Tag: startup
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The When to Incorporate Decision-Matrix
In a recent post, I detailed some incorporation-related points of interest if I launched my own startup. The post presumed I made the decision to push forward with the incorporation of my startup. But how do you know when the time is right to incorporate your startup? Advice Varies There’s a wide range of counsel…
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If I Launched a Startup
Here’s what I’d do in the beginning: Incorporation (1) Entity Choice: Corporation or Corporation (2) State of Incorporation: Delaware (3) Authorized Shares in Charter: 0,000,000 Shares (4) Type of Shares: Common Stock (5) Par Value of Common: $0.0001 (6) Initial Founders Issuance: 8,000,000 Shares (7) Founders Equity Split: Depends on the Team, But Quickly and…
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Model Seed Funding Doc Myths
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, Fenwick & West and Andreessen Horowitz released the Series Seed model documents. The standardized seed funding document movement…
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It Is Not Your Baby Anymore
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…
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Should a Founder License IP to a Startup?
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…
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The Startup “Hyphen” Must Die
It’s time for the entire startup world to cease spelling “startup” with a hyphen. I realize that most dictionaries have “start-up” as the main entry. But if “vlog” and “webisode” can be added to the dictionary, I’m pretty sure the startup hyphen can be eliminated from those same reference books. In addition to just looking…
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What Happens to the Option Pool if a Startup is Acquired?
The 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…
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How to Split the Startup Founder Equity Pie
Founders frequently ask me to provide guidance on how their startup should split equity between co-founders. 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…
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How to Handle Startup Idea Theft
Have you ever been jacked? The only time I recall being a victim of theft was during undergrad at USC. 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…
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5 Common Founder Mistakes
This is a re-post of an article that I wrote about common founder mistakes for StartupLucky.com and Killerstartups.com (not sure if it went out yet). 1. Spending Too Much Time Keeping Your “Unique” Idea Top Secret. Some founders attempt to have everyone within 25 feet of them sign an NDA. Instead of spending time drafting…