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RULES TO STARTUP BY




      5.1.2010
BACKGROUND
Ryan Roberts
• Startup   Lawyer

• Publish “Startup
                 Lawyer”
 startuplawyer.com

• Dallas,TX

•...
DON’T INCORPORATE A HOBBY.
• Incorporatewhen you and your team are ready to make the
 startup a business.

• Spending  cas...
CO-FOUNDER RUNWAYS:
            KNOW THEM.
•   Pre-funding, your startup’s runway likely equals the a co-founder’s shortes...
FOUNDERS SHOULD ALL
         WEAR VESTS.
Typical vesting schedule is “4 Years with a One-Year Cliff ”
        “...25% of t...
A STARTUP LAWYER
REPRESENTS THE STARTUP.

                          STARTUP
        STARTUP
                          LAWY...
DON’T PAY TO PITCH*.

                              • Big  in Japan (ShopSavvy
                                  mobile ap...
TELL “FINDERS” TO GET LOST.

• There is a 99% chance the finder should be registered as a
 broker-dealer with FINRA and the...
A STARTUP LAWYER IS NOT A
LEGAL DOCUMENT GATEKEEPER.

                       • Ifyou do not seek counsel from
 DOCUMENTS

...
STARTUP LAWYERS SHOULD
   NOT CHARGE YOU FOR:
• Initial   Consultation




                                             $
...
OTHER STARTUP LAW RESOURCES
Blogs
•   Startup Company Lawyer (startupcompanylawyer.com)

•   A View From the Valley (mattb...
THANK YOU!

RYAN ROBERTS
@STARTUPLAWYER
STARTUPLAWYER.COM
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Startup Weekend Los Angeles Presentation

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startuplawyer.com presentation at Startup Weekend Los Angeles - May 1, 2010

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Startup Weekend Los Angeles Presentation

  1. 1. RULES TO STARTUP BY 5.1.2010
  2. 2. BACKGROUND Ryan Roberts • Startup Lawyer • Publish “Startup Lawyer” startuplawyer.com • Dallas,TX • USC ’00
  3. 3. DON’T INCORPORATE A HOBBY. • Incorporatewhen you and your team are ready to make the startup a business. • Spending cash to incorporate (via yourself, legalzoom or a lawyer) is a waste unless you are a business. • Reasons to incorporate sooner: (a) IP assignments, (b) Ability to issue cheap founder’s shares, (c) Start long-term capital gains holding period.
  4. 4. CO-FOUNDER RUNWAYS: KNOW THEM. • Pre-funding, your startup’s runway likely equals the a co-founder’s shortest runway. • Do your diligence on prospective co-founders. And keep it up, as co-founder runways can be highly volatile. Founder 1 Founder 2 Founder 3 Startup 0 100 200 300 400 Runway (Days)
  5. 5. FOUNDERS SHOULD ALL WEAR VESTS. Typical vesting schedule is “4 Years with a One-Year Cliff ” “...25% of the total number of shares shall be released from the Repurchase Option on the one-year anniversary of this Agreement, and an additional 1/4th of the total number of Shares shall be released from the Repurchase Option on the corresponding day of each year thereafter...” (Example of annual vesting after the cliff; other option is monthly vesting after the cliff) 100% 75% 50% 25% 0% May 1, 2010 May 1, 2011 May 1, 2012 May 1, 2013 May 1, 2014 Vested Share Amount
  6. 6. A STARTUP LAWYER REPRESENTS THE STARTUP. STARTUP STARTUP LAWYER FOUNDER FOUNDER FOUNDER 1 2 3
  7. 7. DON’T PAY TO PITCH*. • Big in Japan (ShopSavvy mobile app) asked to pay $4,500 for “Top Wireless Innovator” award and potential VC intros. *Paying Nominal Admin Costs OK.
  8. 8. TELL “FINDERS” TO GET LOST. • There is a 99% chance the finder should be registered as a broker-dealer with FINRA and the applicable state securities board. • Penaltiesfor using an unregistered broker-dealer start at the rescission of all investment (i.e. your startup pays back the investors).
  9. 9. A STARTUP LAWYER IS NOT A LEGAL DOCUMENT GATEKEEPER. • Ifyou do not seek counsel from DOCUMENTS your lawyer, you aren't using your lawyer right. • Read available documents to get COUNSEL educated on terms, etc.
  10. 10. STARTUP LAWYERS SHOULD NOT CHARGE YOU FOR: • Initial Consultation $ • Drafting Your Engagement Letter • Multiple Lawyers on a Conference Call • Investor Introductions • Happy Hours, Meals, etc.
  11. 11. OTHER STARTUP LAW RESOURCES Blogs • Startup Company Lawyer (startupcompanylawyer.com) • A View From the Valley (mattbartus.com) Model Docs • Orrick Startup Forms Library (bit.ly/3eQz7f) • TechStars Series AA Preferred (bit.ly/nMXl) • YCombinator Series AA Preferred (ycombinator.com/seriesaa.html) • The Founder Institute’s Plain Preferred (founderinstitute.com/posts/69) • Series Seed (seriesseed.com) • WSGR Series A Term Sheet Generator (bit.ly/hUhUo) • NVCA Model Series A Docs (bit.ly/OAVRf)
  12. 12. THANK YOU! RYAN ROBERTS @STARTUPLAWYER STARTUPLAWYER.COM

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