and is generally taxed as ordinary income on the spread between exercise price and fair market value at exercise (subject to jurisdiction-specific rules). In equity compensation, a Non-Qualified Stock Option (NSO) is commonly granted to employees, advisors, and non-employee directors and offers more flexibility than ISOs in terms of eligibility and limits. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Non-Participating](https://startuplawyer.com/startup-law-glossary/non-participating) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Non-Participating describes preferred stock that, upon a liquidation event, receives its liquidation preference and then does not share further in remaining proceeds unless it converts to common stock. In VC economics, Non-Participating preferred (often “1x non-participating”) is considered more founder-friendly than participating preferred, and Non-Participating structure can materially affect payout waterfalls at mid-range exit values. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Non-Cumulative Dividends](https://startuplawyer.com/startup-law-glossary/non-cumulative-dividends) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Non-Cumulative Dividends are dividends on preferred stock that do not accrue if the board does not declare them for a given period; missed dividends are not owed in the future. In venture capital term sheets, Non-Cumulative Dividends are common because the company typically reinvests cash in growth, and Non-Cumulative Dividends primarily function as a pricing/terms point rather than a cash yield feature. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Non-Compete](https://startuplawyer.com/startup-law-glossary/non-compete) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Non-Compete is a contractual restriction that limits a person’s or company’s ability to engage in competing activities for a defined time period, geography, and scope, subject to enforceability limits that vary widely by jurisdiction. In employment, M&A, and founder agreements, a Non-Compete is used to protect goodwill and trade secrets, and Non-Compete enforceability is a key diligence and risk issue. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Non-Voting Stock](https://startuplawyer.com/startup-law-glossary/non-voting-stock) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** Non-Voting Stock is equity that generally does not carry the right to vote on corporate matters (or has limited voting rights), though it typically retains economic rights such as dividends and proceeds in a sale. In venture and public-company structures, Non-Voting Stock can be used to separate economic ownership from control, and Non-Voting Stock may be issued alongside voting shares in dual-class arrangements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [No-Shop Clause](https://startuplawyer.com/startup-law-glossary/no-shop-clause) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A No-Shop Clause is a provision in a letter of intent or definitive M&A agreement that restricts the seller/target from soliciting or engaging with other potential buyers for a defined period, subject to negotiated fiduciary outs in some cases. In deal process, a No-Shop Clause increases buyer deal certainty, and the No-Shop Clause is often paired with exclusivity periods, termination fees, and information-sharing controls. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [No-Par Value Stock](https://startuplawyer.com/startup-law-glossary/no-par-value-stock) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** No-Par Value Stock is stock issued without a stated par value in the company’s charter, meaning the shares do not have a nominal minimum legal capital amount assigned per share (subject to state law). In corporate formation and financings, No-Par Value Stock can simplify charter drafting and accounting treatment, and No-Par Value Stock is common in many modern startup capital structures. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Non-Accredited Investor](https://startuplawyer.com/startup-law-glossary/non-accredited-investor) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** A Non-Accredited Investor is an investor who does not meet the SEC’s accredited investor criteria based on income, net worth, or qualifying credentials, which can limit which private offerings they may participate in. In fundraising, Non-Accredited Investor participation can increase compliance burdens and restrict exemption choices, and companies often track Non-Accredited Investor counts and disclosure obligations carefully. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [No-Action Letter](https://startuplawyer.com/startup-law-glossary/no-action-letter) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A No-Action Letter is a written response from a regulator (commonly the SEC staff) indicating that the staff would not recommend enforcement action if a party proceeds with a proposed activity as described, although it is not a binding legal determination. In securities compliance, a No-Action Letter can provide useful guidance for novel fundraising, token, broker-dealer, or adviser questions, and No-Action Letter positions are often cited in structuring decisions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Newco](https://startuplawyer.com/startup-law-glossary/newco) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** Newco is shorthand for a newly formed company entity created for a specific transaction purpose, such as holding assets, issuing securities, completing a merger, or facilitating a spinout. In structuring, Newco can isolate liabilities or simplify ownership changes, and Newco is often the vehicle into which target shares are merged or assets are transferred. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Negotiation Leverage](https://startuplawyer.com/startup-law-glossary/negotiation-leverage) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Negotiation Leverage is the advantage one party has in bargaining, typically driven by strong alternatives (BATNA), time, information, competitive interest, or asymmetric need. In financings and M&A, Negotiation Leverage affects pricing and terms, and Negotiation Leverage can shift quickly if a company misses milestones or a buyer loses exclusivity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Negative Control](https://startuplawyer.com/startup-law-glossary/negative-control) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Negative Control refers to the ability to block or veto certain actions (even without majority ownership) through consent rights, protective provisions, or contractual covenants. In VC governance, Negative Control is commonly granted to preferred holders over major decisions (like issuing new stock, selling the company, or changing the charter), and Negative Control can materially influence negotiations and strategic options. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [NDA](https://startuplawyer.com/startup-law-glossary/nda) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** NDA (Non-Disclosure Agreement) is a contract that restricts a recipient’s use and disclosure of confidential information shared during discussions such as fundraising, partnerships, or M&A diligence. In deal processes, an NDA sets the rules for data room access and information handling, and an NDA often includes exceptions, term, and remedies for breach. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [National Venture Capital Association](https://startuplawyer.com/startup-law-glossary/national-venture-capital-association) **Published:** January 27, 2014 **Author:** Ryan Roberts **Content:** The National Venture Capital Association (NVCA) is a U.S. trade association representing the venture capital industry and is well known for publishing model legal documents used in VC financings. In practice, National Venture Capital Association resources influence “market” terms and standardization, and National Venture Capital Association templates are frequently used as starting points for term sheets and definitive agreements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Narrow-Based Weighted Average](https://startuplawyer.com/startup-law-glossary/narrow-based-weighted-average) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** The Narrow-Based Weighted Average is an anti-dilution adjustment method that recalculates a preferred stock conversion price in a down round using a formula that considers only certain shares (typically excluding a broad set of common-equivalent shares), resulting in stronger protection for investors than broad-based methods. In term sheet negotiations, Narrow-Based Weighted Average is more investor-favorable, and Narrow-Based Weighted Average can materially increase dilution to founders and the option pool in a down round. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Most Favored Nation Clause](https://startuplawyer.com/startup-law-glossary/most-favored-nation-clause) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Most Favored Nation Clause (MFN) is a provision that entitles a party to receive terms no less favorable than those granted to others, either automatically or upon election, depending on drafting. In startup financings (especially SAFEs/notes) and commercial contracts, a Most Favored Nation Clause protects early participants from being disadvantaged, and a Most Favored Nation Clause can complicate later negotiations if too broad. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Milestones](https://startuplawyer.com/startup-law-glossary/milestones) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Milestones are specific, measurable goals a company aims to achieve by a certain time (e.g., product release, revenue targets, regulatory approval, customer logos) that demonstrate progress and reduce perceived risk. In fundraising and board governance, Milestones define how runway is deployed, and Milestones are often used to justify the timing and valuation of the next round. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Micro VC](https://startuplawyer.com/startup-law-glossary/micro-vc) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Micro VC is a venture capital fund that is relatively small (often tens of millions of dollars rather than hundreds) and typically focuses on seed and early-stage investments with a high-volume portfolio strategy. In the ecosystem, a Micro VC may lead seed rounds or co-invest with angels, and a Micro VC’s fund size can influence ownership targets and follow-on capacity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Mezzanine Financing](https://startuplawyer.com/startup-law-glossary/mezzanine-financing) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Mezzanine Financing is a hybrid form of capital that sits between senior debt and equity, commonly structured as subordinated debt that may include warrants, payment-in-kind (PIK) interest, or conversion features. In growth and buyout transactions, Mezzanine Financing can increase total leverage when senior lenders won’t provide more, and Mezzanine Financing typically carries higher cost due to its junior position. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Mezzanine Level](https://startuplawyer.com/startup-law-glossary/mezzanine-level) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** The Mezzanine Level refers to an intermediate layer between senior and junior positions, often used metaphorically in capital structure discussions to describe financing that sits between senior secured debt and common equity. In private financing, Mezzanine Level risk/return is typically higher than senior debt but lower than equity, and Mezzanine Level instruments may include subordinated debt with warrants or conversion features. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Mergers and Acquisitions](https://startuplawyer.com/startup-law-glossary/mergers-and-acquisitions) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** Mergers and Acquisitions (M&A) refers to transactions where companies combine or where one company purchases another (or its assets), including mergers, stock purchases, asset purchases, and related restructurings. In corporate strategy and venture outcomes, Mergers and Acquisitions (M&A) is a primary exit path that converts company value into liquidity for shareholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Merger](https://startuplawyer.com/startup-law-glossary/merger) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Merger is a legal combination of two entities into one structure under applicable corporate law, where one entity survives or a new entity is formed, and assets and liabilities transfer by operation of law. In M&A, a Merger is a common deal structure used for acquisitions and reorganizations, and a Merger can be structured as forward, reverse, or triangular depending on tax, liability, and consent considerations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Mentors](https://startuplawyer.com/startup-law-glossary/mentors) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Mentors are experienced operators, investors, or subject-matter experts who provide guidance, introductions, and feedback to founders, typically informally or through accelerators/incubators. In early-stage ecosystems, Mentors can accelerate learning and reduce avoidable mistakes, and Mentors often influence hiring, go-to-market strategy, and fundraising readiness. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Materiality Scrape](https://startuplawyer.com/startup-law-glossary/materiality-scrape) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** A Materiality Scrape Scrape is a provision (common in M&A) that disregards materiality qualifiers in representations and warranties for purposes of determining whether a breach occurred and/or calculating damages, often with negotiated exceptions. By applying a Materiality Scrape, buyers seek to broaden indemnification coverage, and sellers often limit the Materiality Scrape through baskets, caps, and specific carve-outs. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Materiality Qualifier](https://startuplawyer.com/startup-law-glossary/materiality-qualifiers) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Materiality Qualifier is language in representations and warranties that limits disclosure to matters that are “material” (or “material adverse”), reducing the scope of what counts as a breach. In negotiation, a Materiality Qualifier can make claims harder to bring, and buyers often seek to neutralize Materiality Qualifier effects through a materiality scrape. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Material Adverse Change Clause](https://startuplawyer.com/startup-law-glossary/material-adverse-change-clause) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Material Adverse Change Clause (often “MAC” or “MAE”) is a provision in a purchase agreement that allows a buyer to refuse to close (or renegotiate) if the target suffers a material adverse change between signing and closing, subject to negotiated exceptions. In M&A, a Material Adverse Change Clause is heavily negotiated because it allocates interim business risk, and courts interpret Material Adverse Change Clause language narrowly based on facts and drafting. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Market Terms](https://startuplawyer.com/startup-law-glossary/market-terms) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Market Terms are the prevailing deal terms in a given environment—reflecting supply/demand for capital, competitive dynamics, and recent comparable transactions—across items like valuation, liquidation preference, governance, and investor protections. In venture financing, Market Terms can shift quickly with sentiment and rates, and understanding Market Terms helps founders and investors calibrate expectations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Market Standard](https://startuplawyer.com/startup-law-glossary/market-standard) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Market Standard describes terms, pricing, or provisions that are commonly accepted in comparable transactions for a given stage, sector, and market environment. In negotiations, Market Standard is used as an anchor for what is “normal,” and parties often debate what Market Standard truly is based on recent deal comps and leverage. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Market (as used by VCs)](https://startuplawyer.com/startup-law-glossary/market-as-used-by-vcs) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Market (as used by VCs) is shorthand for what investors believe they can successfully insist on in current deals, given recent transactions, supply and demand for capital, and leverage. “Market” is contextual, not permanent or fixed at some true verifiable resource. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Mandatory Redemption](https://startuplawyer.com/startup-law-glossary/mandatory-redemption) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Mandatory Redemption is a provision that requires a company to repurchase (redeem) certain securities—often preferred stock—at a specified time or upon specified conditions, subject to legal limitations on available funds. In VC terms, Mandatory Redemption is a liquidity backstop for investors, and Mandatory Redemption rights can influence leverage in exit discussions and the company’s long-term capital planning. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Management Rights](https://startuplawyer.com/startup-law-glossary/management-rights) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Management Rights are contractual rights granted to certain investors—often in venture funds or key LPs—that provide access to information or involvement sufficient to help satisfy regulatory or ERISA “venture capital operating company” (VCOC) requirements. In practice, Management Rights typically include the right to consult with management and receive information, and Management Rights letters are a standard deliverable in VC financings involving certain institutional LPs. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Management Fee](https://startuplawyer.com/startup-law-glossary/management-fee) **Published:** January 10, 2014 **Author:** Ryan Roberts **Content:** A Management Fee is the annual fee paid by a fund to its manager (GP/management company) to cover operating expenses such as salaries, rent, and overhead, typically expressed as a percentage of committed capital during the investment period and invested capital thereafter. In LP negotiations, Management Fee levels and step-downs are core economic terms, and Management Fee treatment of expenses and offsets can materially affect net returns. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Management Carveout Plan](https://startuplawyer.com/startup-law-glossary/management-carveout-plan) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A Management Carveout Plan is an incentive arrangement that allocates a portion of transaction proceeds or value creation to management, often to motivate retention and performance through an acquisition, recapitalization, or restructuring. In deal negotiations, a Management Carveout Plan affects how value is shared between equity holders and executives, and the Management Carveout Plan design can include pools, hurdles, vesting, and change-in-control triggers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Management Buyout](https://startuplawyer.com/startup-law-glossary/management-buyout) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Management Buyout (MBO) is an acquisition in which the company’s existing management team purchases the business, often with the backing of private equity and significant debt financing. In transaction structuring, a Management Buyout can raise conflicts because management is on both sides of the deal, and Management Buyout processes often require special committees and fairness opinions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Majority Shareholder](https://startuplawyer.com/startup-law-glossary/majority-shareholder) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** The Majority Shareholder is a person or entity that owns more than 50% of a company’s voting power (or, sometimes, equity), giving them the ability to control many corporate decisions. In governance and M&A, a Majority Shareholder can influence board composition, approve mergers, and set strategic direction, and Majority Shareholder control raises conflict-of-interest and minority protection considerations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Major Investor](https://startuplawyer.com/startup-law-glossary/major-investor) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Major Investor is an investor who meets a specified ownership threshold (often defined in a company’s financing documents) that entitles them to enhanced rights such as information rights, preemptive/pro rata rights, or consent rights. In preferred stock financings, Major Investor status is negotiated because it affects governance and access, and Major Investor definitions typically exclude very small holders or require continuous ownership. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Lock-up Period](https://startuplawyer.com/startup-law-glossary/lock-up-period) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Lock-up Period is a contractual time period after an IPO or certain other liquidity events during which insiders (founders, employees, and early investors) are restricted from selling their shares. In exit planning, the Lock-up Period affects supply of shares, price stability, and personal liquidity timing, and Lock-up Period terms may be negotiated with underwriters or in shareholder agreements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Limited Partners](https://startuplawyer.com/startup-law-glossary/limited-partners) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Limited Partners (LPs) are the investors in a limited partnership fund who contribute capital and share in profits but generally do not manage the fund’s day-to-day activities and have limited liability. In venture capital, Limited Partners include institutions and individuals, and Limited Partners’ rights and obligations are set by the limited partnership agreement and side letters. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Limited Liability Partnership](https://startuplawyer.com/startup-law-glossary/limited-liability-partnership) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Limited Liability Partnership (LLP) is a partnership structure that provides limited liability protection to partners for certain obligations of the partnership while retaining partnership-style taxation and governance. In professional services and some investment contexts, a Limited Liability Partnership (LLP) can be used to organize firms and manage liability, though it is less common for VC-backed operating companies. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Limited Liability Company](https://startuplawyer.com/startup-law-glossary/limited-liability-company) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Limited Liability Company (LLC) is a business entity that provides limited liability to its owners (members) while allowing flexible management and, in many cases, pass-through tax treatment. In venture financing, a Limited Liability Company (LLC) may be less common than a Delaware C-corp because of equity incentive and investor constraints, but LLC structures are frequently used for holding companies, real estate, and certain funds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Limited Partnership](https://startuplawyer.com/startup-law-glossary/limited-partnership) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Limited Partnership (LP) is a partnership structure with at least one general partner who manages the entity and one or more limited partners who provide capital with limited liability and limited management rights. In fund formation, the Limited Partnership is the most common legal form for VC and PE funds, and the Limited Partnership agreement (LPA) governs economics, governance, and investor protections. