Departing Directors Board members tend to stay with companies for a relatively long time, but, like employees, sometimes it makes sense for a board  member to leave.  Here is what I try to do when a board member departs: Clear resignation Get a written resignation that makes clear the date of resignation and also includes a… Read more »

What is a Down Round?  A “down round” is a financing in which a company sells shares of its capital stock at a price per share that is less than the price per share it sold shares for in an earlier financing. Why Does it Matter if a Company Does a Down Round? Down rounds… Read more »

One decision to make when incorporating is “How many shares do you want to authorize?”  A common misconception is that the number of authorized shares (which appears in the certificate or articles of incorporation) is necessarily equal to the total number of shares (e.g., to the founders).  However, there is a difference between “authorized” shares and… Read more »

You’ve taken the plunge and formed your business as a Delaware corporation. What do you need to do next? This post, along with the companion piece 8 Legal To-Dos Before Your First Investment, is intended to help you identify other steps you should be taking as you launch your business and prepare to take on… Read more »

UK review by Chris Coulter First time entrepreneurs may be tempted to ask a VC to sign a non-disclosure agreement (NDA) before pitching them or sending information to them. Here are four reasons why the investor may not be willing to sign the NDA, and why the request may harm your chances to secure funding. First,… Read more »

You may have heard people refer to “double-trigger” acceleration.  What are they talking about?  Double-trigger acceleration refers to the partial or full acceleration of vesting of someone’s options or stock based on the occurrence of two distinct events.  Each event is a “trigger” and if both events occur, that constitutes a “double trigger.”  Let’s first take… Read more »

I get questions all the time from clients who haven’t raised convertible debt before. If my clients frequently ask these questions, no doubt there are scores of others who have the same ones. Send me an email at, or send me a tweet at @phwerner if you have a FAQ that you think should… Read more »

Emerging companies often ask: “Is my idea patentable?”  Many of these ideas relate to software.  The patent eligibility of software is again a hot topic in the United States and around the world.  Recent developments in US law have made this an increasingly difficult question to answer. In 2014, the US Patent and Trademark Office… Read more »

Not Just a Question for Founders One question I get asked all the time by a team founding a startup is how to allocate stock among the two or three initial founders.  Often the question is expanded to cover other “founders” who are not prepared to join the team until some milestone is met.  For… Read more »

Many thanks to Libby Hadzima Perkins for her assistance with this article. You and your co-founders have begun exploring a new business idea.  You plan to incorporate, build out a team and raise capital in the future. However, before incorporating you decide to divide ownership in the future company between the founders.  You and your… Read more »