Formation

Establish a Culture of Giving

Authors: Neil M. Nathanson, StartupPercolator

A company’s culture is often established in its earliest days. Once ingrained, it can be very difficult to change. Although many founders recognize the importance of infusing a culture of giving into their enterprises, they wonder how they can go about it with limited time and resources.

The answer should be apparent to every founder. Early stage companies can meet cultural challenges with the same tactics they use for meeting operational challenges with limited cash. When early stage companies don’t have cash, they apply “sweat” or “equity.”

How do you apply “sweat” and “equity” to establish a culture of giving? Contribute “sweat” by agreeing that founders and employees will devote a small percentage of their work time to community activities. Double the “sweat” value by turning your labor into a team-building exercise by volunteering together at a food bank or similar activity.

Contribute “equity” by making small stock or option grants to charities. Some communities have established specific charities designed to accept equity donations from startup companies. Charities, such as the Entrepreneurs’ Foundation, with chapters in California, Oregon, Texas, Colorado and other states, hold the equity until it becomes liquid. The company then directs the funds to organizations of its choice through a charitable foundation.

For some founders, a culture of giving is an important way of giving back to a community that has set them on their own way to success. Others believe that a culture of giving is vital for attracting and retaining talent.

During this holiday season, should you decide a culture of giving is right for your startup company, don’t delay. Use “sweat” and “equity” to establish your new culture now.

How to Prepare for an Equity Financing

We have covered in past FTTWs how to value your startup and how much capital to raise. Once your startup decides to pursue equity financing, you should start to prepare for the investor due diligence process. On the business side, you will need to prepare a business plan and should take steps such as obtaining management references, interviews and background reviews, customer/user references, technical/product reviews, financial statements and business model reviews.

What Every Startup Needs to Know

On Wednesday, June 26th, Perkins Coie’s Palo Alto office hosted the startupPerColator event, “What Every Startup Needs to Know.” Lowell Ness, a Perkins Coie partner in the Emerging Companies & Venture Capital (ECVC) practice, moderated a panel which included Herb Stephens of NueHealth, Thomas Huot of VantagePoint Capital, Jennifer Jones of Jennifer Jones and Partners, Yuri Rabinovich of Start-up Monthly, and Olga Rodstein of Shutterfly.