Archive for the ‘Startup Stuff’ Category

Using LLC “profits interests” for employee incentive equity

In goodnews, goodcounsel’s highly occasional newsletter, I explained how early-stage companies that are set up as LLC’s can use “profits interests” instead of conventional options as a tax-advantaged way to offer employees incentive equity. There are some associated downsides and hassles, however. Read the article here.

Should I raise money with convertible notes or equity?

After “should I form a corporation or a LLC?” this is probably the question I get asked most often. I thought I’d to try to offer a quick, simple overview, with a few links for those with an interest in the gory detail. Here goes. This is general information, not legal advice, capisce? (Duh.) For the […]

music and entrepreneurship (or: go see Adrian Holovaty at the Green Mill)

At last month’s Northwestern Entrepreneurship Conference, Groupon CEO Andrew Mason was a featured speaker. Mason, as many now know, was a music major at Northwestern. Peter Barris of NEA (one of Groupon’s major investors), who shared the stage with Mason, noted that musical talent seemed prevalent (in his experience) in technology entrepreneurs. This observation came […]

What are the essential ingredients of startup legal documents?

In developing a streamlined, cost-effective set of legal formation documents for startups (organizational, not funding documents), I have been giving a lot of thought to the essential areas that entrepreneurs/new companies need to cover. It’s not a huge universe. Here’s what I have come up with: Ownership split (if more than one founder) and vesting. […]

Even worse

In my last post, I made a comment about startups not needing 45-page LLC agreements. I guess there’s even worse being perpetrated out there. A friend, who also represents startups, reports the following: Apropos of your point, I am in the process of negotiating a 2-member, early stage operating agreement which spans 70 pages What […]

Should you split ownership 50-50 with your partner?

A great many founders that come to me for representation want to split ownership 50-50 with their co-founders. I’ve been thinking about 50-50 issues a lot lately. These situations present interesting challenges for the attorney, in terms of how to construct reasonable, practical mechanisms for dealing with disputes that can take place between the founders, […]