The adage, “you have to have money to make money” really hits home when you are reviewing the budget needed to launch a business. Starting a business is expensive, and we understand that many of the entrepreneurs and businesspeople that we represent are trying to “bootstrap it,” especially at the outset of a new venture. Saving money […]
With some regularity, clients tell me that they want to issue employee equity that represents a fixed percentage of the company, not subject to dilution. What startup company founders should realize is that giving out equity containing an “anti-dilution” feature is an extraordinary and unusual benefit, one that should be agreed to only in exceptional circumstances.
I loved the piece in Inc. entitled “5 Ways to Stop Legal-Fee Madness” by Howard Tullman, a legendary Chicago entrepreneur who recently became the CEO of 1871, one of the premiere startup incubators in the area. I agree with just about everything Howard says. Stop for a moment, go read it, and come back and […]
I know that it’s hard to imagine “feeling sorry” for venture capitalists. We think of them as very savvy, sometimes sharp-elbowed people, who typically make a good deal of money. But read Bessemer Venture Partners’ amazing page, detailing their “anti-portfolio” — companies that were presented to them for investment and that they passed on. Companies […]
Lawyer marketing frequently emphasizes — what else? — the importance of hiring lawyers. As someone who has himself stood in the shoes of the cash-conserving entrepreneur, however, I understand the reluctance to use precious startup capital on legal fees. It is possible to significantly overspend on legal services — either by buying too many services […]
We do a lot of convertible notes at goodcounsel, so we try to keep with the state of the art. A year or so ago, some West Coast incubators teamed up with the Wilson Sonsini law firm to create a type of convertible equity for seed, financings intended to replace convertible debt. Convertible debt minus […]
In an earlier post, I described the major points of the proposed crowdfunding rules issued by the SEC (known as “Regulation Crowdfunding”) pursuant to the JOBS Act. Now, I’d like to offer my reactions. My basic reaction is this: you have got to be kidding me.
At last, the Securities and Exchange Commission (SEC) has proposed “Regulation Crowdfunding” (the rules implementing Title III of the JOBS Act). I apologize for my delay in posting about this, but in my defense, the release containing the proposed rules is 585 pages long. (The length alone gives one pause about how workable this regulatory […]
Max Wessel, writing in the Harvard Business Review blog, looks at technology entrepreneurship across the country and states that “ if you start a technology business somewhere other than the San Francisco Bay area, New York, or Boston” — what Wessel terms the “superhubs” — “you’re stacking the deck against yourself.” What does Wessel mean […]
Now that the “fiscal cliff” has come and gone, cliffs are less frequently in the news. In startup circles, however, a different kind of cliff is always popular: the vesting cliff. Typically, vesting of founder or employee equity happens in even increments, daily or monthly. If you graphed that vesting schedule, it would obviously look […]