Legal Checklist for Startups

Scott Edward Walker

Set-up vesting schedules for the founders (see post here ) and file 83(b) elections with the IRS (see #3 here ). Button-down IP ownership and assignment issues (see post here ).

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

Scott Edward Walker

Not only are there key contractual issues that must be buttoned-down (like vesting and IP assignment ), but also there is a minefield of laws and regulations that must be complied with. Introduction I love working with startups – and trying to protect founders and watch their backs.

Trending Sources

4 Deadly Legal Mistakes That Startups Make

Scott Edward Walker

Vesting Restrictions. The first deadly mistake relates to vesting restrictions. IP Ownership. There are three deadly mistakes that relate to intellectual property (IP) ownership, all of which usually surface when the investors conduct their due-diligence investigation: 1.

If I Launched a Startup

The Startup Lawyer

8) Vest Founders Shares?: 9) Vesting Schedule for Founders Shares: 4 years with a One Year Cliff. (10) 10) Consideration for Founders Shares: Cash & IP. (11) 11) Handling of “Lost Founders&# : Lock Down the IP (then Wish Them Well). Here’s what I’d do in the beginning: Incorporation. (1) 1) Entity Choice: Corporation or Corporation. (2) 2) State of Incorporation: Delaware. (3) 3) Authorized Shares in Charter: 10,000,000 Shares. (4)

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The 5 Biggest Legal Mistakes That Startups Make

Scott Edward Walker

Mistake #2 : not buttoning-down IP ownership issues (at 10:20). Mistake #3 : not setting-up vesting schedules (at 17:19). Mistake #2: Not Buttoning-Down IP Ownership Issues. Mistake #3: Not Setting-Up Vesting Schedules. Up-front vesting possible.

The 5 Biggest Legal Mistakes That Startups Make

Scott Edward Walker

My law firm recently entered into a new partnership with This Week in Startups and sponsored their live fireside chat last month in San Francisco with authors Nick Bilton and Brad Stone.

How to Divide Founder Equity: 4 Criteria to Discuss

View from Seed

Co-founder equity should have vesting periods (or lapsing repurchase rights) so if a co-founder departs substantially earlier than others, their stake in the business is accordingly smaller. Ideation/IP.

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

Agile VC

Co-founder equity should have vesting periods (or lapsing repurchase rights) so if a co-founder departs substantially earlier than others, their stake in the business is accordingly smaller.

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. Founder IP Should Become Startup IP. Founders should transfer their IP ownership to the startup.

When Should A Company Be Formed Around an Idea?

Ask The VC

He formed a company 2 years ago that he talks about (though from the research I’ve done has no IP or product of any kind) and thinks that this idea fits into that vision, but doesn’t want to include anyone. 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.

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7 Lessons They Don’t Teach You In Crowdfunding School

Startup Professionals Musings

Keep all IP details close to the vest. Crowdfunding is the hot new vehicle for raising money to support your entrepreneurial efforts, with over 1,250 website platforms around the world to help you, according to a 2015 industry report.

Going Global: 8 Things to Consider If You Want to Expand Your Business

Up and Running

If a local employee has a vested interest in the company, they are arguably more inclined to assist with introductions than they are likely to hire a translator. The choice of where to base your IP holding company has become a key strategic decision for a company’s board of directors.

Most Common Early Start-up Mistakes

Both Sides of the Table

To the best of my knowledge US law allows you to work on your own resources and in your own hours and let you personally own your IP. In some countries outside the US (the UK for example) employers can specify in an employment contract that ANY IP you develop while you’re employed by that company is owned by them. Make sure you own your IP. Founder vesting. Yesterday I wrote a blog posting on founder vesting (see here ).

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White-Label Mobile App Users: Who Owns Them?

The Startup Lawyer

If a startup gets paid via a revenue share arrangement, the potential exists for the large company to exercise their early-termination rights and get their white-label app’s users free-of-charge (or worse, the IP). But even if the white-label agreement vests the startup with all IP ownership, including both the startup’s mobile app and the white-label app, the large company could still receive the free benefit of the jointly-grown user base.

What to do About that Chip on Your Shoulder?

