Building efficient online businesses
From the category archives:
Question: What are the most tax effective ways for founders to “Pay themselves” for efforts in a startup after the initial startup share allocation round. Is there a more effective method apart from options? Answer: Well, option grants are a tried and true method of post-funding Founder compensation, but not all options are created equal. [...]
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Question: Is it legal and acceptable for a start up to receive donations from fans or well wishers through its website to fund business operations? For example, having a donation section which enables fans to send donations via checks or accepts credit card payment from the website or paypal account. Are there tax implications? Does [...]
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Question: What are the advantages and disadvantages of convertible debt vs. equity? Answer: As we’ve discussed in previous postings, I am very much in favor of the convertible note scenario for non-institutional rounds of financing. To recap, the convertible note structure replaces the sale by early stage companies of equity securities, at a set valuation [...]
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Question: What legal language does a typical disclaimer on a website have to have? (For review websites, product or business reviews.) Answer: The type of disclaimer to be used on a web site is a very fact sensitive issue. You must first establish the nature of the transactions taking place on the website, and then [...]
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Question: What are Important key points for IP Assignment Agreements between employer/service purchasers and employee/independent contractors? Answer: For startup companies, or any company for that matter, that values its intellectual property, making sure that it owns the intellectual property that is created for it by employees and independent contractors is key. Many companies think that [...]
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Question: What is the one term/clause/function you hate seeing in Capital Raising documents for your founders and wish was abolished forever? Answer: I truly despair about “full ratchet” down provisions in the anti-dilution sections of angel/venture capital amended charter documents. Full ratchet provisions grant investors immunity from down rounds by adjusting the conversion to common [...]
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Question: Why would I, as a founder, prefer priced shares (Prefs or Equity) over a Capital Note? Answer: If the context of this question is the Founder’s company doing a capital raise, and the company is a startup (or even a more mature company being evaluated for investment by non-institutional investors), I would prefer to [...]
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Ultra Light Startups featured a Legal Roundtable discussion this week led by three attorneys who specialize in helping entrepreneurs understand the legal complications of starting and maintaining a new business. Jonathan Freedman, Andrew Lerner and Charles von Simpson discussed a variety of topics including when to incorporate, trademarks and immigration and employment issues. Freedman began [...]
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Ultra Light Startups presented a Legal Roundtable discussion Tuesday night designed to help entrepreneurs navigate the tricky business of dealing with immigration. The panel was made up of three attorneys, Andrew Lerner, Jonathan Freedman and Stephen Chin. Freedman and Chin advise entrepreneurs on the legal ins and outs of getting a new company off the [...]
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Attorney Ted Lustig addresses Ultra Light Legal Roundtable Tuesday night’s Legal Round Table presented by Ultra Light Startups featured Ted Lustig, an attorney and partner with the full service law firm known as Seyfarth Shaw. Lustig took multiple questions from a group of more than 30 people as he gave legal advice on starting a [...]
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