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Liquidity Event](https://startuplawyer.com/startup-law-glossary/liquidity-event) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Liquidity Event is an event that allows shareholders to convert paper value into cash, most commonly an acquisition, IPO, direct listing, or secondary sale. In venture portfolios, a Liquidity Event is how returns are realized, and Liquidity Event planning often includes timing, tax considerations, lockups, and distribution mechanics for funds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Liquidation Preference](https://startuplawyer.com/startup-law-glossary/liquidation-preference) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** A liquidation preference is the contractual right of preferred shareholders to receive a specified amount of proceeds before common shareholders upon a liquidation event, usually expressed as a multiple of original investment (e.g., 1x) plus sometimes accrued dividends. In term sheets, Liquidation Preference is a primary downside-protection lever, and Liquidation Preference structure (non-participating vs. participating, caps, seniority) can materially change founder and employee outcomes. It is usually expressed as a percentage of the original purchase price of the preferred, such as “2x.” Thus, if the purchase price of the preferred is $5 per share, a liquidation preference of 2x will be $10 per share. Multiple liquidation preferences, for each investment series is possible. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Liquidation Event](https://startuplawyer.com/startup-law-glossary/liquidation-event) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Liquidation Event is a contract-defined event that triggers distribution of proceeds to equity holders, commonly including a sale of the company, merger, liquidation, dissolution, or deemed liquidation in the charter. In VC documentation, the Liquidation Event definition drives when liquidation preferences apply, and parties often negotiate whether certain restructurings or asset sales constitute a Liquidation Event. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Liquidation](https://startuplawyer.com/startup-law-glossary/liquidation) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Liquidation is the process of winding down a company and converting its assets into cash (or distributing assets) to pay creditors and, if anything remains, distribute proceeds to equity holders according to priority. In venture-backed companies, Liquidation outcomes are heavily influenced by the capital structure, and Liquidation often triggers payment of liquidation preferences before common shareholders receive proceeds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Light Preferred](https://startuplawyer.com/startup-law-glossary/light-preferred) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Light Preferred refers to a preferred stock structure that has relatively “light” investor protections and economics compared to more aggressive preferred terms (e.g., simpler liquidation preferences, fewer veto rights, limited participation). In pricing discussions, Light Preferred is often positioned as closer to common-like alignment, and Light Preferred terms may be used in founder-friendly rounds or competitive financings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Lifting A Leg](https://startuplawyer.com/startup-law-glossary/lifting-a-leg) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** Lifting A Leg is venture slang for a company showing an early inflection in traction (e.g., improving growth rate, retention, or pipeline) that suggests momentum is building but is not yet fully proven. In fundraising narratives, Lifting A Leg is used to justify that the business is starting to work, and investors will look for whether Lifting A Leg is supported by repeatable drivers rather than one-off wins. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Lifestyle Company](https://startuplawyer.com/startup-law-glossary/lifestyle-company) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Lifestyle Company is a business designed primarily to support the founders’ preferred lifestyle (income, autonomy, flexibility) rather than to pursue hypergrowth or a large exit. In venture capital, a Lifestyle Company may be a poor fit for traditional VC economics, and the Lifestyle Company framing is often discussed when aligning expectations around growth, burn, and exit timelines. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [License](https://startuplawyer.com/startup-law-glossary/license) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A License is a contractual grant of rights that allows one party to use another party’s intellectual property, technology, software, or content under specified conditions (scope, term, territory, fees, and restrictions). In diligence and post-close integration, a License can be a key value driver or constraint (e.g., non-transferability or field-of-use limits), and mapping each License is often essential in M&A. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Leveraged Buyout](https://startuplawyer.com/startup-law-glossary/leveraged-buyout) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Leveraged Buyout (LBO) is an acquisition in which a buyer uses a significant amount of borrowed money (secured and/or unsecured) to fund the purchase price, with the target’s cash flows and assets often supporting the debt. In private equity, a Leveraged Buyout (LBO) aims to amplify equity returns through Leverage (Debt), and Leveraged Buyout (LBO) structures are sensitive to interest rates, covenants, and operating performance. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Leverage (Debt)](https://startuplawyer.com/startup-law-glossary/leverage-debt) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** Leverage (Debt) is the use of borrowed capital to finance a company or transaction, increasing potential returns to equity holders but also increasing fixed obligations and risk. In buyouts and growth financings, Leverage (Debt) is assessed through ratios like debt/EBITDA, interest coverage, and covenant headroom, and too much Leverage (Debt) can constrain operating flexibility. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Leverage (Ability)](https://startuplawyer.com/startup-law-glossary/leverage-ability) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Leverage (Ability) refers to a party’s relative negotiating power or strategic advantage in a discussion or transaction, driven by alternatives, time pressure, information, and competitive dynamics. In fundraising and M&A, Leverage (Ability) can come from multiple term sheets, a strong growth narrative, or a credible walk-away option, and Leverage (Ability) often determines how “market” terms settle. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Letter of Intent](https://startuplawyer.com/startup-law-glossary/letter-of-intent) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Letter of Intent (LOI) is a document that outlines the key proposed business terms of a transaction (most commonly an acquisition), often including price, structure, exclusivity, and key conditions, while noting which provisions are binding vs. non-binding. In deal process, a Letter of Intent serves as the roadmap for diligence and definitive documentation, and the Letter of Intent stage is where leverage and deal certainty are often set. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Legal Opinion](https://startuplawyer.com/startup-law-glossary/legal-opinion) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Legal Opinion is a formal letter from counsel providing legal conclusions on specified matters (such as due authorization, enforceability, or IP ownership), usually delivered in connection with a financing, credit facility, or M&A transaction. In closings, a Legal Opinion allocates reliance and comfort among parties, and the scope, assumptions, and qualifications of the Legal Opinion are carefully negotiated. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Lead Investor](https://startuplawyer.com/startup-law-glossary/lead-investor) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** The Lead Investor is the investor who typically anchors a financing round by setting or heavily influencing valuation and key terms, committing a significant portion of the round, and coordinating other investors. In practice, the Lead Investor often takes a board seat (or observer seat) and drives diligence and documentation, and the Lead Investor role can materially shape governance and signaling. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Later Stage Financing](https://startuplawyer.com/startup-law-glossary/later-stage-financing) **Published:** January 13, 2014 **Author:** Ryan Roberts **Content:** A Later Stage Financing is capital raised by a company that has established product-market fit and is scaling, often with meaningful revenue and a clearer path to profitability or exit. In venture capital, Later Stage Financing rounds are typically larger, may include growth equity or crossover investors, and Later Stage Financing terms often emphasize downside protection and liquidity planning. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Last In, First Out (LIFO)](https://startuplawyer.com/startup-law-glossary/last-in-first-out-lifo) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** Last In, First Out (LIFO) describes a priority structure in which the most recent capital (or most junior tranche chronologically) is paid back first in an exit, liquidation, or restructuring waterfall—i.e., later money is senior to earlier money. In VC, M&A, and restructurings, LIFO can be implemented through stacked/senior liquidation preferences, new-money priming, or intercreditor/payment subordination provision. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Lapsed Option](https://startuplawyer.com/startup-law-glossary/lapsed-option) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Lapsed Option is an employee or service-provider stock option that has expired or been forfeited, often because it was not exercised within the post-termination exercise window or before the option’s stated expiration date. In cap table management, a Lapsed Option typically returns to the option pool for regranting, and tracking Lapsed Option events is important for dilution planning and financial reporting. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [KISS](https://startuplawyer.com/startup-law-glossary/kiss) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** KISS (Keep It Simple Security) is a standardized early-stage financing instrument created by 500 Global (formerly 500 Startups) that functions similarly to a convertible note or SAFE, converting into equity in a future priced round under defined terms. In seed financings, KISS can be used to raise money quickly with lighter documentation, and KISS instruments typically include conversion mechanics such as a valuation cap and/or discount. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Key Person Insurance](https://startuplawyer.com/startup-law-glossary/key-person-insurance) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Key Person Insurance is an insurance policy a company purchases on the life (and sometimes disability) of a critical executive or employee, with the company as beneficiary to help offset losses from that person’s absence. In lending and M&A diligence, Key Person Insurance can be viewed as a risk mitigant when performance is highly dependent on a small team, and Key Person Insurance proceeds may support transition costs or debt repayment. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Key Person Clause](https://startuplawyer.com/startup-law-glossary/key-person-clause) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Key Person Clause is a provision in a fund’s governing documents that restricts new investments (or triggers other consequences) if specified key individuals cease to devote the required time to the fund, depart, or become incapacitated. For LP protection, a Key Person Clause is intended to ensure the team investors backed is actually running the strategy, and the Key Person Clause typically specifies who the key persons are, what events trigger it, and how it can be cured. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Key Employee](https://startuplawyer.com/startup-law-glossary/key-employee) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Key Employee is an individual whose skills, relationships, or leadership are considered critical to a company’s performance, product development, or customer retention. In diligence and risk assessment, Key Employee dependency is evaluated through retention plans, equity incentives, and succession planning, and losing a Key Employee can materially affect valuation or integration plans. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Junk Bond](https://startuplawyer.com/startup-law-glossary/junk-bond) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Junk Bonds is a high-yield, non-investment-grade corporate bond that pays a higher interest rate because it carries a higher risk of default. In leveraged buyouts and certain growth financings, Junk Bond markets can provide significant capital when open, and Junk Bond spreads are often used as a signal of broader credit conditions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Junior Debt](https://startuplawyer.com/startup-law-glossary/junior-debt) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Junior Debt is debt that ranks below senior debt in priority of payment in the capital structure, meaning it is repaid only after senior lenders are paid in full in a liquidation or enforcement scenario. In acquisition financing and venture debt stacks, Junior Debt typically carries higher interest and/or warrants to compensate for risk, and Junior Debt terms often include intercreditor agreements governing subordination. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Joint Venture](https://startuplawyer.com/startup-law-glossary/joint-venture) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** A Joint Venture is a business arrangement where two or more parties collaborate to pursue a specific project or commercial objective, sharing resources, governance, risks, and returns under agreed terms. In corporate strategy and venture investing, a Joint Venture can be structured as a new entity or a contractual arrangement, and the Joint Venture agreement typically addresses control, funding, IP, exit, and dispute resolution ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Joinder Page](https://startuplawyer.com/startup-law-glossary/joinder-page) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** A Joinder Page is a signature page or short form agreement by which a new party agrees to be bound by the terms of an existing agreement (such as an investor rights agreement, voting agreement, or shareholders’ agreement). In financing documentation, a Joinder Page simplifies adding new investors or transferees without re-executing the full document, and the Joinder Page typically confirms capacity, notice information, and effective date. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [JOBS Act](https://startuplawyer.com/startup-law-glossary/jobs-act) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** The Jumpstart Our Business Startups (JOBS) Act is a U.S. law enacted in 2012 intended to ease capital formation and reduce regulatory burdens for emerging growth companies, including changes to IPO rules and private offering exemptions. In fundraising and going-public planning, the JOBS Act enables features like confidential IPO submissions for eligible issuers and expanded Regulation A offerings, and the JOBS Act also underpins aspects of general solicitation rules. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [J Curve](https://startuplawyer.com/startup-law-glossary/j-curve) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** The J Curve is a common pattern of private investment fund returns where early performance is negative due to fees and unrealized losses, followed by improved performance as investments mature and exits occur. In venture capital, the J Curve reflects that value creation and liquidity take time, and managing LP expectations around the J Curve is a core part of fundraising and reporting. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Issuer](https://startuplawyer.com/startup-law-glossary/issuer) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** An Issuer is the company or entity that offers or sells securities, such as stock, options, notes, or tokens, to investors or employees. In securities law compliance, the Issuer is responsible for meeting offering exemption requirements, providing appropriate disclosures, and maintaining proper records, and the Issuer’s jurisdiction and structure can affect regulatory obligations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Issue Price](https://startuplawyer.com/startup-law-glossary/issue-price) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** The Issue Price is the price per share (or per unit) at which a company sells securities in a financing or offering. In venture rounds, the Issue Price is derived from the pre-money valuation and fully diluted capitalization, and the Issue Price sets the conversion price, option strike benchmarks (e.g., relative to 409A), and dilution outcomes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Issued Shares](https://startuplawyer.com/startup-law-glossary/issued-shares) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Issued Shares are the total number of shares a company has actually issued to shareholders (including founders, investors, and option holders who have exercised), and they can include shares held in treasury depending on usage. In cap table analysis, Issued Shares differ from authorized shares (the maximum the charter allows) and from outstanding shares (issued minus treasury), and tracking Issued Shares is essential for dilution math. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Investors Rights Agreement](https://startuplawyer.com/startup-law-glossary/investor-rights-agreement) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An Investors Rights Agreement (IRA) is a key financing document (especially in VC preferred stock rounds) that sets out investors’ ongoing rights, commonly including information rights, registration rights, and pro rata participation rights. In a financing closing set, the Investor Rights Agreement works alongside the charter and voting agreement, and the Investor Rights Agreement typically applies to holders above certain ownership thresholds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Investor Friendly](https://startuplawyer.com/startup-law-glossary/investor-friendly) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Investor Friendly describes deal terms and governance provisions that favor investors’ downside protection, control rights, and economics (e.g., stronger protective provisions, higher liquidation preferences, tighter covenants, or aggressive anti-dilution). In negotiation dynamics, an Investor Friendly term sheet can be justified by risk, leverage, or market conditions, and “Investor Friendly” is often framed as the inverse of “founder friendly.” ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Investment Company Act of 1940](https://startuplawyer.com/startup-law-glossary/the-investment-company-act-of-1940) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** The Investment Company Act of 1940 is a U.S. federal law regulating entities that are primarily engaged in investing in securities, with extensive requirements around registration, governance, custody, and disclosure. In venture fund structuring, compliance with the Investment Company Act of 1940 is typically achieved through exemptions (such as 3(c)(1) or 3(c)(7)), and violating Investment Company Act of 1940 status can be highly disruptive. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Investment Banker](https://startuplawyer.com/startup-law-glossary/investment-banker) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** An Investment Banker is a financial professional or firm that advises companies on capital raising, mergers and acquisitions, strategic alternatives, and related transaction execution, often including valuation and deal process management. In sell-side and buy-side processes, an Investment Banker runs marketing, coordinates diligence, negotiates terms, and helps manage closing logistics, and the Investment Banker is typically compensated via retainer and success fees. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Investment Adviser](https://startuplawyer.com/startup-law-glossary/investment-advisor) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Investment Adviser is a person or firm that, for compensation, provides advice about securities, portfolio strategy, or asset allocation and is subject to regulation (in the U.S., primarily under the Investment Advisers Act of 1940) unless an exemption applies. In fund formation, Investment Adviser status determines registration, compliance obligations, and marketing rules, and an Investment Adviser often manages a VC fund’s investments. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Inventions Assignment](https://startuplawyer.com/startup-law-glossary/inventions-assignment) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** An Invention Assignment is an agreement under which an employee, founder, or contractor assigns to the company rights in inventions, improvements, and related intellectual property created during the engagement. In diligence, an Inventions Assignment helps ensure clean Intellectual Property ownership, and missing Inventions Assignment paperwork is a common red flag for acquirers and investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Internal Rate of Return](https://startuplawyer.com/startup-law-glossary/internal-rate-of-return) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** The Internal Rate of Return (IRR) is the annualized effective return that sets the net present value (NPV) of an investment’s cash flows to zero, incorporating both timing and magnitude of inflows and outflows. In fund performance reporting, Internal Rate of Return (IRR) is widely used but can be sensitive to early distributions, interim marks, and reinvestment assumptions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Interest](https://startuplawyer.com/startup-law-glossary/interest) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** Interest is the cost of borrowing (or the return on lending) expressed as a rate applied to a principal amount over time, and it can also refer to an ownership stake (an “interest”) in an entity. In venture debt and acquisition financing, Interest expense affects burn and covenants, and Interest rate levels influence valuation through discount rates and capital availability. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Intellectual Property](https://startuplawyer.com/startup-law-glossary/intellectual-property) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Intellectual Property refers to legally protectable intangible assets such as patents, trademarks, copyrights, trade secrets, and related know-how that provide competitive advantage. In venture financings and M&A, Intellectual Property ownership, assignment, licensing, and infringement risk are central diligence topics, and Intellectual Property gaps can materially impact valuation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Integration Risk](https://startuplawyer.com/startup-law-glossary/integration-risk) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Integration Risk is the risk that value expected from an acquisition is not realized due to execution issues such as systems incompatibility, customer churn, cultural mismatch, talent loss, or delayed product roadmap alignment. In diligence and valuation, Integration Risk is assessed to size synergy confidence and identify mitigation plans, and Integration Risk often influences structure (earnouts, retention packages) and timeline. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Integration](https://startuplawyer.com/startup-law-glossary/integration) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** Integration is the post-closing process of combining an acquired company with the buyer’s organization, systems, operations, and culture to realize the deal’s intended value. In M&A execution, Integration workstreams typically cover product, engineering, finance, HR, sales, and compliance, and successful Integration is often the biggest driver of whether synergies are achieved. