The Two Percent Rule

I thought I would take a moment to do a level reset on equity percentages and provide some perspective on how much equity you should consider giving out to prospective employees, directors and consultants. The fact is that there are many founders out there that struggle with how much equity to give to executives they want to hire following a seed stage or Series A financing.  There always seems to be a huge rush following a financing to hand out... Read More

Rules of the VC Game, Part 2: The Size of the Fund Matters

This is the second article in a series of posts intended to provide entrepreneurs and startups with background knowledge about venture capital financing. Many entrepreneurs and startups nowadays are very skeptical about taking VC money, and with good reason.  Not only do you have to worry about the terms of the specific deal, but also your company’s short and long term goals and how well they align, or don’t, with the VC’s financial... Read More

Rules of the VC Game, Part 1: The Path to the Door is Important

Do you think you have a killer idea for a new business?  Do you think that’s enough to secure funding for your idea?  Think again.  As the interview with Jeffrey Bussgang, the founder of Upromise shows, the old adage that VCs bet on the jockey, not the horse still holds true. While spending a lot of time on your cutting edge product or service is important, networking and who you know is more important, at least if you would like to secure... Read More

The Difference Between Company Counsel and Investor’s Counsel

In the startup and emerging growth company law practice space, there are two types of attorneys: Those that represent startup companies and those that represent the investors that invest in them, such as angels and VCs. Some big law firms purport to do both. However, upon closer examination, this is not possible in many instances. “Why?” you might ask. Well, because there is an inherent conflict of interest between the interests of... Read More

How to Avoid Costly Founders Stock Mistakes

You have decided to brave the startup waters and form your own business.  You decide that a corporation is the way to go so you file your articles of incorporation with your particular Secretary of State. The articles can be a form you complete online that is provided by the Secretary of State or a document drafted by your attorney. No matter how you choose to file your articles of incorporation, you will need to specify the number of “authorized”... Read More