You need a person on your team to be the “chief money man.” This person should be able to  take your really good idea and the stories behind it and translate it for the investors that you’re looking for in a way that they can understand and in a way that will make them want to invest in your company. This is an important person to have involved in your company. If you don’t haveRead More…

When a new startup goes out to seek money for the first time, they often can’t get a high enough valuation to make it worthwhile to raise money. Instead of taking money as purchase of stock and equity, you will often take it as convertible debt. The way convertible debt works is you give out a promissory note to the person who is investing the money which converts over into equity at some future event,Read More…

When you start a new company, we are often asked about creating a buy-sell agreement in case somebody leaves the company or in case you want to remove somebody from the company. The issues are quite complex, and it is a much more difficult agreement to put together and get signed than almost any other agreement when you are starting a company. Usually when you start a company, we put in a right of firstRead More…

There are five key elements to a buy sell agreement: death, disability, retirement, withdrawal, and termination. Each of those elements needs to be thought through. What is commonly covered is death. You buy life insurance on each of the partners. If they die, their life insurance buys out their ownership interest. Each of the other issues is much more costly. If somebody is disabled, you have to buy disability insurance for them. The startup companyRead More…

When you come up with your corporate name, the first thing you want to do is check the url to make sure it is available and then reserve it, so that somebody else cannot take them. You should also reserve names that are similar to your name, so somebody will not try to play off of what you are doing. Once you make those reservations, you then want to check trademark registrations. You can doRead More…

Corporations are taxed federal and state in California, roughly 40% combined together. You get credit for the state taxes against the federal taxes. When you do an S corporation in California, there’s a very small tax. The taxation of the income that is left over at the end of the year goes to the shareholders proportionate to their shareholding interests.  Both the income and the losses are proportionate to shareholding interests. It is not theRead More…

Let’s spend a few minutes talking about going public either through an initial public offering (IPO) or through a reverse merger. A reverse merger is when you have a company that’s already public and you take your company and put it into that company. In both instances, it’s a lot of work. It is costly, time-consuming, and is a good way to make capital, but it does not necessarily solve all of the problems ofRead More…

When we go to put deals together for raising money, a strategic relationship, or even an employee or consulting agreement with key people, those agreements can be written relatively simply. They can be 3-4 pages and cover all of the basic terms that really need to be covered in the agreement. In issues where you haven’t covered it, you figure out a way within the agreement to determine a way to resolve disputes very simply.Read More…