House Passes Crowdfunding Bill: FAQ’s for Entrepreneurs

Scott Edward Walker

Presumably, each stockholder will be required to execute a subscription agreement and/or stockholders’ agreement to address key issues such as transfer restrictions, rights of first refusal, drag-along rights, etc. Last week, the U.S. House of Representatives passed a crowdfunding bill that will allow startups to offer and sell securities via crowdfunding sites and social networking sites. What is Crowdfunding?

A Startup Knows It Needs a Lawyer When:


Lawyer time required (including vesting agreements for founders): 3 to 6 hours. And each award to a given employee requires a separate grant agreement laying out the terms of the grant. You need a lawyer to create the plan and grant agreements (on the grant agreements, once you have the form, you can probably use it for other future grants of the same type).

Subscription accounting


According to a CBS Marketwatch article : Under the accounting method used in the past, the company would recognize a full month’s revenue from a subscription agreement, even if a deal was sealed in the middle of the month, for example. The effect of the accounting change is to defer a portion of the revenue that had previously been recorded during the month that the subscription started to the end of the contract. Ok, now for some boring accounting stuff.