Both Sides of the Table

I guess my thoughts are that if you’re part of the country club you have a vested interest in protecting the existing order and that disruption happens more from those that are on the outside wanting to change the rules.

Startup Founder Agreements

High Contrast

In one case the CEO had a different vesting schedule because he had spent a lot more time than the rest of the founding team on the idea. 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. There is some up-front vesting acceleration.

Bad Notes on Venture Capital

Both Sides of the Table

of the time I have no vested interest in having the debate. 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. So you did raise with a price. It’s just a maximum price. You’ll find out the minimum when the next round is raised. Him: Huh? Last week.

Bad Notes on VC

Gust

of the time I have no vested interest in having the debate. 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. So you did raise with a price. It’s just a maximum price. You’ll find out the minimum when the next round is raised. Him: Huh? Last week. At an accelerator ….

Startup Valuation: How Much Is Your Company Worth?

Seed Stage Capital

Not only is it hard to find apples-to-apples comps, but funding valuation data is often kept close to the vest. skip to main | skip to sidebar 19 January 2010 Startup Valuation: How Much Is Your Company Worth? Part of my job description involves prepping startups to raise capital.

6 Ways For Startups To Reduce Operating Costs

YoungUpstarts

These solutions typically shave off overhead costs by simplifying IT management processes, and combining traditional phone and Internet service into a single online connection using an existing IP PBX system. by Morgan Sims.

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

Gust

Determine the allocation of equity among co-founders, early employees or other service providers, and future contributors as applicable, as well as the vesting schedule , if any, that will apply. founders’ shares subject to vesting) and IRS filings for most favorable tax treatment of those shares. In Part I , I gave a quick summary of the who, when and why of forming and documenting a new startup company.

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

Gust

Nevertheless, choosing to defer basic corporate housekeeping items can be disastrous in some circumstances, as when the failure to spend a few thousand dollars on legal fees to clarify IP ownership and equity arrangements comes back to bite a successful company to the tune of millions of dollars on the eve of a liquidity event. In Part II, we’ll get into certificates of incorporation, stock purchase agreements, IP assignments and related matters. What is a startup really?

White-Label Mobile App Users: Who Owns Them?

The Startup Lawyer

If a startup gets paid via a revenue share arrangement, the potential exists for the large company to exercise their early-termination rights and get their white-label app’s users free-of-charge (or worse, the IP). But even if the white-label agreement vests the startup with all IP ownership, including both the startup’s mobile app and the white-label app, the large company could still receive the free benefit of the jointly-grown user base.

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Get Inside the Mind of an Angel Investor

Both Sides of the Table

You can give them 20% of the company with a vesting schedule over four years (this way if things don’t work out you don’t lose too much), and you add infinite value to your team.

Don’t have a Founder’s Agreement? How to Break-up without Hating Each Other

Kevin Dewalt

Equity Vesting: Keep it Simple. Most founder’s agreements suggest 4-year vesting with a 1-year cliff. You don’t want someone hanging on for another 5 months taking up a desk just to vest. 50/50 founders would each vest 25%/2 = 12.5%

A Few Key People Really Can Make a Huge Difference

Both Sides of the Table

It’s clear that America has a vested interest in promoting entrepreneurship in many regions in the country to stimulate innovation & job creation. This article originally ran on TechCrunch. I’m in Seattle this week.

If I Launched a Startup

The Startup Lawyer

8) Vest Founders Shares?: 9) Vesting Schedule for Founders Shares: 4 years with a One Year Cliff. (10) 10) Consideration for Founders Shares: Cash & IP. (11) 11) Handling of “Lost Founders&# : Lock Down the IP. Here’s what I’d do in the beginning: Incorporation. (1) 1) Entity Choice: Corporation or Corporation. (2) 2) State of Incorporation: Delaware. (3) 3) Authorized Shares in Charter: 10,000,000 Shares. (4) 4) Type of Shares: Common Stock. (5)

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Dear elizy: How should I split equity with my co-founders?  And how will that affect raising a seed round?