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Institutional Investor](https://startuplawyer.com/startup-law-glossary/institutional-investor) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An Institutional Investor is an organization that invests capital on behalf of others, such as a pension fund, endowment, insurance company, bank, asset manager, or sovereign wealth fund. In venture capital fundraising, an Institutional Investor often acts as an LP with formal diligence, allocation processes, and governance requirements, and the Institutional Investor’s mandates can affect fund terms and reporting. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Insolvency](https://startuplawyer.com/startup-law-glossary/insolvency) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** Insolvency is the financial condition where an entity cannot pay its debts as they become due or where liabilities exceed assets, depending on the applicable legal test. In venture and M&A contexts, Insolvency shifts fiduciary considerations, increases transaction scrutiny (e.g., fraudulent transfer risk), and can drive restructuring, bridge financings, or formal bankruptcy processes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Inside Round](https://startuplawyer.com/startup-law-glossary/inside-round) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An Inside Round is a financing round led primarily by existing investors rather than new outside investors, often when external demand is limited or speed/confidentiality is prioritized. In a down or flat market, an Inside Round can provide critical runway, and the Inside Round may involve term renegotiations, structure changes, or enhanced investor protections. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [In-Kind Distribution](https://startuplawyer.com/startup-law-glossary/in-kind-distribution) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An In-Kind Distribution is a distribution where a fund delivers securities or other assets to its investors instead of (or in addition to) cash. In venture and private equity funds, an In-Kind Distribution commonly occurs when a portfolio company becomes publicly traded and the fund distributes shares, and the In-Kind Distribution mechanics are governed by the LPA and tax considerations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Initial Public Offering](https://startuplawyer.com/startup-law-glossary/initial-public-offering) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An Initial Public Offering (IPO) is the process by which a company first offers shares to the public and becomes subject to public-company reporting and governance requirements. For venture-backed companies, an Initial Public Offering (IPO) is a major liquidity event that affects valuation, shareholder base, employee equity liquidity, and ongoing disclosure obligations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Initial Coin Offering (ICO)](https://startuplawyer.com/startup-law-glossary/initial-coin-offering) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** An Initial Coin Offering (ICO) is a fundraising method where a project sells cryptographic tokens to purchasers, typically to fund development of a blockchain-based network or application. From a regulatory and diligence perspective, an Initial Coin Offering (ICO) may implicate securities laws depending on token features, marketing, and purchaser expectations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Information Rights](https://startuplawyer.com/startup-law-glossary/information-rights) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Information Rights are contractual rights (commonly granted to preferred stock investors) to receive periodic financial statements, budgets, and other reporting from the company. In VC term sheets, Information Rights help investors monitor performance and risk, and Information Rights are often tied to minimum ownership thresholds and confidentiality obligations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Independent Director](https://startuplawyer.com/startup-law-glossary/independent-director) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** An Independent Director is a board member who does not have a material relationship with the company, its management, or significant investors that would impair objective judgment (as defined by applicable standards or agreements). In governance and M&A, an Independent Director can help manage conflicts, form special committees, and provide credible oversight, and the Independent Director role is often important in related-party or squeeze-out situations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Independent Contractor](https://startuplawyer.com/startup-law-glossary/independent-contractor) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An Independent Contractor is a worker engaged to perform services under a contract who is not treated as an employee for payroll tax, benefits, and many employment-law purposes (subject to jurisdiction-specific tests). In startup operations and diligence, Independent Contractor classification is scrutinized because misclassification risk can create back taxes, penalties, IP ownership gaps, and the need to re-paper Independent Contractor agreements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Indemnity](https://startuplawyer.com/startup-law-glossary/indemnity) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An Indemnity is the promise, usually in a contract, to compensate another party for certain losses or to cover liabilities that may arise in the future. In transaction documents, an Indemnity is used to allocate identified risks, and the Indemnity is typically paired with procedures for notice, defense of claims, and payment timing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Indemnification Cap](https://startuplawyer.com/startup-law-glossary/indemnification-cap) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** An Indemnification Cap is the negotiated maximum aggregate amount that an indemnifying party must pay for covered indemnity claims, often expressed as a percentage of purchase price. In deal terms, the Indemnification Cap limits seller exposure (or, in some cases, buyer exposure), and the Indemnification Cap may have carve-outs for fraud, fundamental reps, or special indemnities. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Indemnification](https://startuplawyer.com/startup-law-glossary/indemnification) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Indemnification is a contractual obligation where one party agrees to reimburse or defend another party for specified losses, claims, or liabilities arising from defined events (such as breaches of representations or third-party claims). In M&A agreements, Indemnification is a core risk-allocation mechanism, and Indemnification provisions interact with baskets, caps, escrows, and survival periods. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Incubator](https://startuplawyer.com/startup-law-glossary/incubator) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** An Incubator is a program or organization that supports very early-stage startups with resources such as workspace, mentorship, product guidance, customer introductions, and sometimes small amounts of capital. Unlike accelerators (often cohort-based and time-boxed), an Incubator may be more flexible in duration, and an Incubator can be sponsored by corporates, universities, or investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Incorporation](https://startuplawyer.com/startup-law-glossary/incorporation) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Incorporation is the legal process of forming a corporation by filing formation documents (such as a certificate of incorporation) with a state and establishing the company’s initial governance framework. For startups, Incorporation sets up the entity that will issue equity, enter contracts, and raise capital, and proper Incorporation choices (jurisdiction, share structure) can materially affect future financings. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Incentive Stock Option (ISO)](https://startuplawyer.com/startup-law-glossary/incentive-stock-option-iso) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** An Incentive Stock Option (ISO) is a type of employee stock option that can receive favorable U.S. tax treatment if statutory holding period and other requirements are met. In equity compensation planning, an Incentive Stock Option (ISO) is typically granted under an option plan, subject to vesting, and may trigger alternative minimum tax (AMT) considerations upon exercise. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Incentive Misalignment](https://startuplawyer.com/startup-law-glossary/incentive-misalignment) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Incentive Misalignment occurs when stakeholders’ rewards, control, or downside exposure are structured such that rational behavior for one party harms the company’s or other parties’ desired outcomes. In venture financings and M&A, Incentive Misalignment can arise from liquidation preferences, earnouts, option refresh timing, or management compensation design that pushes short-term decisions over long-term value. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Illiquid](https://startuplawyer.com/startup-law-glossary/illiquid) **Published:** January 24, 2014 **Author:** Ryan Roberts **Content:** Illiquid describes an asset that cannot be quickly bought or sold without materially affecting its price, often due to limited buyers, transfer restrictions, or sparse trading. In venture capital, private company shares are typically Illiquid until an exit (IPO or acquisition), and Illiquid holdings require longer time horizons and different valuation approaches. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Hurdle Rate](https://startuplawyer.com/startup-law-glossary/hurdle-rate) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** The Hurdle Rate is the minimum required rate of return that must be achieved before performance-based compensation is paid, most commonly in private equity/VC carried interest waterfalls. In fund terms, the Hurdle Rate is intended to align incentives by ensuring LPs receive a baseline return first, and the Hurdle Rate can be structured as preferred return, catch-up, or tiered carry. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Hostile Takeover](https://startuplawyer.com/startup-law-glossary/hostile-takeover) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** A Hostile Takeover is an acquisition attempt pursued without the target company’s board approval, typically by making a tender offer directly to shareholders, running a proxy fight, or otherwise pressuring the board. In public-company M&A, a Hostile Takeover often triggers defensive measures and heightened fiduciary scrutiny around the process and communications. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Holding Period](https://startuplawyer.com/startup-law-glossary/holding-period) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Holding Period is the length of time an investor owns a security or an acquirer owns an asset before selling or otherwise disposing of it. In venture and private equity, Holding Period affects realized vs. unrealized returns and tax treatment, and Holding Period assumptions are a key input to IRR calculations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Holding Company](https://startuplawyer.com/startup-law-glossary/holding-company) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** A Holding Company is an entity that primarily owns equity interests in other companies or assets rather than operating a business directly. In VC and M&A structuring, a Holding Company can be used for tax planning, IP ownership, acquisitions, or to segregate liabilities, and the Holding Company’s capitalization and governance must align with the operating subsidiaries. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Holdback Escrow](https://startuplawyer.com/startup-law-glossary/holdback-escrow) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The Holdback Escrow is an escrow arrangement where the holdback amount is deposited with a third-party escrow agent and released according to the escrow agreement’s claim and dispute procedures. In deal execution, a Holdback Escrow provides sellers comfort that funds are set aside and provides buyers a structured mechanism to assert claims against the Holdback Escrow. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Holdback](https://startuplawyer.com/startup-law-glossary/holdback) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Holdback is a portion of the purchase price or proceeds that is withheld at closing to cover post-closing adjustments, indemnity claims, or other contingent liabilities. In M&A, the Holdback is commonly released after a defined period (or upon satisfaction of conditions), and the Holdback amount and release mechanics are heavily negotiated. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Hockey Stick](https://startuplawyer.com/startup-law-glossary/hockey-stick) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Hockey Stick is a revenue, user, or cash flow projection pattern that shows a long period of relatively flat performance followed by a sharp up-and-to-the-right inflection. In pitch decks and underwriting, a it can be credible when supported by leading indicators and go-to-market evidence, but an unsupported Hockey Stick is often viewed as an over-optimistic forecast. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [High Resolution Financing](https://startuplawyer.com/startup-law-glossary/high-resolution-financing) **Published:** January 7, 2019 **Author:** Ryan Roberts **Content:** A high resolution financing is a convertible note or convertible equity round that can feature different price caps and/or discounts for different investors. This provides the flexibility for a startup to offer a potentially lower price cap and/or discount to earlier investors in a round or sometimes those investors who provide more benefit than just money. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Hedge Fund](https://startuplawyer.com/startup-law-glossary/hedge-fund) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** A Hedge Fund is a privately offered pooled investment vehicle that typically has broad flexibility to use strategies such as long/short, leverage, derivatives, and concentrated positions to pursue absolute returns. In later-stage venture and public-market crossover activity, a Hedge Fund may participate in private rounds or buy shares in the public market, and the Hedge Fund structure is usually limited to accredited/qualified investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Haircut](https://startuplawyer.com/startup-law-glossary/haircut) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** A Haircut is a valuation or collateral discount applied to an asset to reflect risk, illiquidity, volatility, or uncertainty in realizable value. In credit, venture debt, and repo-style financing, a Haircut reduces the amount a lender will advance against collateral, and the Haircut increases when markets or asset quality deteriorate. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Growth Stage](https://startuplawyer.com/startup-law-glossary/growth-stage) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Growth Stage refers to a phase of a company’s lifecycle after early product-market fit, when the business is scaling revenue, hiring rapidly, expanding go-to-market, and optimizing unit economics. In venture investing, Growth Stage rounds are often larger and valuation-sensitive, and Growth Stage metrics (like net revenue retention and CAC payback) become central to underwriting. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Grossing Up](https://startuplawyer.com/startup-law-glossary/grossing-up) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Grossing Up is the practice of increasing a payment so that, after taxes are withheld or incurred, the recipient receives a specified net amount. In transaction documents, Grossing Up may apply to indemnities, withholding taxes on cross-border payments, or certain executive benefits, and Grossing Up provisions allocate tax burden between parties. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Go-Shop](https://startuplawyer.com/startup-law-glossary/go-shop) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** A Go-Shop is a post-signing period in an M&A agreement during which the target is permitted (and sometimes required) to actively solicit superior proposals from other potential buyers, typically subject to rules and a termination fee. In deal process design, a Go-Shop is used to help validate price and reduce fiduciary risk, and the Go-Shop window length and fee structure can meaningfully affect outcomes. The duration of a Go-Shop period usually lasts around one to two months. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Golden Parachute](https://startuplawyer.com/startup-law-glossary/golden-parachute) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** A Golden Parachute is a change-in-control compensation arrangement that provides certain executives with enhanced payments or benefits if they are terminated (or sometimes if they resign for “good reason”) following an acquisition. In M&A, Golden Parachute terms affect negotiations over retention, management incentives, and shareholder approval disclosures, and Golden Parachute excise tax rules may apply in some cases. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Going Private](https://startuplawyer.com/startup-law-glossary/going-private) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Going Private is a transaction in which a public company’s shares are acquired so that the company is no longer publicly traded, often through a merger led by private equity, management, or a strategic buyer. Because Going Private eliminates public reporting obligations, Going Private transactions involve heightened disclosure, fairness considerations, and sometimes shareholder litigation risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [General Solicitation](https://startuplawyer.com/startup-law-glossary/general-solicitation) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** General Solicitation is broadly advertising or marketing a securities offering to the public (e.g., via websites, social media, events, or press) rather than limiting outreach to a pre-existing network. In private offerings, General Solicitation is permitted in certain exemptions (such as Rule 506(c)) if conditions are met, and General Solicitation choices affect verification, disclosure, and compliance processes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [General Partner](https://startuplawyer.com/startup-law-glossary/general-partner) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** A General Partner (GP) is the managing partner of a limited partnership fund who makes investment decisions, operates the fund, and typically has fiduciary responsibilities to the partnership. In venture funds, the General Partner earns management fees and carried interest and has authority defined by the fund’s governing documents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [GDPR](https://startuplawyer.com/startup-law-glossary/gdpr) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** GDPR (the General Data Protection Regulation) is the European Union’s comprehensive privacy law governing how personal data is collected, processed, stored, and transferred, with significant penalties for non-compliance. For startups and acquirers, GDPR compliance affects product design, vendor management, and diligence, and GDPR issues can create material deal risk where data practices are weak. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Game Theory](https://startuplawyer.com/startup-law-glossary/game-theory) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Game Theory is a framework for analyzing strategic decision-making in situations where outcomes depend on the actions of multiple parties, each acting in their own interest. In negotiations, auctions, and term sheet dynamics, Game Theory helps explain bidding behavior, signaling, credible commitments, and how counterparties may respond to different deal structures. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [GAAP](https://startuplawyer.com/startup-law-glossary/gaap) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** GAAP (Generally Accepted Accounting Principles) is the standard framework of accounting rules and guidance used for financial reporting by many U.S. entities. In venture financings and M&A diligence, GAAP-based financials improve comparability and credibility, and GAAP adjustments can materially affect revenue, earnings, and purchase price metrics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Funds Flow Memo](https://startuplawyer.com/startup-law-glossary/funds-flow-memo) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** The Funds Flow Memo is a closing document that details the sources and uses of funds in a transaction, including purchase price payments, debt payoffs, fees, escrow amounts, and distributions to stakeholders. In M&A closings, the Funds Flow Memo is used to coordinate wiring instructions and ensure that every dollar is accounted for in the Funds Flow Memo. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fund of Funds](https://startuplawyer.com/startup-law-glossary/fund-of-funds) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** A Fund of Funds is an investment vehicle that primarily invests in other funds rather than investing directly in companies or assets. In venture capital, a Fund of Funds provides LPs diversified exposure to multiple managers and vintages, while the Fund of Funds adds an additional layer of fees and diligence. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fund Economics](https://startuplawyer.com/startup-law-glossary/fund-economics) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Fund Economics refers to how an investment fund’s financial arrangements allocate costs and returns between limited partners and the manager, including management fees, carried interest, expense policy, and distribution waterfalls. For LP diligence, Fund Economics helps determine net returns and alignment, and Fund Economics can vary meaningfully by fund size, strategy, and manager leverage. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fund](https://startuplawyer.com/startup-law-glossary/fund) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** A Fund is a pooled investment vehicle that raises capital from limited partners (LPs) and deploys that capital according to a stated strategy, such as venture capital, growth equity, private equity, or credit. In venture capital, a Fund is managed by general partners (GPs) and governed by documents that set terms like management fees, carry, investment period, and recycling. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fully-Diluted Basis](https://startuplawyer.com/startup-law-glossary/fully-diluted-basis) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** A Fully-Diluted Basis refers to calculating ownership and per-share metrics assuming all potential equity issuances are outstanding, including options (often from the option pool), warrants, and shares underlying convertible securities. In term sheets and cap tables, Fully-Diluted Basis is used to define price per share, investor ownership, and how dilution is allocated among stakeholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Full Ratchet](https://startuplawyer.com/startup-law-glossary/full-ratchet) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Full Ratchet is an anti-dilution protection that adjusts an investor’s conversion price to match the lowest price at which new shares are issued in a later down round, regardless of the number of shares sold. Because Full Ratchet can significantly dilute founders and other shareholders, Full Ratchet provisions are considered highly investor-favorable and are often negotiated heavily. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Friends and Family Round](https://startuplawyer.com/startup-law-glossary/friends-and-family-round) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** A Friends and Family Round is an early fundraising round where a startup raises capital from personal contacts of the founders, often before institutional investors participate. A Friends and Family Round may use simple instruments (like SAFEs or convertible notes), but even a Friends and Family Round should be documented carefully to avoid securities and cap table issues later. