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How to Divide Founder Equity: 4 Criteria to Discuss

View from Seed

Below, Lee Hower offers advice for approaching these equity discussions objectively and properly. Capital Investment & Sweat Equity.

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

Sometimes co-founders put off the equity split question for some time. Both of these are typically reflected in the founder equity split.

Legal Checklist for Startups

Scott Edward Walker

Button-down IP ownership and assignment issues (see post here ). 5.  None of this is rocket science. 

Punch & Pie: How Should Co-Founders Divide Equity?

Agile VC

Sometimes co-founders put off the equity split question for some time. Both of these are typically reflected in the founder equity split.

How Do Angel Investors Make Decisions?

Early Growth Financial Services

They’ll want to know what’s unique about your IP and … Continue reading → Investment Capital: Equity / Debt / VC Funding

How To Launch a Startup and Avoid Ending-up in Jail

Scott Edward Walker

Introduction I love working with startups – and trying to protect founders and watch their backs.  Potential Criminal Violations Employment Laws. 

Should a Founder License IP to a Startup?

The Startup Lawyer

Founder IP License Problem. Even if the founder offers the startup a completely startup-favorable license, the founder IP license scenario should be a non-starter for most startups. The problem is that even a free and exclusive license to the startup falls short of vesting IP ownership with the startup. This is a bad idea.

Protecting IP in Crowdfunded Deals

Angel Investing News

Investors will eventually want to validate the intellectual property (IP) prior to investing but not just to hear about the opportunity.  During this phase of the investment process, representatives of the investor group may agree to a non-disclosure agreement as part of their validation of the IP.

Crowdfunding: Ways to Boost Your Campaign Success

Early Growth Financial Services

Before you go public with your campaign, you need to identify and protect your IP. Some things, like putting simple copyrights in place, are straightforward enough … Continue reading → Investment Capital: Equity / Debt / VC Funding

IP 12

4 Deadly Legal Mistakes That Startups Make

Scott Edward Walker

IP Ownership.  Any IP created or acquired by a founder (e.g., You need to make sure that any IP created by outside developers (i.e.,

IPO? IP-no!

EIN News

billion through IPOs. "A lot of private equity funds and venture capitalists have been holding their investments for a have gone on sale yet. By mid-June, U.S. firms had raised $22.7

Do It Right The First Time, Part II: Visit the Doctor or House Call?

Gust

Readers can anticipate my next point in continuing the analogy:  It makes no more sense for a non-lawyer to prepare fundamental legal, governance, equity and intellectual property documents than it would for a patient to self-diagnose and begin taking prescription-strength antibiotics or other medications. The risk is simply too great. 

If I Launched a Startup

The Startup Lawyer

Hell Yes. (9) Vesting Schedule for Founders Shares: 4 years with a One Year Cliff. (10) Consideration for Founders Shares: Cash & IP. (11) Handling of “Lost Founders&# : Lock Down the IP (then Wish Them Well).

NDA 47

When Should A Company Be Formed Around an Idea?

Ask The VC

We’d suggest that you form a company (LLC or S-Corp is fine at this point), divide up the equity and make sure it is subject to vesting. That way, if someone does decide to leave, they will not leave with all of their equity. Or should we continue working on the product and see what happens?

IP 80

Are Universities The New VCs?

A VC : Venture Capital and Technology

It isn't the IP and patents that are held by Universities that interest me. think capital gains from equity investments in startups that are birthed inside universities is an interesting idea and I am glad to see Stanford and some other schools trying it out.  The New Yorker has a piece on Stanford's StartX.

IP 66

Do It Right The First Time: Avoiding “Janitorial” Legal Work

Gust

There are countless related subjects, such as what type of entity to form and in what jurisdiction, how to handle equity compensation and vesting arrangements, determining titles and Board membership, and so on.  I’ve written extensively on these subjects, as have other lawyers, notably Yokum Taku and Scott Edward Walker.  Good stuff!

IP 12

The 5 Biggest Legal Mistakes That Startups Make

Scott Edward Walker

Mistake #2 :  not buttoning-down IP ownership issues (at 10:20). Mistake #2:  Not Buttoning-Down IP Ownership Issues. Cheers, Scott.

The 5 Biggest Legal Mistakes That Startups Make

Scott Edward Walker

Cheers, Scott [link] Below is my personal outline for the workshop. issues to address include: How have they treated their other portfolio companies?

Corporate Bad Activity Against Innovators

Feld Thoughts

Virtual Legality: Legal Letters Claim Oculus VR Made The Oculus Rift Using ZeniMax IP. That’s how they create the fast lane and the slow lane.

Top Legal Mistakes Entrepreneurs Make

Deimar

Finally, completely understand who owns what as the relationship persists, especially in the case of intellectual property (IP).

Some Career Advice for Aspiring Tech CEOs

Both Sides of the Table

He wants a chance at changing life’s circumstances with building equity value that might free him and his family from the rat-race of 529 accounts, property taxes, summer-school tuitions and even spending some cash on aging parents. There is often money to be made in finding places with under-valued IP. But how? She joined Yahoo!

