You’ve Got VC Money: The Punchlist

As outside counsel to thousands of VC-backed startups, we are often asked the same questions about what startups need to do after raising their first round of VC financing.

Here is a quick and dirty list of those next steps. The action items below are described in further detail in the “You’ve Got VC Money” series posts linked below.

Please reach out to your Perkins Coie team member if you have any questions.

Shore up your HR.

• Create sustainable employee policies.
• Develop an employee handbook.
• Obtain employment liability insurance.
• Get employee classification right.
• Use the right employment agreements.
• Avoid noncompetition agreements.
• Comply with tax withholding requirements.
• Comply with U.S. Immigration and Customs Enforcement (ICE).

Corporate governance

• Ensure your board understands their duties to the company and takes an active role.
• Keep your board informed.
• Hold regular board meetings (at least 4-6 per year) and make them maximally effective.
• Keep good board minutes.
• Understand what requires board and stockholder approval.
• Keep your investors informed—they will love you for it.

Review your IP strategy.

• Understand the company’s patents, trademarks, copyrights, and trade secrets and develop a plan to protect them.
• Protect your domain names and websites.
• Update your privacy policies and terms of service.
• Update your PIIAs.
• Get licenses in writing.

Establish cap table best practices.

Comply with securities laws.

Establish equity compensation best practices.

• Adopt an equity incentive plan.
• Benchmark your equity grants.
• Establish a standard protocol for granting equity awards—get us involved early on!
• Use our template charts when providing equity grant information.
• Establish a standard protocol for employee/contractor termination.
• Establish a standard protocol for option exercises.
• Don’t allow electronic option exercises.

Get more insurance coverage.

Get more sophisticated accounting help.

Review where you qualify to do business.

Adopt a plan to stay organized amidst an influx of paperwork.