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Freeze Out](https://startuplawyer.com/startup-law-glossary/freeze-out) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** A Freeze Out is a transaction or governance action in which controlling shareholders or a buyer force minority shareholders to cash out or otherwise lose their stake, commonly via a merger or similar squeeze-out mechanism permitted by law. In M&A, a Freeze Out raises heightened fiduciary and process considerations, and parties often structure the Freeze Out to reduce litigation risk (e.g., independent committee and minority approval conditions). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Freedom To Operate Opinion](https://startuplawyer.com/startup-law-glossary/freedom-to-operate-opinion) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** A Freedom To Operate Opinion is a legal analysis (typically from IP counsel) assessing whether a product or technology can be commercialized without infringing valid third-party intellectual property rights. In diligence, a Freedom To Operate Opinion can help quantify IP risk for investors or acquirers and inform design-around, licensing, or litigation strategy. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Free Cash Flow](https://startuplawyer.com/startup-law-glossary/free-cash-flow) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Free Cash Flow is the cash a business generates from operations after accounting for capital expenditures needed to maintain or grow the asset base, commonly used as a measure of financial flexibility. In valuation and diligence, Free Cash Flow supports analyses like discounted cash flow (DCF) and helps assess whether a company can fund growth without additional financing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Franchise Tax](https://startuplawyer.com/startup-law-glossary/franchise-tax) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Franchise Tax is a state-level tax or fee imposed for the privilege of doing business or being registered in a state, which may be based on margin, net worth, or a flat amount depending on the jurisdiction. In corporate maintenance, Franchise Tax compliance affects good standing status, and missed Franchise Tax payments can create diligence issues in financings or M&A. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Founder's Stock](https://startuplawyer.com/startup-law-glossary/founders-stock) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Founder’s Stock is the equity (often common stock) issued to founders at or near formation, typically at a very low purchase price and often subject to vesting and repurchase rights. In financings and exits, Founder’s Stock terms matter for cap table math, tax planning (e.g., 83(b) elections), and how much value accrues to the founding team. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Founder Overhang](https://startuplawyer.com/startup-law-glossary/founder-overhang) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Founder Overhang refers to a situation where a founder’s equity ownership, control rights, or perceived reluctance to dilute can discourage new investors or complicate financing and M&A negotiations. Founder Overhang may also describe concerns that a founder’s large stake could influence governance or exit decisions in ways that are not aligned with other shareholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Founder Misalignment](https://startuplawyer.com/startup-law-glossary/founder-misalignment) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Founder Misalignment occurs when founders’ incentives, time horizons, or objectives diverge from those of investors, the board, or other key stakeholders (e.g., preference for lifestyle outcomes vs. hypergrowth). Founder Misalignment often becomes visible in debates over burn rate, fundraising timing, M&A offers, secondary sales, or willingness to change leadership. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Founder Friendly](https://startuplawyer.com/startup-law-glossary/founder-friendly) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Founder Friendly describes deal terms, governance, and investor behavior that are perceived as supportive of founder control and incentives (e.g., lighter protective provisions, collaborative boards, and minimal punitive economics). In market positioning, a Founder Friendly firm may emphasize speed, trust, and long-term partnership, though “Founder Friendly” can still vary by situation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Founder Fatigue](https://startuplawyer.com/startup-law-glossary/founder-fatigue) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Founder Fatigue is the cumulative exhaustion from prolonged pressure and uncertainty, considering founders are wearing multiple hats and now additionally have to work on a financing or M&A event. Founder fatigue often influences deal decisions more than founders expect. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Founder](https://startuplawyer.com/startup-law-glossary/founder) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Founder is an individual who starts a company and is typically responsible for early product vision, team formation, initial fundraising, and setting the culture and strategy. In venture financings, the Founder’s role is closely tied to control, incentive alignment, vesting, and expectations around leadership as the company scales. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Form S-4](https://startuplawyer.com/startup-law-glossary/form-s-4) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Form S-4 is an SEC registration statement used for securities issued in connection with certain business combination transactions, such as mergers, exchange offers, and reclassifications. In stock-for-stock M&A, Form S-4 is central to the disclosure package delivered to shareholders, and Form S-4 timing and review can drive the overall deal calendar. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Form S-3](https://startuplawyer.com/startup-law-glossary/form-s-3) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Form S-3 is an SEC “short-form” registration statement that eligible seasoned issuers can use to register securities offerings by incorporating prior Exchange Act reports by reference. In capital markets planning, Form S-3 eligibility can improve speed and flexibility for follow-on offerings, and Form S-3 is also used for registering resale of shares in certain contexts. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Form S-2](https://startuplawyer.com/startup-law-glossary/form-s-2) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Form S-2 was an SEC registration statement historically used by certain reporting companies for registered offerings, but it has been largely replaced in practice by other forms due to regulatory updates. When reviewing legacy disclosures, Form S-2 may appear in older filings, and understanding Form S-2 helps interpret how prior registered offerings were structured. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Form S-1](https://startuplawyer.com/startup-law-glossary/form-s-1) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Form S-1 is the SEC registration statement typically used by a company conducting its initial public offering, including detailed disclosures about the business, risks, and financials. Because Form S-1 drafting and SEC review drive IPO timelines, Form S-1 readiness is a major workstream for late-stage startups considering a public exit. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Form 2553](https://startuplawyer.com/startup-law-glossary/form-2553) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** Form 2553 is the IRS election form a qualifying corporation uses to choose S corporation tax status (subject to eligibility rules and ongoing requirements). In startup structuring, Form 2553 is sometimes considered for tax reasons, but many VC-backed companies avoid S corp status due to investor eligibility constraints and the need for flexible equity issuances. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Form 10-K](https://startuplawyer.com/startup-law-glossary/form-10-k) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** A Form 10-K is the annual report that most U.S. public companies file with the SEC, providing audited financial statements and comprehensive narrative disclosures about the business, risk factors, and management’s discussion. For later-stage companies and acquirers, Form 10-K disclosures are a key diligence source, and Form 10-K reporting obligations influence readiness for going public. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Form 8-K](https://startuplawyer.com/startup-law-glossary/form-8-k) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** A Form 8-K is a current report that U.S. public companies file with the SEC to disclose certain material events (e.g., acquisitions, executive changes, significant agreements) on a timely basis. Because Form 8-K filings can be triggered by financing or M&A milestones, Form 8-K disclosure planning is often part of deal execution and communications. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Foreign Qualification](https://startuplawyer.com/startup-law-glossary/foreign-qualification) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Foreign Qualification is the process of registering a corporation or LLC to do business in a state (or jurisdiction) other than the one where it was originally formed. In legal diligence, Foreign Qualification confirms the company can operate, enter contracts, and maintain lawsuits in that jurisdiction, and failures of Foreign Qualification can trigger penalties and compliance clean-up. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Foreign Corrupt Practices Act](https://startuplawyer.com/startup-law-glossary/foreign-corrupt-practices-act) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Foreign Corrupt Practices Act (FCPA) is a U.S. law that prohibits bribery of foreign officials and requires certain companies to maintain accurate books, records, and internal controls. In diligence and compliance programs, the Foreign Corrupt Practices Act is a key risk area for companies operating internationally or selling through distributors, and violations can affect financings, M&A, and post-close integration. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Follow On Strategy](https://startuplawyer.com/startup-law-glossary/follow-on-strategy) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** A Follow On Strategy is an investment approach that defines how a fund reserves capital and chooses whether to invest additional dollars in portfolio companies over time. A well-articulated Follow On Strategy clarifies pacing, target ownership, criteria for doubling down, and how pro rata rights and dilution are managed across rounds. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Follow-on Financing](https://startuplawyer.com/startup-law-glossary/follow-on-financing) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** Follow-on Financing is additional capital raised after an initial round, either from existing investors, new investors, or both, to fund growth, extend runway, or reach key milestones. In portfolio management, Follow-on Financing decisions reflect conviction, ownership targets, anti-dilution considerations, and whether the company is meeting its plan. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Floatation](https://startuplawyer.com/startup-law-glossary/floatation) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Floatation is the process by which a company becomes publicly traded, most commonly through an initial public offering (IPO) (often called a “flotation” outside the U.S.). In an exit pathway, Floatation impacts valuation, liquidity, disclosure obligations, and the timing of when early investors can realize returns from the Floatation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Float](https://startuplawyer.com/startup-law-glossary/float) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Float is the number of a company’s shares that are freely tradable by the public (excluding closely held or restricted shares) and, in another context, it can mean cash temporarily held before it is paid out. In public-market exits, Float affects liquidity, index eligibility, and trading dynamics, and managing Float is a key consideration in IPO planning and lockup design. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Flat Round](https://startuplawyer.com/startup-law-glossary/flat-round) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Flat Round is a priced equity financing in which the company’s pre-money valuation is roughly the same as the prior round’s valuation. A Flat Round can signal slower growth or tougher markets, and it often leads to negotiations around investor protections, employee refresh grants, and optics for existing shareholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [First Time Fund](https://startuplawyer.com/startup-law-glossary/first-time-fund) **Published:** January 8, 2014 **Author:** Ryan Roberts **Content:** A First Time Fund is an investment fund raised by a manager or team that has not previously sponsored a fund under that firm’s banner (even if individuals have prior investing experience). For LPs, underwriting a First Time Fund often emphasizes team credibility, sourcing edge, portfolio construction, and governance because there is limited fund-level track record. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [FINRA](https://startuplawyer.com/startup-law-glossary/finra) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** FINRA (Financial Industry Regulatory Authority) is the U.S. self-regulatory organization that oversees broker-dealers and enforces rules designed to protect investors and promote market integrity. In private placements and fundraising, FINRA rules and guidance can affect who may solicit investors, how placement fees are paid, and what activities require broker-dealer registration with FINRA oversight. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Finder's Fee](https://startuplawyer.com/startup-law-glossary/finders-fee) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** A Finder’s Fee is a success-based payment made to a party that introduces an investor, buyer, or other counterparty who ultimately completes a transaction. In VC and M&A, a Finder’s Fee may be structured as a percentage of proceeds, a fixed amount, or a mix of cash and equity, and it must be handled carefully to comply with applicable securities and brokerage rules. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Finder](https://startuplawyer.com/startup-law-glossary/finder) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** A Finder is an individual or firm that introduces parties to a potential transaction (such as an investment, acquisition, or strategic partnership) but typically does not negotiate terms or provide full broker-dealer services. In practice, a Finder is often compensated for sourcing opportunities, and the Finder’s activities may raise regulatory questions if they resemble securities brokerage ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Financing Window](https://startuplawyer.com/startup-law-glossary/financing-window) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** A Financing Window is a period when market conditions, investor appetite, and comparable valuations make it unusually favorable (or unfavorable) to raise capital or refinance. In venture capital planning, the Financing Window influences timing for priced rounds, venture debt, IPO preparation, and strategic M&A alternatives. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Financing Out Clause](https://startuplawyer.com/startup-law-glossary/financing-out-clause) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** A Financing Out Clause is a deal provision (most common in certain acquisition agreements) that allows a buyer to terminate if it cannot obtain the debt or other financing required to close, subject to negotiated conditions. Because a Financing Out Clause shifts financing risk to the seller, it is often resisted in competitive M&A processes or replaced with reverse break fees and funding commitments. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Financial Accounting Standards Board](https://startuplawyer.com/startup-law-glossary/financial-accounting-standards-board) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Financial Accounting Standards Board (FASB) is the independent U.S. standard-setting body that establishes Generally Accepted Accounting Principles (GAAP) for many entities. In diligence and reporting, Financial Accounting Standards Board guidance affects revenue recognition, expense treatment, and how investors assess a startup’s financial statements. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fiduciary Duties](https://startuplawyer.com/startup-law-glossary/fiduciary-duties) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Fiduciary Duties are the legal obligations (commonly including the duty of care and duty of loyalty) that directors, officers, or controlling parties owe to a corporation and its shareholders. In M&A and VC governance, Fiduciary Duties shape how boards evaluate financings, conflicts, related-party transactions, and sale processes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Federal Reserve Act](https://startuplawyer.com/startup-law-glossary/federal-reserve-act) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Federal Reserve Act of 1913 is the U.S. law enacted in 1913 that created the Federal Reserve System and set out its authority to conduct monetary policy and supervise certain banking activities. In finance markets, the Federal Reserve Act underpins the central bank framework that influences liquidity, interest rates, and risk appetite that flow through to venture capital and dealmaking. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Federal Funds Rate](https://startuplawyer.com/startup-law-glossary/federal-funds-rate) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Federal Funds Rate is the target interest rate range that influences what U.S. banks charge each other for overnight lending of reserve balances, and it serves as a benchmark for broader borrowing costs. Because the Federal Funds Rate affects discount rates and capital availability, it can materially impact startup valuations, financing conditions, and M&A activity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Family Office](https://startuplawyer.com/startup-law-glossary/family-office) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Family Office is a private organization established to manage the investments, taxes, estate planning, philanthropy, and other financial affairs of a wealthy individual or family. In venture capital, a Family Office may invest directly in startups or commit capital to VC funds as a long-term, relationship-driven limited partner. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [1X](https://startuplawyer.com/startup-law-glossary/1x) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** Shorthand for a liquidation preference equal to the investor’s original purchase price. The “1X” is the multiple of such original purchase price. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fairness Opinion](https://startuplawyer.com/startup-law-glossary/fairness-opinion) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** A Fairness Opinion is an opinion, typically delivered by an investment bank or financial advisor, stating whether the financial terms of a transaction are fair from a financial point of view to a company or its stockholders. A Fairness Opinion is often obtained in significant M&A transactions to support board decision‑making and mitigate fiduciary duty risk, especially in conflicted or change‑of‑control situations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Fair Market Value](https://startuplawyer.com/startup-law-glossary/fair-market-value) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The Fair Market Value is the estimated price at which an asset would change hands between willing parties in an arm’s-length transaction with reasonable knowledge and no compulsion. Fair Market Value is used to set compliant option exercise prices and to evaluate deal pricing, and Fair Market Value frequently appears in board approvals, 409A reports, and M&A fairness discussions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Face Value](https://startuplawyer.com/startup-law-glossary/face-value) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Face Value is the stated principal amount of a debt instrument (or the nominal value of a security) that is used as the reference for repayment and interest calculations. Face Value matters in venture debt and notes because discounts, premiums, and distressed trading are often framed relative to Face Value. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Exit Strategy](https://startuplawyer.com/startup-law-glossary/exit-strategy) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** An Exit Strategy is the planned pathway to liquidity for a startup and its investors, typically through M&A, IPO, or structured secondary transactions. Exit Strategy influences financing choices and operating priorities, and Exit Strategy alignment among founders and investors reduces conflict as the company matures. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Exit Event](https://startuplawyer.com/startup-law-glossary/exit-event) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** An Exit Event is a liquidity outcome for investors and founders, typically an acquisition, merger, IPO, or other transaction where equity converts into cash or marketable securities. Exit Event mechanics drive payout waterfalls, and Exit Event timing affects vesting, option treatment, and fund performance measurement. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Exercise Price](https://startuplawyer.com/startup-law-glossary/exercise-price) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The Exercise Price is the price per share an option or warrant holder must pay to purchase shares upon exercise, often set at fair market value for options. Exercise Price impacts employee incentive value and tax treatment, and Exercise Price is a core diligence item for 409A compliance and equity plan administration. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Exercise](https://startuplawyer.com/startup-law-glossary/exercise) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Exercise is the act of using an option or warrant to buy the underlying shares at the agreed exercise price, subject to the plan or instrument terms. Exercise converts the right into actual ownership, and Exercise decisions are influenced by vesting, taxes, liquidity expectations, and option expiration. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Evergreen Fund](https://startuplawyer.com/startup-law-glossary/evergreen-fund) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Evergreen Funds is an investment vehicle that continually reinvests proceeds rather than returning all capital and winding down on a fixed timeline like a traditional 10-year fund. Evergreen Fund structures can provide longer holding periods and follow-on flexibility, and Evergreen Fund terms often focus on redemption mechanics and valuation policies. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Escrow](https://startuplawyer.com/startup-law-glossary/escrow) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Escrow is a controlled holding arrangement where cash, stock, or documents are held by a neutral third party until specified conditions are met. Escrow is common in M&A for indemnity holdbacks and purchase price adjustments, and Escrow terms define release conditions, claims processes, and timing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [ERISA](https://startuplawyer.com/startup-law-glossary/erisa) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** ERISA, The Employee Retirement Income Security Act, is a U.S. law governing employee benefit plans and imposing fiduciary standards and prohibited transaction rules for certain plan assets. ERISA matters for VC funds because some LPs are benefit plans, and ERISA compliance can influence fund structure and representations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Equity](https://startuplawyer.com/startup-law-glossary/equity) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Equity is ownership in a company, typically represented by shares (common or preferred) and reflected on the cap table along with rights and preferences. Equity determines voting and economic participation, and Equity structure becomes especially important in exits because liquidation preferences and conversion mechanics change payouts. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Equity Financing](https://startuplawyer.com/startup-law-glossary/equity-financing) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Equity Financing is raising capital by selling ownership interests (common or preferred) to investors, typically documented through a term sheet and definitive financing agreements. Equity Financing dilutes existing holders but can provide long-duration capital, and Equity Financing terms set governance, information rights, and protective provisions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Entrepreneur in Residence (EIR)](https://startuplawyer.com/startup-law-glossary/entrepreneur-in-residence-eir) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Entrepreneur in Residence (EIR) is a temporary role at a venture firm or incubator where an operator explores ideas, vets opportunities, or supports portfolio companies, often with a path to founding or leading a new venture. Entrepreneur in Residence (EIR) arrangements can include comp, carry, or investment rights, and Entrepreneur in Residence (EIR) roles are used to deepen thesis development and sourcing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Engagement Letter](https://startuplawyer.com/startup-law-glossary/engagement-letter) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Engagement Letter is the agreement that sets the scope, fees, responsibilities, and limitations for advisors such as bankers, lawyers, accountants, or placement agents. Engagement Letter terms can affect economics through success fees and expenses, and Engagement Letter provisions often address conflicts, reliance, and confidentiality. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Employment Agreement](https://startuplawyer.com/startup-law-glossary/employment-agreement) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Employment Agreement is a contract defining the relationship between a company and an employee, including role, compensation, confidentiality, IP assignment, and termination terms. Employment Agreement provisions matter in M&A because change-of-control, severance, and restrictive covenants can affect integration, and Employment Agreement compliance reduces misclassification and IP risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Employee Stock Option Plan](https://startuplawyer.com/startup-law-glossary/employee-stock-option-plan) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** The Employee Stock Option Plan (or ESOP) is the program and legal framework a company uses to grant equity incentives (typically options) to employees, including the plan document, grant agreements, and administration rules. Employee Stock Option Plan design impacts hiring competitiveness and dilution planning, and Employee Stock Option Plan terms are frequently reviewed in VC diligence. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Elevator Pitch](https://startuplawyer.com/startup-law-glossary/elevator-pitch) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Elevator Pitch is a short, clear explanation of a startup’s product, customer, traction, and why it matters, typically deliverable in 30–60 seconds. Elevator Pitch quality affects first meetings and warm introductions, and Elevator Pitch consistency should match the narrative in the deck. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [EIN](https://startuplawyer.com/startup-law-glossary/ein) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** EIN is an Employer Identification Number issued by the IRS to identify a business entity for U.S. tax and reporting purposes. EIN is required to open bank accounts, run payroll, and file tax returns, and EIN is a standard diligence item for financings and acquisitions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Effective Pre-Money](https://startuplawyer.com/startup-law-glossary/effective-pre-money) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Effective Pre-Money is the “true” pre-money valuation after accounting for items that function like additional dilution or value transfer, such as a pre-money option pool increase or outstanding convertibles. Effective Pre-Money helps founders compare offers apples-to-apples, and Effective Pre-Money often differs from the headline number in a term sheet. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Economies of Scale](https://startuplawyer.com/startup-law-glossary/economies-of-scale) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Economies of Scale are cost advantages that arise when a business grows and its average unit costs decline due to spreading fixed costs, purchasing leverage, and operating efficiencies. Economies of Scale are often a core M&A rationale, and deal models frequently quantify Economies of Scale as cost synergy targets. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Economics vs. Control](https://startuplawyer.com/startup-law-glossary/economics-vs-control) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Economics vs. Control is the tradeoff between financial outcomes (valuation, preferences, price) and governance power (board seats, veto rights, covenants, decision rights). Economics vs. Control frames negotiation strategy, because founders may accept weaker economics for autonomy or accept tighter control to improve Economics vs. Control economics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Economic Terms](https://startuplawyer.com/startup-law-glossary/economic-terms) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Economic Terms are the deal provisions that determine “who gets what” financially, including valuation, price per share, liquidation preference, participation, dividends, and option pool sizing. Economic Terms drive expected return outcomes, and Economic Terms are often traded against control terms during negotiation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Early-Stage Financing](https://startuplawyer.com/startup-law-glossary/early-stage-financing) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** Early-Stage Financing is capital raised at the seed or Series A stage to fund product development, initial hiring, and go-to-market, often using SAFEs, convertible notes, or preferred equity. Early-Stage Financing terms set the foundation for ownership and governance, and Early-Stage Financing choices can materially impact future dilution. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Duty of Loyalty](https://startuplawyer.com/startup-law-glossary/duty-of-loyalty) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** The Duty of Loyalty is a fiduciary duty requiring directors and officers to act in the best interests of the company and its stockholders, including avoiding conflicts of interest and not usurping corporate opportunities. Duty of Loyalty issues commonly arise in related-party deals and conflicted exits, and Duty of Loyalty compliance often drives special committee and disclosure practices. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Duty of Care](https://startuplawyer.com/startup-law-glossary/duty-of-care) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** The Duty of Care is a fiduciary duty requiring directors and officers to make informed decisions and exercise appropriate oversight with the care a reasonably prudent person would use in similar circumstances. Duty of Care is central in board process (materials, minutes, expert input), and Duty of Care failures can create liability exposure in financings and exits. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Due Diligence](https://startuplawyer.com/startup-law-glossary/due-diligence) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Due Diligence is the structured investigation of a startup’s business, financials, legal posture, IP, and risks conducted by investors or buyers before signing or closing. Due Diligence is typically managed through a data room and Q&A, and Due Diligence findings often change valuation, structure, or closing conditions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Dry Powder](https://startuplawyer.com/startup-law-glossary/dry-powder) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Dry Power is uncommitted or unspent capital an investor or acquirer has available for new deals, follow-ons, or acquisitions. Dry Powder levels affect market competition and speed of execution, and high Dry Powder often increases bidding pressure and pricing. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Drive-By VC](https://startuplawyer.com/startup-law-glossary/drive-by-vc) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** A Drive-By VC refers to an investor who engages briefly (requests materials, takes an intro meeting) but does not meaningfully advance to partner-level discussion, diligence, or a term sheet. Drive-By VC interactions consume founder time, and repeated Drive-By VC cycles can slow fundraising progress. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Drawdown](https://startuplawyer.com/startup-law-glossary/drawdown) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** Drawdown is the act of pulling committed but unfunded capital, such as borrowing under a credit facility or calling capital from limited partners. Drawdown mechanics include conditions and notice requirements, and Drawdown timing affects liquidity, interest expense, and closing logistics. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Distribution](https://startuplawyer.com/startup-law-glossary/distribution) **Published:** January 14, 2014 **Author:** Ryan Roberts **Content:** A Distribution is the payment or transfer of cash, stock, or other property from a company or fund to its owners or investors, such as dividends, return of capital, or exit proceeds. Distribution in a VC fund refers to sending proceeds to LPs after liquidity events, and Distribution timing and form can affect taxes and realized performance. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Drag Along Rights](https://startuplawyer.com/startup-law-glossary/drag-along-rights) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Drag Along Rights are provisions that allow a specified majority of stockholders (often including preferred) to require minority holders to support and participate in a sale on the same terms. Drag Along Rights reduce holdout risk and help deliver clean exits, and Drag Along Rights are a key execution tool in venture-backed M&A. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Down Round](https://startuplawyer.com/startup-law-glossary/down-round) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A Down Round is an equity financing where the company raises money at a lower valuation than the prior round, often triggering anti-dilution adjustments for preferred investors. Down Round dynamics can reshape ownership and morale, and a Down Round can also change exit incentives and negotiating leverage. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Dividends](https://startuplawyer.com/startup-law-glossary/dividends) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Dividends iare distributions of cash or stock that a corporation pays to stockholders when permitted by law and the company has sufficient surplus or earnings. Dividends on preferred stock are often specified contractually (sometimes accruing), even if Dividends are rarely paid before an exit. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Double Trigger Acceleration](https://startuplawyer.com/startup-law-glossary/double-trigger-acceleration) **Published:** January 2, 2014 **Author:** Ryan Roberts **Content:** Double Trigger Acceleration is a vesting provision where unvested equity accelerates only if two events occur—typically a change of control plus a qualifying termination within a defined period. Double Trigger Acceleration is common in startup M&A because it supports retention for buyers while still providing employee protection through Double Trigger Acceleration. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Domestic Corporation](https://startuplawyer.com/startup-law-glossary/domestic-corporation) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** A Domestic Corporation is a corporation organized under the laws of the jurisdiction where it is doing business (for example, a Delaware corporation is a domestic corporation in Delaware). Domestic Corporation status affects governance law and filings, and a Domestic Corporation may still need “foreign qualification” to operate in other states. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Dodd-Frank](https://startuplawyer.com/startup-law-glossary/dodd-frank) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) is a U.S. financial regulatory law enacted after the 2008 crisis that reshaped oversight of banks, derivatives, and certain reporting and compliance practices. Dodd-Frank can matter for private funds and deal financing conditions because Dodd-Frank influences regulatory expectations and market structure. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [EBITDA](https://startuplawyer.com/startup-law-glossary/ebitda) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a profitability proxy meaning earnings before interest, taxes, depreciation, and amortization, commonly used in valuation and debt covenant analysis. EBITDA is used to compare operating performance across companies and to size leverage, and EBITDA adjustments are often debated during diligence. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Earnout](https://startuplawyer.com/startup-law-glossary/earnout) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** An Earnout is a deal structure where part of the purchase price is paid after closing only if the acquired business meets agreed performance targets during a defined period. Earnout structures bridge valuation gaps, and Earnout mechanics (metrics, control, dispute process) are heavily negotiated because Earnout outcomes can vary. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Debt-to-Equity Ratio](https://startuplawyer.com/startup-law-glossary/debt-to-equity-ratio) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** The Debt-to-Equity Ratio is a financial leverage metric that compares total debt to shareholders’ equity to show how much financing comes from lenders versus owners. Debt-to-Equity Ratio is reviewed in diligence and underwriting because higher leverage can reduce flexibility, tighten covenants, and raise refinancing risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Delaware General Corporation Law](https://startuplawyer.com/startup-law-glossary/delaware-general-corporation-law) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Delaware General Corporation Law is the primary statute governing Delaware corporations, covering formation, boards, stockholder votes, fiduciary duties, and mergers. Delaware General Corporation Law matters in startup financings and M&A because many venture-backed companies are Delaware corporations and transaction documents track Delaware General Corporation Law concepts. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Disclosure Documents](https://startuplawyer.com/startup-law-glossary/disclosure-documents) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Disclosure Documents are the written materials a company provides to investors or buyers to explain the business and communicate key facts and risks (for example: deck, financials, data room index, diligence responses). Disclosure Documents help align expectations and record what was shared, and Disclosure Documents can be used to evaluate consistency with representations and warranties. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Disclosure](https://startuplawyer.com/startup-law-glossary/disclosure) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Disclosure is the act of providing investors, buyers, or counterparties with material information about a company’s business, risks, financials, and legal status to support informed decisions. Disclosure is typically managed through data rooms, disclosures schedules, and Q&A, and weak Disclosure can create liability and deal friction. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Distressed Debt](https://startuplawyer.com/startup-law-glossary/distressed-debt) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Distressed Debtis debt of a company that is trading or negotiated with an expectation of default, restructuring, or bankruptcy, often at a discount to face value. Distressed Debt investors may seek influence or control through covenants and restructuring leverage, and Distressed Debt often shapes outcomes in distressed M&A. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Directors and Officers Insurance](https://startuplawyer.com/startup-law-glossary/directors-and-officers-do-insurance) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Directors and officers insurance is an insurance policy (or program of policies) that provides coverage for certain losses, defense costs, and liabilities arising from claims made against a company’s directors and officers (and often the company itself) in connection with alleged wrongful acts in their corporate or managerial capacities, subject to the policy’s terms, conditions, exclusions, limits, and retention. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Director](https://startuplawyer.com/startup-law-glossary/director) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Director is a member of a corporation’s board of directors (or similar governing body) elected or appointed to help oversee the company’s affairs and act in the best interests of the corporation and its stockholders, including by setting governance and strategic direction, hiring/overseeing executive management, approving significant corporate actions, and exercising fiduciary duties as required by applicable law and the company’s organizational documents. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Depreciation](https://startuplawyer.com/startup-law-glossary/depreciation) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Depreciation is an accounting method of allocating the cost of a tangible long-lived asset over its estimated useful life to reflect wear and tear, obsolescence, or usage, typically recorded as a non-cash expense that reduces reported earnings and the asset’s book value (and may differ from tax depreciation methods and schedules). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Demand Registration Rights](https://startuplawyer.com/startup-law-glossary/demand-registration-rights) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Demand registration rights are contractual rights (typically granted to investors or other holders of registrable securities) that allow the holder(s), subject to negotiated conditions such as minimum ownership thresholds, timing restrictions, and limits on frequency, to require a company to file and pursue a registration statement with the SEC (or other applicable regulator) so the holder(s) can sell their securities in a registered public offering, with the process often subject to customary company deferral rights and underwriter cutbacks. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Default](https://startuplawyer.com/startup-law-glossary/default) **Published:** January 23, 2014 **Author:** Ryan Roberts **Content:** Default is the occurrence of an event of default or other condition specified in a financing, credit, or other material agreement that gives the non-breaching party specified rights or remedies, which may include requiring immediate payment or performance, increasing interest or fees, restricting additional borrowing or distributions, exercising remedies against collateral, and/or terminating or accelerating the agreement. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Deck](https://startuplawyer.com/startup-law-glossary/deck) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Deck is a presentation document (typically a slide deck) used to communicate key information in a structured, visual format—commonly to summarize a company, product, transaction, or investment opportunity, including items such as the overview, market, strategy, financials, risks, and terms. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Debt Financing](https://startuplawyer.com/startup-law-glossary/debt-financing) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Debt Financing is any transaction in which a company (or other borrower) raises capital by borrowing money under a legally binding obligation to repay principal (and typically interest and/or fees) on agreed terms, commonly documented through instruments such as loans, promissory notes, bonds, convertible or non-convertible notes, or credit facilities, and often subject to covenants, security interests/collateral, guarantees, and remedies upon default. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Data Room](https://startuplawyer.com/startup-law-glossary/data-room) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** A data room is a secure repository (physical or, more commonly today, online) used to store, organize, and share confidential documents with authorized people—typically during high-stakes activities like M&A due diligence, fundraising, audits, or litigation. When it’s online, it’s usually called a Virtual Data Room (VDR) and it typically includes: - **permission controls** (who can see/download/print) - **activity tracking/audit logs** (who accessed what, when) - **security features** like encryption and watermarking ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Debenture](https://startuplawyer.com/startup-law-glossary/debenture) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Debenture is a debt instrument a company issues to borrow money, typically evidenced by a note and often unsecured or backed by the issuer’s general credit rather than specific collateral. Debenture terms in growth financings may include covenants and sometimes warrants, and the Debenture can influence downside protection and repayment priority. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Deal Momentum](https://startuplawyer.com/startup-law-glossary/deal-momentum) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Deal Momentum is the pace and perceived forward motion of a fundraising or M&A process from first interest through diligence, documentation, and closing. Deal Momentum is reinforced by fast response times, clear next steps, and competitive tension among credible investors or buyers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Deal Flow](https://startuplawyer.com/startup-law-glossary/deal-flow) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Deal flow is the pipeline (and pace) of potential transactions an investor or acquirer is seeing and evaluating—i.e., the stream of startups or deals that could turn into an investment, acquisition, or other financing event. In VC, deal flow usually means the volume and quality of startup opportunities a fund sources (inbound pitches, warm intros, accelerators, portfolio referrals). In M&A/corporate development, Deal Flow means the set of potential acquisition/partnership targets being originated, screened, and advanced through a funnel. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Deal Fatigue](https://startuplawyer.com/startup-law-glossary/deal-fatigue) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Deal fatigue is the burnout and frustration that builds during a prolonged fundraising or M&A process (negotiations, diligence, and legal docs), causing parties—founders, investors, buyers/sellers—to lose momentum, delay decisions, become more likely to make rushed concessions, or even walk away to “just be done.” ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Deal Certainty](https://startuplawyer.com/startup-law-glossary/deal-certainty) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Deal certainty is the degree of confidence that a proposed transaction (fundraising, acquisition, merger, or buyout) will actually close on the agreed terms and timeline, with minimal risk of delay, renegotiation, or failure. In startup/VC and M&A, deal certainty is typically driven by things like: **Ability to close** (clear authority, clean docs, credible buyer/sponsor) **Financing certainty** (committed funds; no financing contingency) **Limited closing conditions** (fewer “outs,” narrower MAE/MAC) **Regulatory/approval risk** (antitrust, CFIUS, board/stockholder consents) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Date of Issue](https://startuplawyer.com/startup-law-glossary/date-of-issue) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** The Date of Issue is date a specific document is formally created and released (e.g., term sheet, SAFE, note, stock certificate, board consent, invoice); used to track when it was issued, which can differ from the effective date or closing date. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Customary](https://startuplawyer.com/startup-law-glossary/customary) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** In a venture M&A context, customary means terms, conditions, and deal protections that are standard or market‑typical for transactions of similar size, stage, and risk profile (i.e., not unusually buyer‑ or seller‑favorable). This is typically seen on term sheets as “customary” describing a specific deal term. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Cumulative Voting](https://startuplawyer.com/startup-law-glossary/cumulative-voting) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Cumulative voting is a shareholder voting method (often for electing directors) where each share gets votes equal to shares owned × number of director seats, and the shareholder may allocate all votes to one candidate or split them among candidates, which can help minority shareholders win board representation. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Cumulative Dividend](https://startuplawyer.com/startup-law-glossary/cumulative-dividend) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A cumulative dividend is a preferred stock dividend that accrues over time at a stated rate even if the company does not declare or pay dividends, and the unpaid amount must be paid (typically before any common dividends, often at a liquidity event) when distributions are made. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Crowdfunding](https://startuplawyer.com/startup-law-glossary/crowdfunding) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** Crowdfunding is a method of raising capital by collecting small contributions from a large number of people—typically via an online platform—either in exchange for rewards/pre-orders, equity, or as debt/repayable funding. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Cross-Fund Investment](https://startuplawyer.com/startup-law-glossary/cross-fund-investment) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** **Cross-fund investment** is when a venture capital firm manages **multiple funds** and **more than one of its funds invests in the same portfolio company** (often raising conflict-of-interest and allocation/fairness considerations). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Cross-default](https://startuplawyer.com/startup-law-glossary/cross-default) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** Cross-default is a contract clause that makes a default under one agreement automatically trigger a default under another agreement, so if a borrower breaches or misses payments on one obligation, a lender under a separate obligation can treat that as an event of default too. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Creditor](https://startuplawyer.com/startup-law-glossary/creditor) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** A Creditor is an person or entity that is owed money or performance by a company (e.g., a lender, vendor, landlord, or noteholder). Usually, Creditors have legal contracts with the borrower granting the lender certain rights if the borrower fails to pay back the loan. For example, the right to claim any of the debtor’s real assets (e.g. real estate or car). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Cram Down Round](https://startuplawyer.com/startup-law-glossary/cram-down-round) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** A cram down round is a highly punitive down-round financing—usually done when a startup urgently needs capital—where the new money comes in at a much lower valuation and on coercive terms (often including pay-to-play penalties, forced conversions, or other provisions) that can severely dilute or subordinate non-participating existing shareholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Covenants](https://startuplawyer.com/startup-law-glossary/covenants) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Covenants are contractual promises in a financing or debt agreement that require a company to do certain things (affirmative covenants) and/or prohibit certain actions (negative covenants), often to protect the lender or investor (e.g., maintain financial reporting, limits on additional debt, or restrictions on asset sales). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Corporate VC](https://startuplawyer.com/startup-law-glossary/corporate-vc) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Corporate VC (corporate venture capital) is a form of venture investing in which a corporation invests directly in startup equity—often to advance strategic goals (e.g., product roadmap, partnerships, market access) alongside potential financial return. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Corporate Resolution](https://startuplawyer.com/startup-law-glossary/corporate-resolution) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** **A corporate resolution is a formal written record of a decision approved by a company’s board of directors or shareholders, authorizing a specific action (e.g., approving a financing, appointing officers, opening a bank account, or entering a major contract).** ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Corporate Governance](https://startuplawyer.com/startup-law-glossary/corporate-governance) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Corporate governance is the system of rules, roles, and decision-making processes—set by law, the company’s charter/bylaws, and board/shareholder practices—that determines how a company is directed and controlled, including oversight, accountability, and approval of major actions. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Convertible Stock](https://startuplawyer.com/startup-law-glossary/convertible-stock) **Published:** January 7, 2014 **Author:** Ryan Roberts **Content:** Convertible stock is a class of stock (typically preferred stock) that gives the holder the right to convert it into another class of the company’s stock (usually common stock) under specified terms, such as a defined conversion ratio and timing (often at the holder’s option or upon certain events like an IPO. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Convertible Security](https://startuplawyer.com/startup-law-glossary/convertible-security) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Convertible security is a financing instrument that can convert into the company’s equity (typically common or preferred stock) upon specified events and pricing terms—for example, a convertible note or SAFE in startup fundraising. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Convertible Note](https://startuplawyer.com/startup-law-glossary/convertible-note) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A Convertible Note is a debt instrument (a loan) that can be converted into equity automatically upon certain conditions and/or at the option of the holder or the issuer. Although not the main purpose of investing in Convertible Notes, they do earn interest, and 2-8% is standard. Usually, the investor will convert the principal of the note plus the interest automatically into equity when an institutional investor (such as a Venture Capitalist) makes an investment of a certain threshold amount. Convertible Notes are generally converted into equity with a conversion discount or price cap mechanism. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Convertible Equity](https://startuplawyer.com/startup-law-glossary/convertible-equity) **Published:** January 7, 2019 **Author:** Ryan Roberts **Content:** Convertible equity is a financing instrument that starts as an equity investment but is structured to convert into a different class of equity in a later priced round (typically converting into preferred stock, often using a valuation cap and/or discount to set the conversion price). The most common form of convertible equity is the “SAFE”. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Conversion Rights](https://startuplawyer.com/startup-law-glossary/conversion-rights) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Conversion rights are the contractual rights that let a security holder convert their instrument (e.g., convertible note, SAFE, or preferred stock) into equity under specified conditions, timing, and pricing (including any discount, valuation cap, and other conversion mechanics). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Conversion Price Adjustment](https://startuplawyer.com/startup-law-glossary/conversion-price-adjustment) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Conversion price adjustment is a contractual mechanism that changes the price at which a convertible security converts into equity—typically lowering the conversion price via a discount and/or valuation cap (and, in other contexts like preferred stock, via anti-dilution adjustments) so earlier investors receive more shares on conversion. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Conversion Discount](https://startuplawyer.com/startup-law-glossary/conversion-discount) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Conversion discount is the percentage reduction to the price per share that a convertible note (or similar instrument like a SAFE) uses when it converts into equity in the next financing round—so the investor converts at a lower price than the new investors (e.g., a 20% discount means paying 80% of the round’s price per share). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Control Terms](https://startuplawyer.com/startup-law-glossary/control-terms) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Control terms are financing and governance provisions that allocate decision-making power by determining who can direct or veto key company actions (typically through voting, board composition, and investor consent rights). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Convertible Debt](https://startuplawyer.com/startup-law-glossary/convertible-debt) **Published:** June 22, 2010 **Author:** Ryan Roberts **Content:** Convertible debt is a loan to a startup that is designed to convert into equity (often preferred stock in the next priced financing round) instead of being repaid in cash, unless it reaches maturity or another repayment/settlement event happens. Key terms often included: - Conversion trigger: usually the next equity financing (e.g., Series A) or a change of control. - Pricing: conversion often happens at a discount to the next round price and/or with a valuation cap. - Debt terms: typically includes interest and a maturity date. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Control Rights](https://startuplawyer.com/startup-law-glossary/control-rights) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Control rights are the legal and contractual rights that give a party the ability to direct—or block—key company decisions, typically through voting power, board governance, and investor consent (veto) provisions. Common control rights examples: **Information rights** (financial reporting/inspection that supports oversight) **Voting rights** (e.g., electing directors, approving mergers) **Board rights** (board seats, observer rights) **Protective provisions / consent rights** (approval required for issuing new shares, taking on debt, changing the charter, selling the company) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Control Anxiety](https://startuplawyer.com/startup-law-glossary/control-anxiety) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Control anxiety (in the startup context) is the persistent fear that you’ll lose decision-making power or the ability to steer outcomes as the company grows—often triggered by fundraising, hiring executives, adding a board, delegating, or scaling processes. It commonly shows up as: **Micromanagement** driven by uncertainty rather than performance issues **Over-involvement** in every decision (“I have to approve everything”) **Difficulty delegating** and second-guessing teammates **Resistance to governance** (board oversight, investor rights, reporting) **Avoiding fundraising/partnerships** because of perceived loss of autonomy ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Control](https://startuplawyer.com/startup-law-glossary/control) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** In a venture (VC/startup) context, control means the rights and mechanisms that let one party direct or constrain the company’s key decisions—even if they don’t own most of it. Common ways “control” shows up: - **Voting control (corporate governance):** who can elect/remove directors and approve major actions (e.g., selling the company, issuing new shares). Often driven by common vs. preferred voting, protective provisions, and class votes. - **Board control:** who holds a majority of board seats or has tie-breaking rights; the board controls hiring/firing the CEO and strategic oversight. - **Contractual / negative control:** rights that block actions unless an investor approves (vetoes), such as budgets, debt, acquisitions, option pool increases, or senior securities. - **Economic control (less direct):** terms that strongly shape outcomes (e.g., liquidation preference, participation) even without decision-making power. - **Practical control:** influence due to brand, network, follow-on funding leverage, information rights, or founder dependence—informal but real. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Contingent Liability](https://startuplawyer.com/startup-law-glossary/contingent-liability) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** A contingent liability is a potential obligation that depends on whether a future event happens. It becomes an actual liability only if that event occurs (or fails to occur). Common examples include pending lawsuits, guarantees, indemnification obligations, and warranty claims. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Consideration](https://startuplawyer.com/startup-law-glossary/consideration) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Consideration is something of value that each party gives or promises to give in exchange for what the other party is providing in a contract—essentially the “bargained-for exchange” that helps make an agreement legally enforceable. Examples: money, shares, services, property, or a promise to do (or not do) something. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Confidential Information](https://startuplawyer.com/startup-law-glossary/confidential-information) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Confidential information is non-public information that a person or company treats as private and protects from disclosure, and that is shared only with authorized people for a legitimate purpose. It commonly includes things like trade secrets, product plans, source code, customer lists, pricing, financials, contracts, employee data, and any information marked or understood to be confidential. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Conditions Subsequent](https://startuplawyer.com/startup-law-glossary/conditions-subsequent) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Conditions subsequent are events or requirements that occur after a contract becomes effective, and if they happen (or aren’t satisfied), they can end, limit, or unwind a party’s rights or obligations. In other words: the deal/obligation is in effect now, but a later event can terminate it or change the outcome. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Conditions Precedent](https://startuplawyer.com/startup-law-glossary/conditions-precedent) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** Conditions precedent are specific requirements that must be satisfied (or waived) before a contract obligation becomes enforceable—most commonly, before a deal is required to close. In M&A/venture agreements, examples often include: required regulatory approvals, delivery of closing documents, accuracy of key representations and warranties, and no material adverse effect (if applicable). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Common Stock](https://startuplawyer.com/startup-law-glossary/common-stock) **Published:** March 17, 2010 **Author:** Ryan Roberts **Content:** Common stock is the basic class of equity ownership in a corporation. It generally represents a residual claim on the company—meaning common stockholders share in the company’s value after creditors and any preferred stockholders have been paid. Common stock typically includes: - Voting rights (e.g., electing directors), depending on the charter/class - Potential dividends (if declared) - Upside in growth and rights to proceeds in a sale/liquidation after senior claims ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Commercially Reasonable Efforts](https://startuplawyer.com/startup-law-glossary/commercially-reasonable-efforts) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Commercially reasonable efforts is a contract standard that means a party must take reasonable, practical steps that a similarly situated business would take to achieve a specified objective—using diligent effort consistent with normal business practices, and generally without requiring extraordinary measures (like taking on unreasonable cost, risk, or harm to the business), unless the contract says otherwise. Because it’s context-specific, the exact meaning often depends on the agreement’s language (e.g., any cost cap, deadlines, or “including/without limitation” examples). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Collateral](https://startuplawyer.com/startup-law-glossary/collateral) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Collateral is property or assets pledged to secure a debt or obligation. If the borrower defaults, the lender (or secured party) may have the right to take and sell the collateral (or otherwise enforce its security interest) to help repay what’s owed. Common examples: real estate (mortgage), a car (auto loan), inventory/accounts receivable (business loan), or cash/securities (margin/secured credit). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Co-Sale](https://startuplawyer.com/startup-law-glossary/co-sale) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A co-sale (also called a tag-along right) is a right that lets certain shareholders participate in a sale of shares by another shareholder(often founders or a major holder) to a third party. Typically, if the major shareholder proposes to sell their shares, the co-sale holders can “tag along” and sell a proportional number of their own shares on the same terms and price to that buyer. This helps protect minority investors from being left behind if control or a large position is sold. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Closing](https://startuplawyer.com/startup-law-glossary/closing) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** In venture financing and M&A, closing is the point when a deal is officially completed and becomes legally effective—meaning the parties have signed required documents, satisfied (or waived) conditions, exchanged funds and other deliverables, and ownership/rights transfer as agreed. - Venture closing: the investment is finalized and the company issues securities (e.g., preferred stock/SAFE conversion), investors wire funds, and the company can use the proceeds. - M&A closing: the transaction is consummated and the buyer acquires the shares or assets, pays the purchase price (subject to any escrow/holdback), and control transfers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Cliff](https://startuplawyer.com/startup-law-glossary/cliff) **Published:** March 31, 2011 **Author:** Ryan Roberts **Content:** In the startup/equity-comp context, a cliff is the initial period in a vesting schedule during which no equity vests, and then a chunk vests all at once when the cliff is reached. Example: 4-year vesting with a 1-year cliff → you vest 0% until month 12, then typically 25% vests at month 12, and the rest vests monthly (or quarterly) thereafter. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Clean Cap Table](https://startuplawyer.com/startup-law-glossary/clean-cap-table) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** A Clean Cap Table is a capitalization table that’s simple, accurate, and free of complications that could delay or reduce value in a financing or acquisition. Typically a clean cap table means: **No disputes or surprises** (no unclear issuances, broken 83(b)s, missing board approvals, etc.). **Clear ownership records** (who owns what; documentation matches the table) **Simple security structure** (not too many classes/series or unusual rights) **Limited “overhang”** (reasonable option pool/convertibles; no messy warrants/side letters) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Clawback](https://startuplawyer.com/startup-law-glossary/clawback) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A clawback is a contractual or legal provision that allows money or benefits already paid out (or granted) to be recovered/returned if certain conditions occur. Common clawback examples: - Executive compensation: a company can recoup bonuses/equity if financial results are restated, misconduct is discovered, or performance targets weren’t actually met. - M&A / indemnities: a buyer can recover part of the purchase price (or escrow) if the seller breached reps/warranties or there are specified losses. - Private equity/venture funds: a “GP clawback” can require managers to return excess carried interest so final profit splits match the agreed waterfall. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Class F Common Stock](https://startuplawyer.com/startup-law-glossary/class-f-common-stock) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** Class F Common Stock is a founder-favorable class of common stock developed by the [Funded Founder Institute](https://fi.co/guides/91). The Class F Common Stock shares offer founders various protective provisions such as: -2 to 1 Board votes per founder relative to non-founder board members -10 to 1 share votes relative to regular common shares -Monthly vesting with no cliff -Approval rights on new investments, liquidity events, increases to Board size, etc. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Chief Executive Officer (CEO)](https://startuplawyer.com/startup-law-glossary/chief-executive-officer-ceo) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The Chief Executive Officer (CEO) is the company’s top executive, responsible for setting strategy and overall direction and for making sure the organization executes on its goals. Typically, the Chief Executive Officer (CEO): - leads the senior management team, - makes major operating and investment decisions, and - reports to (and is accountable to) the board of directors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Charter](https://startuplawyer.com/startup-law-glossary/charter) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** A charter is a formal legal document that creates or authorizes an organization and sets out its basic governing framework and powers. Common uses: - Corporate charter: another name for the certificate/articles of incorporation filed with the state to form a corporation. - Board/committee charter: an internal document that defines a group’s purpose, authority, scope, and responsibilities (e.g., an audit committee charter). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Chapter 7](https://startuplawyer.com/startup-law-glossary/chapter-7) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Chapter 7 is a section of the U.S. Bankruptcy Code for liquidation. In Chapter 7, a trustee typically: - collects and sells (liquidates) the debtor’s non-exempt assets, and - uses the proceeds to pay creditors in a priority order. For individuals, Chapter 7 often results in a relatively quick discharge of many eligible debts; for businesses, it usually means the business shuts down and assets are liquidated rather than reorganized. