Blogs

a small plant growing

Startup Percolator

The blog posts on Startup Percolator cover a wide range of topics essential for entrepreneurs and startups.

Startup - Employees

October 1, 2014

Identifying Employees for Your Startup

The right employees help your startup rise to the top. Identifying those employees early can save time and money. The infographic below created by FocusHR points out some of the innovative strategies companies like Zappos and Google employ to find dedicated employees and create a collaborative work environment.

road through mountains

August 21, 2014

Anatomy of a Startup Cap. Table

One of the first steps in forming a startup, even before any documents are drafted or signed, is creating a capitalization or "cap." table illustrating the ownership of the company.

Startup - Fundraising

August 5, 2014

How to Prepare for and Win a Pitch Competition

The second annual SXSW V2Venture pitch competition took place on Wednesday, July 16 in Las Vegas.

road through mountains

July 18, 2014

Vesting Basics - What are typical vesting schemes?

In a previous Founder Tip of the Week, I discussed what vesting is. In this Founder Tip of the Week, I will discuss some common vesting schemes. Employees The norm for options granted to employees is that they vest ratably monthly over four years.

Startup - Fundraising

July 8, 2014

Startup Funding 101

Just as an individual founder has their own style when running a company, each has her/his own preferred funding strategy. Check out the infographic below which identifies four funding styles founders typically use to launch and grow their startups.

road through mountains

April 14, 2014

Seeing the Big Picture

When starting a new company, it’s easy to focus entirely on the business you are building, but it’s also important to make sure that you see the big picture.

Startup - Intellectual Property

March 6, 2014

NDAs Decoded: What They Are and When to Use Them

A nondisclosure agreement (or "NDA") is a contract illustrating how confidential information will be shared and protected by two or more parties.

Startup - Equity Compensation

February 19, 2014

The Double Edged Sword: Why Founders and Investors Should Avoid Fixed-Multiple Change of Control Premiums in Convertible Note Financings

In a convertible note financing (or an increasingly popular SAFE financing), the change of control premium—the benefit given to a lender if the company has an exit before the notes convert—is an easily overlooked term. This is because it is rarely applicable, especially when the financing is a seed-type investment.

Startup - Equity Compensation

February 12, 2014

The Problem With Percentages

Unfortunately, too often I hear founders say things like “I promised her options for 2% of the company,” or worse, we see statements to that effect in employee offer letters or other agreements. In the worst cases, founders will even expressly agree to issue an investor or service provider a “fixed percentage” of the company’s ownership going forward.

Startup - Governance and Risk Management

January 21, 2014

A Start-up’s First Office Lease Agreement – Focus on the Economics

Nearly every start-up begins in a garage, basement or home office. Some of today’s largest technology companies fall into that category, including Google, Apple, Hewlett-Packard and Amazon. But, at some point hopefully, the start-up outgrows its humble beginnings and needs to lease office, retail or storage space in order to meet consumer demands.

Startup - Fundraising

January 8, 2014

Thinking About Raising Capital Through a "General Solicitation"? Make Sure You Understand the Hidden Costs

The passing of the JOBS Act created much fanfare, especially given the relaxation of the securities laws with respect to the use of "general solicitations." Notwithstanding the excitement from the blogosphere, the revised rules also come with some hidden costs that make using a “general solicitation” in fundraising less attractive.

Startup - Equity Compensation

October 25, 2013

Do I need to file a Section 83(b) election if vesting is imposed on my stock after it has been issued?

In a prior Founder Tip of the Week we discussed how the Internal Revenue Code (the “Tax Code”) characterizes unvested founder stock as not being purchased until it has vested, and that this characterization can have adverse tax consequences for the founder because the Tax Code treats as taxable income the excess, if any, of the fair market value of stock at the time it vests over the purchase price of the stock (the “spread”).

road through mountains

August 2, 2013

Get to Know the Delaware Public Benefit Corporation

A new Delaware law, signed on July 17 by Gov. Jack Markell, allows companies to be formed as public benefit corporations (PBCs), which balance stockholders’ returns, the impact on other people affected by a company's business activities, and the creation of an overall public benefit. Starting on August 1, Delaware companies will be able to form or reincorporate as PBCs, or merge with PBCs.

Startup - Fundraising

June 18, 2013

Include a Capitalization Table in the Term Sheet

Whether a financing, merger or other acquisition, or other major transaction, parties often outline the major provisions in a non-binding term sheet or letter of intent. A principal benefit of this approach it to help the parties identify major areas of disagreement early to avoid wasted expense on additional diligence and drafting of the definitive agreements.

road through mountains

June 11, 2013

Three Steps to Limit Liability and Avoid Veil Piercing

A corporation is a separate entity with its own liabilities for which the individual owners cannot be held personally liable. It is a concept that is old as dirt and right as rain, right? Surely everyone accepts this basic premise of doing business as a corporate entity? Well, perhaps everyone but the plaintiff’s attorney seeking to hold someone with deep pockets financially responsible for his client’s injuries.