How do I avoid spending too much on legal fees for my startup?
With no revenue and small early investments, new startups don’t exactly have piles of cash lying around. Meanwhile, getting operational is a cash suck that can quickly empty the company’s pockets. As you might expect, founders of new startups are highly motivated to seek savings wherever they can. But when it comes to legal fees early in a startup’s life, it’s important to optimize your attorney time while not cutting corners that’ll lead to disaster later.
How do I raise venture capital? The Basics
Every startup begins with an idea, and soon a core team is formed to turn that idea into a business. But businesses don’t grow from an idea on enthusiasm and teamwork alone – founders will need money to scale-up, and that can make raising venture capital as important to the business as the idea.
Yes! I Was Granted Stock! Is It Taxable?
With little cash coming in the door and debt accumulating, startups do not have the means to pay big salaries to attract top tier talent and add to their headcount. That is why startups should consider adopting a stock incentive plan to compensate and motivate employees, contractors, and advisers with stock instead of salaries. Although it may mean “working for free” for now, talented employees will be enticed by the idea of owning a piece of the startup because it could mean a big pay off later when, and if, the startup has a successful initial public offering or is acquired. Although the employee, contractor, or adviser may feel like they are “working for free,” the IRS disagrees.
What is intellectual property? Why is this important before starting work?
When discussing intellectual property (IP) with founders, I get two very different questions from founders, and both questions have the same answer. The first question is, “This IP is my baby, can I keep it instead of giving it to the company?” The second is, “Can’t we worry about IP later?” The answer to both questions is always “no” if you aspire to obtain venture capital investment to grow your company. Venture funds will take a hard pass on any startup that does not own or has not taken steps to protect its IP.
What is a Convertible Instrument?
Whether it’s your Uncle Bob’s pocket money from selling a Chevy or a more significant investment from your friend’s professor’s brother who happens to be an angel investor, early investments in your startup may come from surprising places. Regardless of where the money comes from, one of the most common methods to document the investment for pre-revenue and pre-product startups is by using some form of convertible instrument.
What do I need to know before I start hiring?
Many startups are born when a few friends pull together behind an idea and build the beginnings of a business as a small, agile team. But a group of friends can bring a business only so far; hiring to grow the team is inevitable.
Why Should I Choose to Form as a Delaware C Corporation if I’m Forming a Startup?
As of 2019, more than 1.5 million business entities have been formed in Delaware – that’s more than 1.5 businesses per resident of the U.S.’s second-smallest state. The reason is not that Delawareans are extremely entrepreneurial citizens, of course. Rather, Delaware is the legal home for businesses operating throughout the United States, with nearly 68% of Fortune 500 companies choosing it as their legal starting point, due solely to Delaware’s favorable corporate laws.