Hippoland

Ada is my professor, and we are using her lab, and the company is based on her research, though the IP is assigned to the company. First off, whatever you decide, you should implement vesting. Standard vesting practices in the Silicon Valley at this time of writing are 4 year vesting with a 1 year cliff. These days, I’ve sometimes seen 3 year vesting with a 1 year cliff, which would also be ok.

What Is the “Walker Startup Package”?

Scott Edward Walker

Set-up vesting schedules for the founders (see post here ) and file 83(b) elections with the IRS (see #3 here ). Button-down IP ownership and assignment issues (see post here ).

Startup Blog: Staff & Money or Money & Staff

Taffy Williams

You offer them for example 3% of the equity of the company starting immediately and add a buyback or vesting provision that goes to zero in a 3-4 year timeframe. The buyback or vesting ensures they have to work for a period to keep the stock or options.

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

Agile VC

Co-founder equity should have vesting periods (or lapsing repurchase rights) so if a co-founder departs substantially earlier than others, their stake in the business is accordingly smaller.

You May Not Own That Logo…5 Reasons Why Startups Need Attorneys

UC Berkeley

Early stage startups tend to seek legal advice only when IP is involved. Advisors typically get.25% to 1% vesting monthly over 24 months. That mindset can come back to bite entrepreneurs…hard. During a recent LC Best Practices event, WilmerHale’s Joe Wyatt and Ashwin Gokhale gave multiple examples of how firms can help startups with everything from avoiding landmines to benchmarking equity for employees and advisors. Here are some top picks: 1.

Filing a Charter Is Not a Startup Incorporation

The Startup Lawyer

Want to vest your founders’ shares ? And you can definitely forget about a technology transfer agreement or anything else IP-related. I’ve noticed a lot of recent articles promoting that a startup can “ skip the lawyer &# and incorporate via an online service. These sites typically list about 20 incorporation tasks they’ll do for your startup for around $250 plus the applicable state filing fees.

Up Up Down Down Left Right Left Right B A Start

The Startup Lawyer

vesting schedule and company repurchase option ). What if your startup’s rockstar developer claims ownership of the startup’s IP? If you recognize this post’s title, then you are always welcome at my table.

PIPA and SOPA Need a New Name

Mark Birch

3261), introduced in the House in late October (which includes the most controversial parts of the Senate’s PROTECT IP Act (S. First, the vested interests ignore the threat because it is small and figure it will quickly die out. If we are not vigorous about exercising our freedoms and making our collective voices heard, the vested interests and incumbents will win.

CEO Friday: Why we don’t hire.NET programmers

blog.expensify.com

Expensify Blog. Expense Reports That Don't Suck. CEO Friday: Why we don’t hire.NET programmers. Update: The end is near, Expensify is hiring a.NET programmer! Learn more… Saturday edit: Wow, quite a response to this. Some additional comments at the end. Sunday edit : Still going!

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Beware The Consultant

infochachkie.com

Allow the consultant to invest in your future success; in lieu of cash, grant them equity in the form of Non-qualified Options that vest based upon the attainment of quantifiable goals; keep in mind that adverse tax consequences may be associated with such equity grants, so check with your accountant before deploying this form of compensation. IP) is an ugly thing at a startup. About Who the Heck is Uncle Saul?

Series Seed Financing Documents

www.seriesseed.com

It would be helpful to get a California standard employee manual, employee contract/agreements, IP ownership release to company, and confidentiality. Standard 1-way/bi-lateral NDA's, standard templates for an employee manual, employee contract/agreements, IP ownership release to company are on my wish-list too. There are some Vesting terms for founders in the term sheet but I can't find them in the others documents too. SeriesSeed.com.

Setting And Shaping A Strong Startup Culture

Seed Stage Capital

As a result, their ‘story is kept close to the vest. While you should never give away true IP or trade secrets, a primary job duty of the CEO is to pitch and sell the vision of the company-all day, all the time, to (almost) anyone who will listen.

Crazy! 189 Answers To The Top Startup Questions On Your Mind

maplebutter.com

I can’t offer any amazing technology or IP, but I can solve a few problems by just doing it “right”, and not the way it’s being forced on people right now. Maple Butter. Search for: Videos. About. You are here: Home » Hiring » Crazy!