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Corporate & Securities Law

The Startup Lawyer

Entrepreneur and Startup Company Law

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Last Entry: April 15, 2020 at 16:22:08

What Happens to the Option Pool if a Startup is Acquired?

Posted on December 22, 2009
The option pool is the amount of common stock a startup reserves (typically at each series of financing) for future issuances to employees, directors, advisors, and consultants. For example, if a startup has 5,000,000 shares of common stock outstanding immediately before the Series A round, a condition of the Series A round may will [...

How to Set Conversion Discounts in Convertible Notes

Posted on December 18, 2009
Convertible promissory notes do not include a stated pre-money valuation. Instead, the convertible note seed investor and startup agree that the pre-money valuation for the convertible note investment will be determined by the pre-money valuation the startup receives at the Series A round...

How Convertible Debt Works

Posted on December 17, 2009
Convertible debt is a type of security frequently issued by startups when raising seed capital. With convertible debt, the startup issues the seed investor a promissory note, for the investment amount, that contains a conversion feature. The conversion feature is the mechanism by which the debt (the promissory note) will convert to equity [...

Christmas @CoHabitat Party Tomorrow Night

Posted on December 17, 2009
CoHabitat in Uptown Dallas is hosting their inaugural Christmas party December 18th from 8pm to 2am. It looks to be a very merry time with music, drinks, and door prizes at 2517 Thomas Avenue. While you don’t have to celebrate Christmas to come to the party and have a grand time, a tacky sweater [...

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Accountants Heart LLCs

Posted on December 17, 2009
I’ve never had a client’s accountant recommend any legal form besides the LLC for a new startup. Even though I heart corporations, I still believe the LLC can be an appropriate legal entity for some companies and ventures. But when it comes to a startup looking to (i) raise capital, and/or (ii) issue [...

White-Label is the New Black for Startups

Posted on December 15, 2009
I’ve been seeing a lot of white-label deals for startup clients in the past couple months. For example, Big in Japan struck a deal with CBS Interactive (CNET) to white-label ShopSavvy as the custom app “CNET Scan and Shop.” Also, ParaTweet came to terms with Royal Caribbean on a white-label custom app used for [...

Is a Term Sheet Binding?

Posted on December 14, 2009
A term sheet is an outline of the deal terms that helps frame the contemplated transaction for both parties. Term Sheets for financings and acquisitions are usually not binding. However, it is quite common to see various sections of the term sheet binding, including: -No Shop or Go Shop Clauses: Can [...

Startup Weekend Dallas Video Recap

Posted on December 14, 2009
Check out this great video recap of Startup Weekend Dallas 2009. �If you weren’t able to make it this Startup Weekend, hopefully you can make it out in April 2010. Share this on Facebook Tweet This! Submit this to Hacker News Share this on del...

How to Split the Startup Founder Equity Pie

Posted on December 09, 2009
Founders frequently ask me to provide guidance on how their startup should split equity between co-founders. My answer is always: (1) It Depends, and (2) Quickly. (1) IT DEPENDS If you’ve ever hired a lawyer, you will (unfortunately) hear the phrase “it depends” several times...

How to Handle Startup Idea Theft

Posted on December 08, 2009
Have you ever been jacked? The only time I recall being a victim of theft was during undergrad at USC. Someone broke into my car while it was parked in the garage of my downtown L.A. apartment complex and the bandit(s) made off with my CD collection...

25 Startup Law Resources

Posted on December 07, 2009
The following is a list of 25 legal websites, blogs, and articles related to startup company legal issues. Even though this site is listed first, the list is not intended to be a ranking by any means. And as a blanket provision, none of the sites or articles represented by the following links [...

Startup Happy Hour Tonight

Posted on December 07, 2009
This is a last minute reminder that Dallas Startup Happy Hour is tonight at the Infomart. There’s no admission charge and the drinks are taken care of by SpringStage and Texas Startup Blog, but for this holiday-month edition of Startup Happy Hour, would you please bring an unwrapped children’s toy? All toy donations [...

CoHabitat ? Startup Weekend Dallas Launch Party

Posted on November 19, 2009
CoHabitat is hosting the official Startup Weekend Dallas launch party this Friday night. A big thanks to Blake Burris for hosting the event. Where: 2517 Thomas Ave. Dallas 75201 When: Friday, November 20th; 10PM ? 1AM CoHabitat is a startup community and coworking space in Uptown Dallas...

2,000 Reasons To Attend Startup Weekend Dallas

Posted on November 09, 2009
It was recently announced that over $2,000 in cash will be given away to the top teams at Startup Weekend Dallas. The prizes will be determined by community vote and some panelists. Register here for Startup Weekend Dallas. Share this on FacebookTweet This!Share this on del...