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Chapter 11](https://startuplawyer.com/startup-law-glossary/chapter-11) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Chapter 11 is a section of the U.S. Bankruptcy Code that allows a business (and sometimes an individual) to seek court protection to reorganize its debts and operations rather than liquidate. Key idea: In Chapter 11, the debtor typically keeps operating as a “debtor in possession” while it negotiates and gets court approval for a reorganization plan to repay creditors over time, restructure obligations, or sell parts of the business. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Change of Control](https://startuplawyer.com/startup-law-glossary/change-of-control) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A change of control is an event (defined in a contract, plan, or law) where control of a company shifts to a new person or group. Common triggers include: - Acquisition of the company (merger or sale of substantially all assets) - Someone or a group obtaining majority voting power (often >50%, sometimes a lower threshold is specified) - A majority change in the board of directors over a set period - Certain reorganizations that result in new controlling owners Because the exact meaning is contract-specific, documents often spell out the precise thresholds and exceptions. Typically, the sale of the startup’s securities for the purposes of raising additional funds does not constitute a “Change in Control.” ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Certificate of Incumbency](https://startuplawyer.com/startup-law-glossary/certificate-of-incumbency) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A certificate of incumbency is a formal document—usually signed by a company’s secretary or another authorized officer—that certifies who the company’s current officers and/or directors are, and often confirms their authority to sign specific agreements on the company’s behalf. It commonly includes the names and titles of the incumbents, and may attach or reference related items like board resolutions and signature specimens. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Certificate of Incorporation](https://startuplawyer.com/startup-law-glossary/certificate-of-incorporation) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** A certificate of incorporation (also called articles of incorporation or a corporate charter, depending on the state) is the legal document filed with a state to form a corporation. It typically includes basic information such as: - the corporation’s name - purpose (sometimes broad) - registered agent and address - authorized shares (and sometimes classes/series) - incorporator information Once accepted by the state, it’s what officially brings the corporation into existence. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capitalization Table](https://startuplawyer.com/startup-law-glossary/capitalization-table) **Published:** March 6, 2013 **Author:** Ryan Roberts **Content:** A capitalization table (or cap table) is a record that shows a company’s ownership structure—who owns what percentage of the company—and how that ownership is split across different securities. It typically lists: - shareholders (founders, employees, investors) - types of equity (common stock, preferred stock) - options/warrants and the option pool - convertible instruments (e.g., SAFEs/convertible notes), sometimes on an “as-converted” basis ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capital Stock](https://startuplawyer.com/startup-law-glossary/capital-stock) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Capital stock is the ownership interest in a corporation represented by its issued shares (e.g., common stock and preferred stock). It also commonly refers to the total amount of equity the corporation is authorized to raise by issuing those shares (often described in the charter as authorized shares and par value). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Carveout](https://startuplawyer.com/startup-law-glossary/carveout) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A carveout (carve-out) is when a company separates part of its business (a product line, division, assets, or subsidiary) from the rest—most often to sell it, spin it off, or make it a standalone operation. Common uses: - M&A: seller “carves out” a division to sell to a buyer. - Deal terms: a “carve-out” can also mean an exception to a rule (e.g., an indemnity carve-out, non-compete carve-out). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capital Interest](https://startuplawyer.com/startup-law-glossary/capital-interest) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** A capital interest is an ownership interest in a partnership or LLC that gives the holder a share of the business’s current equity value—meaning if the company were liquidated at fair market value today, the holder would be entitled to receive a portion of the proceeds (after paying debts and any senior priorities). This is commonly contrasted with a profits interest, which generally gives rights only to future growth/profits and typically has little or no value at the time it’s granted. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capital Gains Tax](https://startuplawyer.com/startup-law-glossary/capital-gains-tax) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Capital gains tax is the tax you may owe on a profit you make when you sell a capital asset (like stocks, real estate, or a business interest) for more than your cost basis (generally what you paid, adjusted for certain items). In the U.S., it’s commonly split into: - Short-term capital gains (asset held 1 year or less) — taxed at ordinary income tax rates. - Long-term capital gains (held more than 1 year) — often taxed at preferential rates compared with ordinary income. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capital Gains](https://startuplawyer.com/startup-law-glossary/capital-gains) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Capital gains are the profits you earn when you sell a capital asset (like stocks, bonds, real estate, or a business interest) for more than you paid for it. - Capital gain = sale price − your cost basis (generally what you paid, plus/minus certain adjustments). - Often categorized as short-term (held 1 year or less) vs. long-term (held more than 1 year), with different tax treatment in many jurisdictions (including the U.S.). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capital Commitment](https://startuplawyer.com/startup-law-glossary/capital-commitment) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A capital commitment is the amount of money an investor (or partner/member) agrees in advance to contribute to a fund or business—often not all at once, but when requested through future capital calls/drawdowns—up to that committed amount. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capital Call](https://startuplawyer.com/startup-law-glossary/capital-call) **Published:** December 23, 2009 **Author:** Ryan Roberts **Content:** A capital call (also called a drawdown) is a formal request by a fund or partnership/LLC to its investors/partners to contribute part of the capital they previously committed, usually to fund investments, expenses, or fees. Typically, the notice specifies how much is due, when it’s due, and where to send it; failure to pay can trigger default remedies under the governing agreement. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Capital Account](https://startuplawyer.com/startup-law-glossary/capital-account) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** A capital account is an account used to track an owner’s equity in a business—especially in a partnership or LLC. It generally: - increases with capital contributions and allocated profits, and - decreases with distributions and allocated losses. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Cap Table Overhang](https://startuplawyer.com/startup-law-glossary/cap-table-overhang) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Cap table overhang refers to the amount of existing ownership claims (typically options/warrants/convertibles—often concentrated in an option pool) that sit “over” the common stock and can dilute current shareholders when they’re exercised or converted. In practice, people use it to describe situations where a company has a large unallocated or underwater option pool / heavy equity incentives outstanding, which can: (1) affect pricing and negotiations in a financing or acquisition (because the buyer/investors factor in that future dilution) and (2) reduce the effective value of existing common holders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Call Right](https://startuplawyer.com/startup-law-glossary/call-right) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A call right is a contractual right that lets the holder require another party to sell a specified asset or ownership interest to the holder at a set price (or pricing formula) and within a specified time window. Common context: in private company equity, a company or investor may have a call right to buy back shares from a founder/employee after certain events (e.g., termination, breach, failure to meet vesting conditions). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [C Corporation](https://startuplawyer.com/startup-law-glossary/c-corporation) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A C corporation (C corp) is a type of corporation that is taxed as a separate legal entity from its owners under Subchapter C of the Internal Revenue Code. Key features: - The corporation pays corporate income tax on its profits, and shareholders may also pay tax on dividends (often called “double taxation”). - Offers limited liability protection for shareholders. - Can have unlimited shareholders and multiple classes of stock (common in venture-backed companies). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Bylaws](https://startuplawyer.com/startup-law-glossary/bylaws) **Published:** January 9, 2010 **Author:** Ryan Roberts **Content:** Bylaws are a corporation’s (or other organization’s) internal governing rules—adopted by the owners/board—that explain how the organization is run. They typically cover things like: - the roles and powers of directors and officers - meeting procedures, voting, and quorum requirements - how directors/officers are elected or removed - committees, recordkeeping, and other internal processes (They’re different from articles/certificate of incorporation, which is the public filing that creates the entity.) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Buyer Optionality](https://startuplawyer.com/startup-law-glossary/buyer-optionality) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Buyer optionality means the buyer’s flexibility to choose among multiple paths or options—and to decide later—based on how circumstances develop. Common examples (depending on context): **Investing**: having multiple ways to deploy capital (e.g., invest now vs. wait; choose among opportunities). **M&A**: a buyer’s ability to pursue alternative targets, change deal structure, or walk away if conditions aren’t met. **Commercial/contracting**: options to adjust volume, timing, product mix, renew/terminate, or switch suppliers. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Buy-Sell Agreement](https://startuplawyer.com/startup-law-glossary/buy-sell-agreement) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A buy-sell agreement is a contract among business co-owners that sets rules for what happens to an owner’s interest if a triggering event occurs—most commonly death, disability, retirement, resignation/termination, divorce, or a desire to sell. It typically covers: - Who can buy the departing owner’s shares/interest (the company, the other owners, or both) - How the price is determined (fixed price, formula, appraisal, etc.) - How the purchase is funded (often using life insurance for death events) - Restrictions on transfers (to keep ownership within the intended group) ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Business Plan](https://startuplawyer.com/startup-law-glossary/business-plan) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** A business plan is a written document that explains a business’s goals, strategy for achieving them, target market, business model, and financial projections—typically used to guide operations and/or to raise funding. It usually covers: the company and product/service, market and competitors, marketing/sales strategy, operations, management team, and a financial plan (revenue, expenses, cash needs). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Burn Rate](https://startuplawyer.com/startup-law-glossary/burn-rate) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** A Burn Rate is the rate at which a startup goes through its cash to cover expenses. A burn rate measures how quickly a startup company will use up its cash. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Break-up Fee](https://startuplawyer.com/startup-law-glossary/break-up-fee) **Published:** June 20, 2012 **Author:** Ryan Roberts **Content:** A break-up fee is a fee (usually negotiated in an M&A deal) that a target company agrees to pay a buyer if the transaction fails to close due to specified reasons—most commonly if the target accepts a superior competing offer or otherwise breaches agreed deal protections. It’s also commonly called a termination fee and is intended to compensate the buyer for time, expense, and deal risk. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Acqui-Hire](https://startuplawyer.com/startup-law-glossary/acqui-hire) **Published:** January 7, 2019 **Author:** Ryan Roberts **Content:** An acqui-hire is a type of acquisition where a company buys another company primarily to hire its employees (often a startup team), rather than to acquire its products, customers, or technology. The acquired company’s product may be shut down or deemphasized, and much of the deal value is effectively tied to retaining the team. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Accredited Investor](https://startuplawyer.com/startup-law-glossary/accredited-investor) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** An **accredited investor** (U.S.) is a person or entity that meets certain criteria under SEC Rule 501(a) of Regulation D, generally indicating they have sufficient financial sophistication and/or financial capacity to participate in certain private (unregistered) securities offerings. For individuals, the most common ways to qualify are: - **Income test**: earned income over $200,000 in each of the two most recent years (or $300,000 jointly with a spouse/spousal equivalent) with a reasonable expectation of the same this year. - **Net worth test**: net worth over $1,000,000, alone or jointly with a spouse/spousal equivalent, excluding the value of the primary residence. There are also other qualifying categories (e.g., certain professional certifications, “knowledgeable employees” of private funds, and various entity types). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Broker-Dealer](https://startuplawyer.com/startup-law-glossary/broker-dealer) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A broker-dealer is a financial firm (or individual) registered with regulators to do two related jobs: - **Broker**: acts as an agent for clients by buying or selling securities on the client’s behalf (typically earning a commission or fee). - **Dealer**: acts as a principal by buying and selling securities for its own account (earning money from the spread/markup between buy and sell prices). In the U.S., broker-dealers are generally regulated by the SEC and must be members of FINRA (and/or other SROs), depending on their activities ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Broad-based Weighted Average](https://startuplawyer.com/startup-law-glossary/broad-based-weighted-average) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** Broad-based Weighted Average is an anti-dilution method that adjusts the price per share of the preferred stock of a prior investor due to the issuance of new preferred shares. The prior investor’s preferred stock is adjusted at a weighted average rate of the previously issued stock and the new preferred shares. This method uses all common stock outstanding on a fully diluted basis (including all convertible securities, warrants and options) in determining the new weighted average price. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Bridge Financing](https://startuplawyer.com/startup-law-glossary/bridge-financing) **Published:** March 31, 2011 **Author:** Ryan Roberts **Content:** A bridge financing refers to any short term funding of a startup that will eventually be replaced or followed by a larger capital investment from later stage investors. For a startup, a bridge financing could mean either a convertible note raise with a short term note (i.e., 1 to 2 years) or a ‘weak preferred’ stock equity raise. The startup will raise a small portion of funding (in relation to a typical venture capital round of $1,000,000 or more) in order to extend the runway of the entity — or otherwise build a bridge to the next goal. The goal does not have to be a venture capital financing, but this is typically the case. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Bootstrapping](https://startuplawyer.com/startup-law-glossary/bootstrapping) **Published:** June 20, 2012 **Author:** Ryan Roberts **Content:** Bootstrapping is the action of a startup to minimize expenses and build cash flow, thereby reducing or potentially eliminating the need for outside investors. Bootstrapping can also refer to co-founders self funding the startup through their own capital or through sales. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Book Value](https://startuplawyer.com/startup-law-glossary/book-value) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** The book value of a company is defined as the total assets minus the total liabilities. The book value of an asset, as shown on a balance sheet, is typically based on its original cost minus accumulated depreciation. The book value is used for both accounting and tax purposes. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Bond](https://startuplawyer.com/startup-law-glossary/bond) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A bond is a debt instrument in which an investor loans money to an entity (corporate or governmental) for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states, and U.S. and foreign governments to finance a variety of projects and activities. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Boilerplate](https://startuplawyer.com/startup-law-glossary/boilerplate) **Published:** February 28, 2013 **Author:** Ryan Roberts **Content:** Boilerplate refers to a legal document or a portion of a legal document that is ‘standard’ or not typically negotiated. Boilerplate can also mean a template legal document. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Board of Directors](https://startuplawyer.com/startup-law-glossary/board-of-directors) **Published:** March 31, 2011 **Author:** Ryan Roberts **Content:** A board of directors is a group of people (or even just 1 person) that’s main function is the oversight of the startup, not management of the day to day operations of the startup. The board of directors will make high level decisions, including whether to raise capital or sell the company (although in certain situations the startup’s shareholders will also have to approve a transaction initially approved or authorized by the board of directors). The board of directors is elected by the stockholders of the startup. States like Delaware permit a board of directors of just 1 person, but a board of directors for a venture-backed startup will typically be either 3 or 5 person boards. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Board Observer](https://startuplawyer.com/startup-law-glossary/board-observer) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A Board Observer has the right to be present at the meetings of the startup’s Board of Directors and receive Board Consents, but cannot take part in voting. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Board Consent](https://startuplawyer.com/startup-law-glossary/board-consent) **Published:** June 20, 2012 **Author:** Ryan Roberts **Content:** Board Consent refers to the approval of a startup’s board of directors. The Board Consent can take written form or can be effected at a meeting of the Board of Directors. Board Consent is needed to approve certain startup transactions, such as option grants. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Blue Sky Law](https://startuplawyer.com/startup-law-glossary/blue-sky-law) **Published:** March 31, 2011 **Author:** Ryan Roberts **Content:** Blue Sky Law refers to the securities law of the individual states. Similar to the SEC which oversees the federal securities law of the United States, each individual state has their own regulatory agency with their own rules and regulations regarding the offering, issuance and transfer of a startup’s securities. Blue sky law is important as most startups only consider the federal securities laws (SEC) when offering and/or selling their securities to angel investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Blended Preferences](https://startuplawyer.com/startup-law-glossary/blended-preferences) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** A startup has Blended Preferences when all of its preferred stock has equivalent liquidation preference rights. That is, the liquidation preferences of each series of preferred stock have pari passu liquidation preference rights. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Blanket Lien](https://startuplawyer.com/startup-law-glossary/blanket-lien) **Published:** January 6, 2014 **Author:** Ryan Roberts **Content:** A Blanket Lien gives a creditor the right to seize all assets, as opposed to a normal lien, which usually is tied to a single asset. Because of this expanded right, a Blanket Lien is creditor favorable. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Black-Scholes Option Pricing Model](https://startuplawyer.com/startup-law-glossary/black-scholes-option-pricing-model) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** The Black-Scholes Option Pricing Model is an analytical framework used to determine the fair price of stock options. The Model takes into account the stocks current price, the strike price, the time remaining until the option expires, market volatility and the interest rate. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Best Efforts Offering](https://startuplawyer.com/startup-law-glossary/best-efforts-offering) **Published:** June 20, 2012 **Author:** Ryan Roberts **Content:** A Best Efforts Offering is a type of offering of a startup’s securities in which the underwriter(s) only guarantee their “best effort” to sell the startup’s shares. The underwriter does not buy the securities outright from the startup nor guarantee the startup will receive a set amount of investment capital from the offering. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Benchmark](https://startuplawyer.com/startup-law-glossary/benchmark) **Published:** June 20, 2012 **Author:** Ryan Roberts **Content:** A Benchmark is a performance goal. Benchmarks, if reached, may trigger additional compensation for a startup’s management or additional investment for the startup. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Basket](https://startuplawyer.com/startup-law-glossary/basket) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** A basket is the amount of damages that must be suffered by a buyer before it can recover from the seller under the indemnity provisions of an acquisition agreement. A basket is similar to a deductible. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Basis Point](https://startuplawyer.com/startup-law-glossary/basis-point) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** A Basis Point is equal to 1/100 of 1% and is used most commonly in describing interest rates. