The following chart lists the principal considerations in selecting the form of business entity and applies them to the C corporation, S corporation and limited liability company (“LLC”) entity forms. The considerations are listed in no particular order, in part because their importance will vary with each business formation depending on the nature of the…

Convertible debt is a structure with debt-like features, and converts into the issuer’s equity in certain circumstances. See here for our forms of Series Seed debt documents. Many early stage companies use convertible debt for their initial fundraising.  This article identifies and explains the basic terms of convertible debt.  A few variations on the “classic”… Read more »

Corporations are distinct legal entities owned by their stockholders.  Unlike a partnership, a corporation may be owned by a single person who may (but need not) be the corporation’s sole director and serve as any required officer.  The stockholders elect the corporation’s board of directors but are not otherwise active as such in the management… Read more »

Scenario 1:  You need additional staff for your growing business or an upcoming project, but want to avoid the expense of hiring new employees. Scenario 2:  You would like to set up an intern training program as a means of recruiting and promoting the company. You have heard of other companies using unpaid interns for… Read more »

I often have a discussion that goes like this: New employee:  “I want Founder Stock” Me:  “I see, so you want to buy Common Stock” New employee:  “No, I want Founder Stock, just like the founders received.” Me:  “There is no such thing as Founder Stock, you are talking about Common Stock.” New employee: “I’m… Read more »

Ready for prime time?  Is your story compelling enough to interest venture capital investors? Some businesses, even if they succeed, simply will not get large enough to deliver the kinds of returns that venture investors seek. Do you have demonstrable results? Customer traction? Patented intellectual property? Consider raising a small amount of money from angels… Read more »

Focus on what’s important, negotiate and resolve the important points early, get the deal closed as quickly as possible and get back to growing the company. When you receive a term sheet from a VC for a full preferred stock financing, the abundance and variety of terms might seem overwhelming.  It can be difficult to… Read more »

Focus on what’s important, negotiate and resolve the important points early, get the deal closed as quickly as possible and get back to growing the company. When you receive a term sheet from a VC for a full preferred stock financing, the abundance and variety of terms might seem overwhelming.  It can be difficult to… Read more »

Debt can be less dilutive than equity.Interested? Why you might need to borrow money: Corporate credit cards. Equipment purchases. Working Capital. Growth Capital – add runway before your next equity round at higher valuation. Getting started – outreach Find a banker in this space and get to know how they work. Build the relationship early; start…

Debt can be less dilutive than equity.Interested? Why you might need to borrow money: Corporate credit cards. Equipment purchases. Working Capital. Growth Capital – add runway before your next equity round at higher valuation. Getting started – outreach Find a banker in this space and get to know how they work. Build the relationship early; start… Read more »