Patents are important to startups because they provide a legally sanctioned monopoly that bars entry to competitors. In addition, patents may serve defensive purposes in that competitors may be less likely to sue a startup for patent infringement if there is a risk of a countersuit. Further, […]
A couple of months ago, we gave you five privacy tips relevant to startups and told you about the consequences startups face from regulators if they fail to protect their users’ privacy. Regulators like the Federal Trade Commission (FTC), the Federal Communications Commission (FCC), the Consumer Financial […]
Collecting stockholder consent by email can be more complicated than collecting director consent by email. If your company is incorporated in a state that permits stockholders to consent by electronic transmission, developing a process for collecting these consents is key to ensuring that the stockholder action is […]
Stock options – the right to purchase stock in the Company at a fixed price (“exercise price”) for set period of time-generate many of the questions facing a startup lawyer. This relates to the popularity of options as a way to compensate employees and contractors. Benefits: Properly structured options are […]
Q: How should I invest in insurance for my startup? What types of insurance do I need? What can I expect from the claim process? A: A full risk assessment of your company’s developing business requires an audit of your potential liabilities. However, as a general rule […]
The most common exit for early-stage companies is acquisition by another company. Because early-stage companies by definition do not have a long history of revenue and earnings performance, it can be difficult for the buyer and seller to agree on valuation. The seller will argue for a […]
Startups have bigger concerns than privacy, or so they think. Many startups have learned that being young and small does not keep them off the radar screens of privacy regulators, and they can be vulnerable to costly investigations. Privacy issues that come to light in the course […]
In our Emerging Companies & Venture Capital group, we often work with founders and early- stage companies that are in the process of raising their first round of financing. On occasion, this takes the form of a “friends and family” round, consisting of a group of supportive […]
Key to any early stage fundraising effort is a well-crafted Executive Summary, or Exec Summary. This succinct document describes your new venture and preemptively addresses fundamental questions that prospective investors will have. I have read hundreds of executive summaries over the years. And, the few good ones […]
A great estate plan is like a business plan for yourself and those most important to you. Just as a business plan is a road map to long-term success, an estate plan is a road map to achieving peace of mind for your family and perhaps even your business partners. As we have heard many times before, there is no escaping death and taxes, so we might as well plan for both. And yet, when we work with founders, we often find that they are so consumed with running their businesses that their estate plans—their "personal" business plans—are in disarray or nonexistent. Below are a few pointers to help you begin to chart a course in estate planning.
The right employees help your startup rise to the top. Identifying those employees early can save time and money. The infographic below created by FocusHR points out some of the innovative strategies companies like Zappos and Google employ to find dedicated employees and create a collaborative work environment.
One of the first steps in forming a startup, even before any documents are drafted or signed, is creating a capitalization or “cap.” table illustrating the ownership of the company. As companies grow and issue more stock to raise capital or compensate employees, their cap. tables can […]
The second annual SXSW V2Venture pitch competition took place on Wednesday, July 16 in Las Vegas. During this no-holds-barred, Vegas-style pitch competition, a live audience, along with a panel of expert judges, discovered advancements in various sectors of emerging technology. Following the competition, the winning companies were […]
In a previous Founder Tip of the Week, I discussed what vesting is. In this Founder Tip of the Week, I will discuss some common vesting schemes. Employees The norm for options granted to employees is that they vest ratably monthly over four years.
Just as an individual founder has their own style when running a company, each has her/his own preferred funding strategy. Check out the infographic below which identifies four funding styles founders typically use to launch and grow their startups.
When starting a new company, it’s easy to focus entirely on the business you are building, but it’s also important to make sure that you see the big picture . Here are three areas to keep covered...
A nondisclosure agreement (or "NDA") is a contract illustrating how confidential information will be shared and protected by two or more parties.
In a convertible note financing (or an increasingly popular SAFE financing), the change of control premium—the benefit given to a lender if the company has an exit before the notes convert—is an easily overlooked term. This is because it is rarely applicable, especially when the financing is a seed-type investment.
Unfortunately, too often I hear founders say things like “I promised her options for 2% of the company,” or worse, we see statements to that effect in employee offer letters or other agreements. In the worst cases, founders will even expressly agree to issue an investor or service provider a “fixed percentage” of the company’s ownership going forward.
Nearly every start-up begins in a garage, basement or home office. Some of today’s largest technology companies fall into that category, including Google, Apple, Hewlett-Packard and Amazon. But, at some point hopefully, the start-up outgrows its humble beginnings and needs to lease office, retail or storage space in order to meet consumer demands.
