The Startup
Law Playbook
From starting a company, to raising money, contracting with third parties, and navigating exit strategies, we help founders and leadership teams through every step of the startup lifecycle. We created this playbook as a foundational resource to address some of the most common questions we’ve heard over the years. We hope it’s a helpful tool for your startup journey.
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1.01 - What should you do before starting a company?
1.02 - When should I incorporate my startup?
1.03 - What type of entity should I form?
1.04 - Which state should I incorporate in?
1.05 - What are the formation documents?
1.06 - Should we include a transfer restriction in our bylaws?
1.07 - What does a company’s board of directors do?
1.08 - What fiduciary duties do directors have?
1.09 - What do a company’s stockholders approve at formation?
1.10 - How many shares should be authorized in the certificate of incorporation?
1.11 - What does fully-diluted capitalization mean?
1.12 - What is an agent for service of process?
1.13 - What do I need to consider when choosing a company name?
1.14 - How do founders get their company stock?
1.15 - What is an 83(b) election and why is it important?
1.16 - Do I need to file an 83(b) election if vesting is imposed on my stock after it is issued?
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2.01 - What is equity compensation?
2.02 - Can I pay my employees solely with equity?
2.03 - How much equity do I issue to my employees and contractors?
2.04 - Can I tell employees and contractors they will receive a percentage of the company?
2.05 - What are stock options?
2.07 - What is a 409A valuation and do I need one?
2.08 - Do we need a 409A valuation even though we just had a financing with a set valuation?
2.09 - Which 409A valuation provider should I use?
2.10 - What data will I need to provide to complete a 409A valuation?
2.11 - How long are 409A valuations good for?
2.12 - What’s the difference between an ISO and an NSO?
2.13 - Should a company allow early exercise of stock options?
2.14 - What are restricted stock awards (RSAs)?
2.15 - When would a company use restricted stock awards (RSAs) instead of stock options?
2.16 - What happens if an option holder leaves the company?
2.17 - Can I give an employee a longer period to exercise their option?
2.18 - What is the standard protocol for granting equity compensation?
2.19 - What are typical vesting schedules for equity compensation?
2.20 - Can I reprice stock options if a subsequent 409A valuation is lower than the exercise price?
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3.01 - How much should my startup pay its executives?
3.02 - Do I need non-disclosure agreements (NDAs)?
3.03 - What are the most important terms in NDAs?
3.04 - What is the difference between an employee and an independent contractor?
3.05 - What do I need to know about hiring employees?
3.06 - Can I hire an unpaid intern?
3.07 - Can I pay consultants and strategic partners with equity?
3.08 - How are corporations taxed?
3.09 - My Delaware franchise taxes seem very high – how do I lower them?
3.10 - Does my startup need insurance?
3.11 - Does my startup need an accountant?
3.12 - What annual filings do I need to keep track of?
3.13 - Should we have a Shareholder Agreement?
3.14 - How do I protect my company’s intellectual property?
3.15 - What are Proprietary Information and Inventions Agreements (PIIAs)?
3.16 - Should I create an advisory board?
3.17 - Does my company’s board of directors need to have meetings?
3.18 - How do I take minutes of a board meeting?
3.19 - What is the process for terminating an employee?
3.20 - How should I organize documents relating to my company?
3.21 - How can I save time and money when working with lawyers?
3.22 - What are some common legal mistakes made by startups?
3.23 - What tools are commonly used by startups?
3.24 - What are some other excellent resources for founders?
3.25 - Can I solicit investments using social media or crowdfunding?
3.26 - What is a private placement?
3.27 - Do I need to hold annual stockholder meetings?
3.28 - What is the Corporate Transparency Act and what does it mean for my company?
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5.01 - When should I use convertible notes and SAFEs?
5.02 - What are convertible notes and SAFEs and what are the major differences?
5.03 - What are the major terms in convertible notes and SAFEs (e.g., discount and valuation cap)?
5.04 - Who are angel investors?
5.05 - Should I use a convertible note or a SAFE?
5.06 - What is the difference between “pre-money” and “post-money” valuation cap SAFEs?
5.07 - What should the interest rate for a convertible note be?