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Bankruptcy](https://startuplawyer.com/startup-law-glossary/bankruptcy) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** A company is in Bankruptcy if it is unable to pay its debts. There are various types of Bankruptcy and different ways in which to resolve the situation based on the different type. Also, Bankruptcy can be entered into willingly or can be forced by a court. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Balance Sheet](https://startuplawyer.com/startup-law-glossary/balance-sheet) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** A Balance Sheet shows a company’s assets, liabilities and equity on a given date, it is a snapshot of the financial status of the company. The Balance Sheet is only accurate at the moment in time it is created and does not fluctuate and change. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Back-Up Certificate](https://startuplawyer.com/startup-law-glossary/back-up-certificate) **Published:** March 31, 2011 **Author:** Ryan Roberts **Content:** A back-up certificate is a certificate (i.e., document) a startup will issue to its legal counsel whereby the President or CEO of the startup certifies as to various facts that legal counsel will need in order to properly issue an opinion letter as part of a venture capital financing transaction. A back-up certificate is not a document that is part of the deal documents of a venture capital financing and usually stays internal between the startup and its legal counsel. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Automatic Conversion](https://startuplawyer.com/startup-law-glossary/automatic-conversion) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Automatic Conversion is a clause found in convertible promissory notes that dictates the automatic conversion of the convertible debt to the type of equity raised at a Qualified Financing\*. The conversion is considered “automatic” because it does not require the vote of either the startup or the investor. An automatic conversion can also occur regarding preferred stock of a startup before the startup’s IPO, with the automatic conversion clause converting preferred stock to common stock. \*A Qualified Financing is typically defined as an equity financing by the startup, for the purpose of raising capital, in which the aggregate of $1,000,000 (this amount can vary per deal) is purchased by investors. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Authorized Shares](https://startuplawyer.com/startup-law-glossary/authorized-shares) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Authorized Shares is the maximum amount of shares of stock a startup can issue. The number and type of authorized shares is set forth in the startup’s charter. The amount and type of authorized shares can be changed by the startup, provided the startup obtains the requisite approval of the startup’s shareholders. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [At-Will Employee](https://startuplawyer.com/startup-law-glossary/at-will-employee) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An At-Will Employee is an employee that can be terminated or leave employment at any time and for any or no reason. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Associate](https://startuplawyer.com/startup-law-glossary/associate) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Associate at a VC is an employee involved in investment analysis. An Associate at a law firm is a junior attorney who is an employee and does not own equity in the law firm. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Assignment](https://startuplawyer.com/startup-law-glossary/assignment) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Assignment is the term used to describe the giving on one’s rights (typically of a contract or contractual rights from an investment holding) to another. You can also Assign obligations from one party to another. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Asset Acquisition](https://startuplawyer.com/startup-law-glossary/asset-acquisition) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Asset Acquisition refers to a company sale transaction wherein the buyer purchases the assets of the startup rather than the stock of the startup. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [As-Converted Basis](https://startuplawyer.com/startup-law-glossary/as-converted-basis) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** The As-Converted Basis is a metric to determine the total equity base by converting all preferred stock (and other convertible securities) to common stock. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Articles of Incorporation](https://startuplawyer.com/startup-law-glossary/articles-of-incorporation) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Articles of Incorporation is a legal document that is filed with the secretary of state to create a corporation. Articles of Incorporation will contain the corporation’s basic information (name, registered agent, office address, share structure, etc.). Articles of Incorporation is also commonly referred to as a “Charter” or a “Certificate of Incorporation.” ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Arbitrage](https://startuplawyer.com/startup-law-glossary/arbitrage) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Arbitrage describes a situation in which a security is bought and sold simultaneously in order to take advantage of a price difference. These price differences and Arbitrage occur because of inefficiencies in markets. Arbitrage can also simply mean when a market participant takes advantage of a market in order to profit. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Anti-Dilution](https://startuplawyer.com/startup-law-glossary/anti-dilution) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Anti-Dilution is a preferred stock term typically given to venture capital investors that protects the VC investor from a large reduction in ownership of a startup due to the startup’s issuance of additional shares at a price per share lower than what the VC investor previously paid. The benefit of anti-dilution protection for the VC investor is that the VC investor will receive a conversion adjustment based on the lower-priced issuance of stock in the future. The amount of the conversion adjustment will depend on what type of anti-dilution protection is used: -Weighted Average -Broad-based Weighted Average -Narrow-Based Weighted Average -Full Ratchet ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Annual Meeting](https://startuplawyer.com/startup-law-glossary/annual-meeting) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** The Annual Meeting is held once yearly for the shareholders of a corporation. At the Annual Meeting, the shareholders elect members of the Board of Directors and vote on other important corporate issues. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Angel Investor](https://startuplawyer.com/startup-law-glossary/angel-investor) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** An angel investor is a wealthy person that invests in a startup typically before a venture capital firm does. An angel investor usually invests $1 million or less in a startup. The angel investor may invest in the startup personally or through another entity such as an LLC. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Angel Group](https://startuplawyer.com/startup-law-glossary/angel-group) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Angel Group is a group of angel investors that are formally organized or networked as a group. An Angel Group is usually formed to help the angel investors’ deal flow. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Angel Financing](https://startuplawyer.com/startup-law-glossary/angel-financing) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Angel Financing is a round of financing a startup receives from one or a group of angel investors. An Angel Financing is a smaller round of seed funding relative to that of a venture capital fund. Angel Financing investments are typically structured as convertible notes or “weak” preferred stock. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Analyst](https://startuplawyer.com/startup-law-glossary/analyst) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Analyst is an entry-level employee at a VC that compiles spreadsheets and does research on potential investments. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Amortization](https://startuplawyer.com/startup-law-glossary/amortization) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** Amortization describes the paying off of debt or a loan in regular payments (going towards both the principal and interest) over time. It is the process of accounting or decreasing an amount over a period of time. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Amended and Restated Certificate of Incorporation](https://startuplawyer.com/startup-law-glossary/amended-and-restated-certificate-of-incorporation) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Amended and Restated Certificate of Incorporation is the legal document filed with the secretary of state that restates, integrates, and further amends the original articles of incorporation (i.e., the Charter) of the startup. An Amended and Restated Certificate of Incorporation is typically filed in conjunction with the purchase of a new class of stock, such as a Series A Round. The startup must file the Amended and Restated Certificate of Incorporation in order to establish the rights and preferences of the new Series A Preferred Stock. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Alternative Minimum Tax (AMT)](https://startuplawyer.com/startup-law-glossary/alternative-minimum-tax) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** The Alternative Minimum Tax (AMT) is essentially a separate tax system in the United States wit its own set of tax rates and deduction rules, all of which are usually less generous than the regular rules. In the startup context, an Alternative Minimum Tax issue can occur in the realm of incentive stock options (ISOs). Since the alternative minimum tax rules have no special treatment for incentive stock options, an ISO grantee may be subject to the alternative minimum tax on the exercise of such stock options. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Advisory Board](https://startuplawyer.com/startup-law-glossary/advisory-board) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Advisory Board is group of people selected by the startup for their experience, knowledge, and influence. The startup hopes that the advice, counsel, and connections of the advisory board members will benefit the growth and direction of the startup. Some advisors will join an advisory board rather than the more formal board of directors because the advisory board makes no “actual decisions” regarding the startup (and therefore an advisory board member has less potential liability). Advisory Board members will typically get a grant of a quarter point or more of stock options in the startup. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Administrator](https://startuplawyer.com/startup-law-glossary/administrator) **Published:** January 22, 2014 **Author:** Ryan Roberts **Content:** An Administrator is a person or entity that administers certain corporate transactions on behalf of a startup. For example, the administrator of a startup’s stock plan is generally the board of directors of such startup. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Acquisition](https://startuplawyer.com/startup-law-glossary/acquisition) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Acquisition is the process of taking over a controlling interest (50% or more) in a company such as a startup. Acquisitions can be either for stock or the assets of the target startup. A startup may contemplate an acquisition of another company in order to diversify or strengthen the startup’s service or product offering. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Accelerator](https://startuplawyer.com/startup-law-glossary/accelerator) **Published:** January 15, 2014 **Author:** Ryan Roberts **Content:** An Accelerator is a broad term which includes a variety of different types of companies and/or facilities whose purpose is to host and support the development of startups. Accelerators help startups grow while controlling costs by offering networks of contacts and mentors, and shared backoffice resources. They will also generally invest a small amount of capital into the startup for a certain percentage (usually pretty small) of equity. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M185OTUpIj4KPHBhdGggZD0iTTE0LjgxNTYgMEgxLjE4MTI1QzAuNTI4MTI1IDAgMCAwLjUxNTYyNSAwIDEuMTUzMTNWMTQuODQzOEMwIDE1LjQ4MTMgMC41MjgxMjUgMTYgMS4xODEyNSAxNkgxNC44MTU2QzE1LjQ2ODggMTYgMTYgMTUuNDgxMyAxNiAxNC44NDY5VjEuMTUzMTNDMTYgMC41MTU2MjUgMTUuNDY4OCAwIDE0LjgxNTYgMFpNNC43NDY4NyAxMy42MzQ0SDIuMzcxODhWNS45OTY4N0g0Ljc0Njg3VjEzLjYzNDRaTTMuNTU5MzggNC45NTYyNUMyLjc5Njg4IDQuOTU2MjUgMi4xODEyNSA0LjM0MDYyIDIuMTgxMjUgMy41ODEyNUMyLjE4MTI1IDIuODIxODggMi43OTY4OCAyLjIwNjI1IDMuNTU5MzggMi4yMDYyNUM0LjMxODc1IDIuMjA2MjUgNC45MzQzNyAyLjgyMTg4IDQuOTM0MzcgMy41ODEyNUM0LjkzNDM3IDQuMzM3NSA0LjMxODc1IDQuOTU2MjUgMy41NTkzOCA0Ljk1NjI1Wk0xMy42MzQ0IDEzLjYzNDRIMTEuMjYyNVY5LjkyMTg4QzExLjI2MjUgOS4wMzc1IDExLjI0NjkgNy44OTY4NyAxMC4wMjgxIDcuODk2ODdDOC43OTM3NSA3Ljg5Njg3IDguNjA2MjUgOC44NjI1IDguNjA2MjUgOS44NTkzOFYxMy42MzQ0SDYuMjM3NVY1Ljk5Njg3SDguNTEyNVY3LjA0MDYzSDguNTQzNzVDOC44NTkzNyA2LjQ0MDYzIDkuNjM0MzggNS44MDYyNSAxMC43ODc1IDUuODA2MjVDMTMuMTkwNiA1LjgwNjI1IDEzLjYzNDQgNy4zODc1IDEzLjYzNDQgOS40NDM3NVYxMy42MzQ0VjEzLjYzNDRaIiBmaWxsPSIjNDM0OTYwIi8+CjwvZz4KPGRlZnM+CjxjbGlwUGF0aCBpZD0iY2xpcDBfMzQzXzk5NSI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Acceleration Clause](https://startuplawyer.com/startup-law-glossary/acceleration-clause) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** An Acceleration Clause is a clause found in a promissory note that allows the note holder (lender) to require the entire amount of the promissory note due immediately. An Acceleration Clause is typically triggered after a startup incurs an “event of default” (including any applicable cure period). ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Accelerated Vesting](https://startuplawyer.com/startup-law-glossary/accelerated-vesting) **Published:** February 16, 2010 **Author:** Ryan Roberts **Content:** Accelerated Vesting is a form of vesting that takes place at a faster rate than the initial vesting schedule in a founder or startup employee’s stock purchase or stock option agreement. The accelerated vesting can be for part, or all, of the founder’s or employee’s unvested shares or stock options. The most common types of accelerated vesting are “Single Trigger” and “Double Trigger” acceleration. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [83b Election](https://startuplawyer.com/startup-law-glossary/83b-election) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** An 83b (or 83(b)) election is a tax election made by founders issued stock subject to a vesting schedule. The 83b election neutralizes a potential disastrous tax consequence, and the founder recognizes “income” upon the initial restricted stock purchase. If a founder fails to make a 83b election, each vesting milestone will be a taxable event for the founder. “Income” will be calculated as the difference between the FMV of the portion of stock that vested and the original purchase price of the newly-vested portion. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [409A Report](https://startuplawyer.com/startup-law-glossary/409a-report) **Published:** February 1, 2014 **Author:** Ryan Roberts **Content:** A 409A Report is a third‑party valuation report that determines the fair market value of a private company’s common stock for purposes of complying with Internal Revenue Code Section 409A. It is used to set the minimum exercise price for stock options and help avoid adverse tax consequences. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [409A](https://startuplawyer.com/startup-law-glossary/409a) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** 409A is the section of the Internal Revenue Code that regulates the tax treatment of “non-qualified deferred compensation.” In order to avoid extremely adverse tax consequences, startups comply with Section 409A by issuing stock options at least at fair market value. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [4 Years with a One Year Cliff](https://startuplawyer.com/startup-law-glossary/4-years-with-a-one-year-cliff) **Published:** January 8, 2010 **Author:** Ryan Roberts **Content:** 4 Years with a One Year Cliff is the typical vesting schedule for startup founders’ stock. Under a 4 years with a one year cliff schedule, founders vest shares over a four year period. Because of the one year cliff, the founders will not vest any shares until the first anniversary of the founders stock issuance. Upon the one-year anniversary, the founders will each vest 25% of their total shares. Vesting will usually occur monthly after the cliff. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPGcgY2xpcC1wYXRoPSJ1cmwoI2NsaXAwXzM0M18xMDE2KSI+CjxwYXRoIGQ9Ik03Ljk5OTk5IDBDMTIuNDE4MyAwIDE2IDMuNTgxNzMgMTYgNy45OTk5OUMxNiAxMi4wOTAyIDEyLjkzMDMgMTUuNDYzIDguOTY5MjEgMTUuOTQxNFYxMC40NDQ3TDExLjEzMzQgMTAuNDQ0N0wxMS41ODIzIDhIOC45NjkyMVY3LjEzNTM5QzguOTY5MjEgNi40ODk0NSA5LjA5NTkxIDYuMDQyMjYgOS4zODY1NyA1Ljc1NjU2QzkuNjc3MjYgNS40NzA4NCAxMC4xMzE5IDUuMzQ2NjIgMTAuNzg3OCA1LjM0NjYyQzEwLjk1MzggNS4zNDY2MiAxMS4xMDY2IDUuMzQ4MjcgMTEuMjQyMiA1LjM1MTU3QzExLjQzOTQgNS4zNTYzOCAxMS42MDAxIDUuMzY0NjcgMTEuNzEyIDUuMzc2NDRWMy4xNjAzMkMxMS42NjczIDMuMTQ3ODkgMTEuNjE0NSAzLjEzNTQ3IDExLjU1NTQgMy4xMjMyNEMxMS40MjE0IDMuMDk1NTQgMTEuMjU0OCAzLjA2ODgzIDExLjA3NTcgMy4wNDUzN0MxMC43MDE2IDIuOTk2MzYgMTAuMjcyOSAyLjk2MTU0IDkuOTcyOTIgMi45NjE1NEM4Ljc2MTYgMi45NjE1NCA3Ljg0NjE0IDMuMjIwNjggNy4yMDcxMyAzLjc1NzQ2QzYuNDM1OTIgNC40MDUyNyA2LjA2NzM5IDUuNDU3NDggNi4wNjczOSA2Ljk0NjU5VjcuOTk5OTlINC40MTc3MlYxMC40NDQ3SDYuMDY3MzlWMTUuNzY0NEMyLjU4Mjg4IDE0Ljg5OTkgMCAxMS43NTE4IDAgNy45OTk5OUMwIDMuNTgxNzMgMy41ODE3MyAwIDcuOTk5OTkgMFoiIGZpbGw9IiM0MzQ5NjAiLz4KPC9nPgo8ZGVmcz4KPGNsaXBQYXRoIGlkPSJjbGlwMF8zNDNfMTAxNiI+CjxyZWN0IHdpZHRoPSIxNiIgaGVpZ2h0PSIxNiIgZmlsbD0id2hpdGUiLz4KPC9jbGlwUGF0aD4KPC9kZWZzPgo8L3N2Zz4K) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [25102(o)](https://startuplawyer.com/startup-law-glossary/25102o) **Published:** January 31, 2010 **Author:** Ryan Roberts **Content:** 25102(o) is the section of the California Corporation’s Code that startup company’s rely on to grant compensatory stock options that are exempted from qualification with the State of California. The startup issuer using 25102(o) must comply with several rules, including but not limited to: Rule 701 of the Securities Act and also the filing of a notice with the California Department of Corporations. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [25102(f)](https://startuplawyer.com/startup-law-glossary/25102f) **Published:** January 8, 2010 **Author:** Ryan Roberts **Content:** 25102(f) is the section of the California Corporation’s Code that provides the limited offering exemption California startup founders typically use to exempt their founders shares from qualification with the State of California. As part of the exemption, founders in California must file a 25102(f) notice. FULL TEXT OF SECTION 25102(f) —————————————– California Corporations Code section 25102(f) exempts from the provisions of section 25110: “Any offer or sale of any security in a transaction (other than an offer or sale to a pension or profit-sharing trust of the issuer) that meets each of the following criteria: 1\. Sales of the security are not made to more than 35 persons, including persons not in this state. 2\. All purchasers either have a preexisting personal or business relationship with the offeror or any of its partners, officers, directors or controlling persons, or managers (as appointed or elected by the members) if the offeror is a limited liability company, or by reason of their business or financial experience or the business or financial experience of their professional advisors who are unaffiliated with and who are not compensated by the issuer or any affiliate or selling agent of the issuer, directly or indirectly, could be reasonably assumed to have the capacity to protect their own interests in connection with the transaction. 3\. Each purchaser represents that the purchaser is purchasing for the purchaser’s own account (or a trust account if the purchaser is a trustee) and not with a view to or for sale in connection with any distribution of the security. 4\. The offer and sale of the security is not accomplished by the publication of any advertisement. The number of purchasers referred to above is exclusive of any described in subdivision (i), any officer, director, or affiliate of the issuer, or manager (as appointed or elected by the members) if the issuer is a limited liability company, and any other purchaser who the commissioner designates by rule. For purposes of this section, a husband and wife (together with any custodian or trustee acting for the account of their minor children) are counted as one person and a partnership, corporation, or other organization that was not specifically formed for the purpose of purchasing the security offered in reliance upon this exemption, is counted as one person. The commissioner may by rule require the issuer to file a notice of transactions under this subdivision. However, the failure to file the notice or the failure to file the notice within the time specified by the rule of the commissioner shall not affect the availability of this exemption. An issuer who fails to file the notice as provided by rule of the commissioner shall, within 15 business days after demand by the commissioner, file the notice and pay to the commissioner a fee equal to the fee payable had the transaction been qualified under Section 25110.” ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [280G](https://startuplawyer.com/startup-law-glossary/280g) **Published:** January 8, 2019 **Author:** Ryan Roberts **Content:** Internal Revenue Code Section 280G was created to protect the interests of stockholders by preventing startups from making unreasonably large payments (golden parachute payments) to certain “disqualified individuals” upon a change of control. Section 280G both limits the amount of golden parachute payments and imposes a special excise tax on them. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ### [Carried Interest (Carry)](https://startuplawyer.com/startup-law-glossary/carried-interest-carry) **Published:** March 22, 2026 **Author:** Ryan Roberts **Content:** Carried Interest (Carry) is the portion of investment profits allocated to fund managers after returning capital to investors. Carry strongly influences timelines, risk tolerance, and exit behavior. Typically, a fund must return the initial capital plus a preferential rate of return to the limited partner before the general partner can share in the profits. The general partner will usually receive Carried Interest equal to around 20% of the profit earned, although some successful firms can receive up to 25% or 30%. ![author avatar](https://startuplawyer.com/wp-content/uploads/Ryan-Roberts-Startup-Lawyer.avif) Ryan Roberts Startup Lawyer Ryan Roberts is a startup lawyer with more than two decades of experience advising on venture financings and M&A transactions totaling more than $1 billion. He is the author of the Amazon bestselling startup law book Acceleration. [See Full Bio](https://startuplawyer.com/author) [ ](https://startuplawyer.com/author) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.facebook.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,PHN2ZyB3aWR0aD0iMTYiIGhlaWdodD0iMTYiIHZpZXdCb3g9IjAgMCAxNiAxNiIgZmlsbD0ibm9uZSIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIj4KPHBhdGggZD0iTTEyLjIxNzUgMS4yNjkyOUgxNC40NjY1TDkuNTUzMSA2Ljg4NDk1TDE1LjMzMzMgMTQuNTI2NkgxMC44MDc1TDcuMjYyNjUgOS44OTE5OEwzLjIwNjU5IDE0LjUyNjZIMC45NTYyNDdMNi4yMTE1OCA4LjUyMDAyTDAuNjY2NjI2IDEuMjY5MjlINS4zMDczN0w4LjUxMTU2IDUuNTA1NTFMMTIuMjE3NSAxLjI2OTI5Wk0xMS40MjgyIDEzLjE4MDVIMTIuNjc0NEw0LjYzMDIyIDIuNTQ0NzFIMy4yOTI5M0wxMS40MjgyIDEzLjE4MDVaIiBmaWxsPSIjNDM0OTYwIi8+Cjwvc3ZnPgo=) ](https://x.com/startuplawyer) [ ![social network icon](data:image/svg+xml;base64,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) ](https://www.linkedin.com/in/startuplawyer/) --- ## 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