Tag: startup
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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…
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You Can’t Spell Corporation Without “IP”
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…
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Startup “Odds of Success” Calculator
StartupNation released an “Odds of Success Calculator” so that entrepreneurs can “see if your business is prepared for success.” The calculator derives your odds of success based upon your answers to the following 8 questions: (1) About how much debt and equity capital has been provided to your business? (2) How long do you think…
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Why LegalZoom Fails Startups
Thinking of saving some cash and using LegalZoom to incorporate your startup? Think again. While incorporating with LegalZoom is a viable option for some new businesses, LegalZoom comes up way short for startups. LegalZoom just doesn’t offer the documents a typical startup needs: Shareholders Agreement? Nope. Stock Purchase Agreements? No. Tech transfer agreements? Nada. What…
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Delaware is Suffering: Will Incorporation Fees Increase?
I’ve blogged before about the benefits of incorporating in Delaware. Thus, I was somewhat shocked to see the Deal Journal blog about how Delaware is becoming another victim of the credit crunch. I never thought about how much revenue Delaware receives from its Division of Corporations, but the article contained this statistic: Delaware’s Division of…