The risks of being a small investor in a private company

Chris Dixon

Small investors invest in entity 1 that licenses IP from entity 2. Value of IP increases and entity 2 is sold and eventually cancels entity 1′s license, making entity 1 worthless. 4) Pay-to-play or artificially low downrounds. Here are a few examples. 1) Issuing of senior securities with multiple liquidation preferences.

When do I need to incorporate a company?

Startup Company Lawyer

More than one founder.  If there is more than one founder, the likelihood of an argument about how the equity should be split in the new company increases dramatically.  Incorporating a company and issuing stock to the founders will help prevent misunderstandings among the founders about equity splits.  Issuing stock options.  Funding. 

IP 20

Top 120 Startup Posts for 2010

SoCal CTO

Both Sides of the Table , July 22, 2010 An updated Digital Trends presentation - Jeff Hilimire , June 2, 2010 I do what I hate - Jessica Mah , January 7, 2010 Startup Equity Allocation - charliecrystle.com , January 11, 2010 When good investment decisions end up backing more women CEOs: Conversation with Cameron Lester at Azure Capital.

CTO 89

Tahosa’s Summit: 6 Months [Series]

Non-Linear Growth

To my knowledge, no-one has ever done a blog series on the process of building a venture capital or growth equity firm. Hire an IP attorney to help you through the process and some good marketing people if you can afford them. I enjoy reading blog posts of entrepreneurs that chronicle the journey of starting and building a business.

If I Launched a Startup

The Startup Lawyer

Hell Yes. (9) Vesting Schedule for Founders Shares: 4 years with a One Year Cliff. (10) Consideration for Founders Shares: Cash & IP. (11) Handling of “Lost Founders&# : Lock Down the IP.

NDA 9

What Should You Do with Your Crappy Little Services Business?

Both Sides of the Table

You own the IP you create. In a down market IP can become a huge differentiator. 3. This post originally appeared on TechCrunch. Period.

What is it Like to Negotiate a VC Round?

Both Sides of the Table

Of course investors care about controls (board, protective provisions, IP assignments, non-solicitation) but these are all pretty standard. Over the years I’ve written extensively about the downsides of convertible notes for startups such as here , here and here. In the old days VCs funded off of a “pre-money” valuation.

How to Find the Top VCs for the Investment You Need

Up and Running

They invest in strong teams, massive market opportunities, and novel IP. Pacific Northwest. billion invested in 374 startups in that area.

Startups Need the ‘Why’ Before the ‘What’ to Build

Startup Professionals Musings

Intellectual property (IP). They emphasize that before the “What” should come the “Why?” Position yourself relative to your competitors.

Working with Friends

Non-Linear Growth

Last week I wrote about the value of repeat relationships in the venture capital and private equity business. Well… today, Intel Capital announced a significant investment in Meritage portfolio company IP Commerce. Crisp is better for it. I’m excited that Intel has decided to join us at IP Commerce. On and up!

IP 8

Bad Notes on Venture Capital

Both Sides of the Table

“But lawyers will charge much more for equity.” Try doing THAT with equity. This week. On the phone … Me: So, you raised venture capital? Him: Yeah. We raised a seed round. About $1 million. Me: At what price? Him: It wasn’t priced. We raised a convertible note. Me: With a cap? Him: Yes, $8 million. Him: Huh?

Zayo Group – One of Boulder’s Amazing Startup Stories

Feld Thoughts

By the time we sold to Level 3, our total proceeds to equity owners and management were $225M. Instead, we sought to provide raw fiber, wavelengths, ethernet, IP, and technical space to those entities that needed a whole lot of bandwidth. We raised $2.7B of debt and $870M in equity in three rounds. ”, he continued.

Bad Notes on VC

Gust

But lawyers will charge much more for equity.” Try doing THAT with equity. This week. On the phone …. Me: So, you raised venture capital? Him: Yeah. We raised a seed round. About $1 million. Me: At what price? Him: It wasn’t priced. We raised a convertible note. Me: With a cap? Him: Yes, $8 million. Me: Ah. I see. Him: Huh? Last week.

How do seed VCs pick their investments?

Hippoland

On Friday, I spent a couple of hours at my alma mater talking with student entrepreneurs about their companies. How many?  Who exactly is the customer? 

The Legal Side of Entrepreneurship

YoungUpstarts

They also need to decide whether to structure terms as an equity deal or a convertible security deal. Financing. ” The Cost of Financing.

Startup Resources

www.vccafe.com

IP Location Tools. YCombinator Series AA Equity Financing Documents. Founder Equity Issues. Venture Hacks equity section.

How to Work with Lawyers at a Startup

Both Sides of the Table

Shame about not getting it in legal writing that you owned the original IP.  the link is here. Many people start companies arse backwards. 

Startup Founder Agreements

High Contrast

It outlines key points of agreement between founders around IP ownership, equity ownership, vesting, etc. For example, without a clear vehicle (a company) to contribute intellectual property into, a founder who walks away may mean that the future company won’t own its own IP. Some get common equity for their investment.

Why Content Personalization Is Not Web Personalization (and What to Do About It)

ConversionXL

Imagine you receive an email from your bank about refinancing and home equity loans. Tweet It!]. Does it actually impact conversion rates?

Web 49