Startup Weekend Dallas: 1 Day Left For 20% Off

Posted on October 29, 2009
Before you get ready to go trick-or-treating, just wanted to give you a courtesy reminder that the 20% early-bird discount available to those wanting to attend Startup Weekend Dallas expires tomorrow night. Register with the code “swearlybird” before 6pm on October 30th to receive this discount...

5 Common Founder Mistakes

Posted on October 23, 2009
This is a re-post of an article that I wrote about common founder mistakes for StartupLucky.com and Killerstartups.com (not sure if it went out yet). 1. Spending Too Much Time Keeping Your ?Unique? Idea Top Secret. Some founders attempt to have everyone within 25 feet of them sign an NDA...

Startup Weekend Dallas Discount Code

Posted on October 21, 2009
There’s a 20% early-bird discount available to those wanting to attend Startup Weekend Dallas. Register with the code “swearlybird” before 6pm on October 30th to receive this discount. Buy tickets here, or find out more about the weekend event...

Is Your Startup?s Name Available in Delaware?

Posted on October 13, 2009
Delaware has a pretty sweet Name Availability Search Tool via their Division of Corporations. If your desired entity name isn’t available to reserve, then that name isn’t available for a new corporate entity filing in Delaware. If your startup name is available, you can reserve the name online for $75...

Is Your Startup's Name Available in Delaware?

Startup Weekend Dallas

Posted on October 12, 2009
Startup Weekend is coming to Dallas the weekend of November 20-22 at the Big in Japan offices at the INFOMART. I’m one of the local organizers, so I’ll keep you updated as we get closer to the event. If you are interested in sponsoring the event, ping me...

Don?t Create an ?Issuance Pool?

Posted on October 02, 2009
“We want to have 30% of the startup company at exit.” -Anonymous Startup Founders Occasionally, founders will plan out their startup’s lifespan to the point of pre-determining their final equity figure after all hires and investments have been made...

Should Your Startup Hire a Finder?

Posted on October 02, 2009
Raising capital is not easy. While startup entrepreneurs usually have a strong network of people within their own industry, many entrepreneurs lack contacts at venture capital firms and other angel groups. And even if the entrepreneur knows about such funding sources, it’s difficult to get solid intros to such people...

Start-Up Tool Kit From Orrick

Posted on October 02, 2009
Forgot to mention that Orrick released a Start-Up Tool Kit over the summer. From Orrick’s site: Orrick’s Start-Up Tool Kit is a comprehensive set of resources designed to aid start-ups and their founders on the journey from the “garage” to the global marketplace...

Don't Create an "Issuance Pool"

Startup Docs from TheFunded.com

Posted on September 29, 2009
TheFunded.com has just released a “Complete Set of Founder Friendly Legal Docs” via its website. (Hat tip to @bradleyjoyce at the Fort Worth Startup Blog) The sample startup documents, located at docstoc.com, include: - Bylaws - Certificate of Incorporation - Initial Stockholder Consent - Invention Assignment Agreement - Restricted Stock Purchase Agreement - Indemnification Agreement - Initial [...

What is an Option Pool?

Posted on September 29, 2009
An option pool is an amount of a startup’s common stock reserved for future issuances to employees, directors, advisors, and consultants. The option pool is created pursuant to a written plan in order to satisfy Rule 701 which provides a registration exemption from Section 5 the 1933 Securities Act...

You Can?t Spell Corporation Without ?IP?

Posted on September 01, 2009
I watch “Shark Tank” on ABC. I had high hopes for the show, but it’s quickly turning into a disaster. A segment on Sunday’s episode did manage to highlight a key point for startups: TRANSFER THE INTELLECTUAL PROPERTY TO YOUR STARTUP COMPANY In the episode, Coverplay Inc...

You Can't Spell Corporation Without "IP"

Interlude

Posted on August 31, 2009
Sometimes I feel like I don’t have a partner Sometimes I feel like my only friend Is the blog I author, The Startup Lawyer Lonely as I am, together we cry This concludes my blog’s 70-day interlude. Regular posting resumes tomorrow. In the meantime, check out these 2 posts from other great blogs: The One Number You Should [...

Venture Capital Geography & Performance

Posted on June 22, 2009
I’ve always been skeptical of the “you have to be in the Valley” to be a successful startup. Well here’s some potential ammo for those of you being pressured into moving, whether from Dallas to Boston, or Rancho Cucamonga to the Valley: Non-local investments made by venture capital firms based in the Valley, [...

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