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Legal Tips For Startups

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Legal Tips For Startups

  1. Legal Tips for Startups Andy Stack T: @andystack E: andy@andystack.com
  2. My legal adventures <ul><li>Started 4 companies; sold 2, other 2 are still running </li></ul><ul><li>Was operational contact with 13 different law firms </li></ul><ul><li>LLC->C Corp </li></ul><ul><li>IP: Patents, Trademarks, Copyright </li></ul><ul><li>Employment: Hiring/Firing, Stock Plans </li></ul><ul><li>Deals: Angels, VCs, Acquisitions </li></ul>
  3. Legal Issues are Everywhere <ul><li>But what is really important? </li></ul><ul><li>Andy’s Top 3 </li></ul><ul><ul><li>83b Election </li></ul></ul><ul><ul><li>Do your IP assignment and protection correctly from the start </li></ul></ul><ul><ul><li>Know when to call in the experts..BUT Don’t let your lawfirms run your business </li></ul></ul><ul><ul><ul><li>Referees vs coaches </li></ul></ul></ul>
  4. IP <ul><li>What and when to protect? </li></ul><ul><ul><li>Patents, Trademarks, Copyright </li></ul></ul><ul><ul><li>Assets, code, ideas, documents </li></ul></ul><ul><li>What documents are needed with team members? </li></ul><ul><ul><li>Standardize forms, but consider heavy/light versions </li></ul></ul><ul><li>Why focus now on protection? </li></ul><ul><ul><li>Save future time, hassle, valuation </li></ul></ul>
  5. Employment <ul><li>Stock plans, stock issuances, </li></ul><ul><li>83b elections </li></ul><ul><li>Maintaining a clean cap table </li></ul><ul><li>Contractor classification as employees </li></ul><ul><li>What are main questions you have? </li></ul><ul><ul><li>stock for out-of-state and out-of-country employees or consultants? </li></ul></ul>
  6. Deals <ul><li>Financing: priced rounds vs convertible notes </li></ul><ul><li>Acquisitions: what really matters in due-diligence? </li></ul><ul><ul><li>IP </li></ul></ul><ul><ul><li>Contracts </li></ul></ul><ul><ul><li>Licenses </li></ul></ul><ul><ul><li>*Tip: document and save all records of 3 rd party legal issues </li></ul></ul>
  7. Choose your lawfirms <ul><li>Considerations </li></ul><ul><ul><li>Experience in your industry </li></ul></ul><ul><ul><li>Deep bench of resources for specific expertise </li></ul></ul><ul><ul><li>Cost deferrals </li></ul></ul><ul><ul><li>Additional services: funding contacts, etc. </li></ul></ul><ul><li>Andy’s big 2 </li></ul><ul><ul><li>“Street-smarts” of team </li></ul></ul><ul><ul><li>Flexibility with needs and issues of a startup </li></ul></ul>
  8. Manage Your Lawfirms <ul><li>Understand your costs! </li></ul><ul><ul><li>Know when you are being billed and when you aren’t </li></ul></ul><ul><ul><li>Review first few invoices with partner in detail </li></ul></ul><ul><ul><li>Everything is negotiable </li></ul></ul><ul><ul><li>Prepare ahead of time before picking up the phone </li></ul></ul><ul><ul><li>Know all team members and delegate work appropriately </li></ul></ul><ul><ul><ul><li>Should a partner, assoc, or paralegal do this work? </li></ul></ul></ul>
  9. Legal Hacks/Tips <ul><li>Modify existing legal docs yourself; just ask for a blessing </li></ul><ul><li>Don’t freak out at first Delaware tax bill </li></ul><ul><li>Minimize non-employee shareholders </li></ul><ul><li>Stock: RSPAs vs ISOs vs Non-Quals </li></ul><ul><li>$ Spent on US utility patents is worth it </li></ul><ul><li>Consider asking forgiveness vs permission </li></ul><ul><li>Litigation happens </li></ul><ul><ul><li>Generally it isn’t worth the distraction or cost </li></ul></ul><ul><ul><li>Keep communication open and show you are being reasonable to avoid it </li></ul></ul>
  10. Typical Costs (from my experience) <ul><li>$10-12k US Patent, $3k Trademark </li></ul><ul><li>$25k per lawfirm for Series A financing </li></ul><ul><ul><li>Less than $1000 for convertible note instead! </li></ul></ul><ul><li>$250k per lawfirm for small/med acquision </li></ul><ul><li>$3k/mo for general legal costs ongoing </li></ul><ul><li>$100k Patent Litigation </li></ul>
  11. Resources <ul><li>Venture Hacks </li></ul><ul><ul><li>http://venturehacks.com </li></ul></ul><ul><li>Startup Exchange </li></ul><ul><ul><li>http://andystack.com </li></ul></ul><ul><ul><li>Startup Kit link </li></ul></ul><ul><ul><li>Andy Stack </li></ul></ul><ul><ul><li>E [email_address] </li></ul></ul><ul><ul><li>T: @andystack </li></ul></ul><ul><ul><li>C: 650-468-3349 </li></ul></ul>

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