5.08 - What transactions force automatic conversion of convertible notes or SAFEs?
5.09 - What happens to the convertible note if it hasn't converted by the maturity date?
5.10 - What happens if the Company is sold before the convertible note converts?
5.11 - What should the maturity date of the convertible note be?
5.12 - Can you have multiple closings in a convertible note or SAFE financing?
5.13 - What does subordination mean in a convertible note?
5.14 - What is a security interest in connection with a convertible note?
5.15 - What should the representations and warranties in the note purchase agreement be?
5.16 - Who can amend a convertible note or SAFE?
5.17 - Who pays legal fees in a convertible note or SAFE financing and how much does it cost?
5.18 - What is a shadow series and how is it used in convertible note and SAFE financings?
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6.01 - What can I do to prepare for a fundraise?
6.02 - Is venture capital right for you?
6.03 - What should my investor pitch deck look like?
6.04 - How do venture capitalists value companies?
6.05 - What does a Series A term sheet look like?
6.06 - What are the most important terms in a term sheet?
6.07 - What are traps to avoid in term sheet negotiations?
6.09 - What do definitive agreements for a Series A financing look like?
6.10 - Are Series A term sheets binding?
6.11 - What do I need to know about paying someone to help me find investors?
6.12 - What are the pros and cons of accepting investments from strategic investors?
6.13 - What is preferred stock and why is it issued to investors?
6.14 - How do you calculate Series A price per share?
6.15 - Can you have multiple closings in a Series A financing?
6.16 - What is a liquidation preference and what is a typical liquidation preference?
6.17 - What are representations and warranties and which ones am I making?
6.18 - What are redemption rights?
6.19 - Why is preferred stock convertible into common stock?
6.20 - When should preferred stock be automatically converted into common stock?
6.21 - What is anti-dilution protection?
6.22 - What are carveouts to anti-dilution protection?
6.23 - What is a pay-to-play provision?
6.24 - What are protective covenants?
6.25 - What stockholder approval is necessary to complete a preferred stock financing?
6.26 - What information rights do investors receive in venture capital financings?
6.27 - What registration rights do investors receive in venture capital financings?
6.28 - What is a market standoff provision?
6.29 - What is a right of first offer (i.e., pro rata right)?
6.30 - What is a right of first refusal and co-sale agreement?
6.31 - What is a drag-along provision?
6.32 - What should the composition of the board be like and how are the board seats allocated?
6.33 - What are board observer rights?
6.34 - What is a management rights letter?
6.35 - What should legal fees for a Series A financing be?
6.36 - What should the terms of the no shop be?
6.37 - What are the conditions to closing of a Series A financing?
6.38 - What does the legal opinion cover?
6.39 - What is Form D and what information gets publicly disclosed in a financing?
6.40 - What should I think about now that I have venture capital funding?
6.41 - What do I need to know about board meetings now that we're funded?
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11.01 - What are the options for exiting your business?
11.02 - What are the primary structures for selling a business?
11.03 - How do companies find acquirors for their businesses?
11.04 - What are the most important components of a letter of intent (LOI)?
11.05 - What due diligence should companies do before they try to sell their company?
11.06 - What is an asset sale?
11.9 - What are the tax differences between asset sales, stock sales, and mergers?
11.10 - What is the process for completing an acquisition?
11.11 - What are the primary documents involved in an acquisition?
11.12 - What representations and warranties will a company have to make in an acquisition?
11.13 - What is representation and warranty insurance?
11.14 - How does indemnification work in an acquisition?
11.15 - How do purchase price adjustments work in acquisitions?
11.16 - What is the diligence process like in an acquisition?
11.17 - What third party consents are required to sell a company?
11.18 - What stockholder approval is necessary to sell a company?
11.19 - What are directors’ duties and what can they do to protect themselves in a sale of company?
11.20 - What does a waterfall look like?
11.22 - What are “parachute payments” and 280G?
11.23 - What is the Hart-Scott-Rodino (HSR) Act?
11.24 - What are California’s Bulk Sale laws and how do they impact acquisitions?
11.25 - What are the risks that CFIUS will block an acquisition?
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