Start-Up Entrepreneur Series: 83(b) Elections

In the Start-Up Entrepreneur Series, I will be taking a deeper look into some of the most common questions early stage founders face in putting together and operating their new businesses.  

The Start-Up Entrepreneur Series will be published each Wednesday morning until conclusion. For more information, check out www.hoeglaw.com or drop Rick a line at rhoeg@hoeglaw.com.

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Two weeks ago, we discussed considerations associated with the issuance of Company stock to Founders.  One of these considerations was the concept of “vesting”. To quote this very blog:

“Vesting” is a fancy legal term for a number of separate, but interrelated concepts related to giving back stock if a purchaser (or grantee) either leaves a relationship with the company (time-based vesting) or doesn’t do what they said they were going to do (milestone-based vesting).

In short, while a Founder receives stock (or “units of interest” in a limited liability company), the Founder is not secure in his or her ownership of that stock until it is “vested”.  Prior to that point, such stock may be forfeited (or repurchased at below market cost) by the Company.

Which raises the age-old question: What about taxes?

Financing Term Sheet Deep Dive: Anti-Dilution

Whether you’ve only recently decided to seek out capital for your business or you’ve already received (or made) your first offer, the term sheet (or “letter of intent”) is an integral part of the process.  

In this series we’ll look to shed some light on the legal language contained in that term sheet by taking a “deep dive” into the most often used terms and how choices made in selecting those terms can affect both Company and Investor.  Check out an overview here.

Financing Term Sheet Deep Dive will be published each Monday morning until conclusion. For more information, check out www.hoeglaw.com or drop Rick a line at rhoeg@hoeglaw.com.

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Last week, in discussing the right of Investors to convert their preferred stock into common, we touched on the concept of “anti-dilution” provisions intended to alter the number of shares that the preferred stock might convert into.

Today, we take a deeper look at this complicated concept.

Start-Up Entrepreneur Series: Non-Competition

In the Start-Up Entrepreneur Series, I will be taking a deeper look into some of the most common questions early stage founders face in putting together and operating their new businesses.  

The Start-Up Entrepreneur Series will be published each Wednesday morning until conclusion. For more information, check out www.hoeglaw.com or drop Rick a line at rhoeg@hoeglaw.com.

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Last week, we discussed agreements designed to protect a Company’s intellectual property.  As part of that discussion, we brought up the concept of “non-competition”;  a provision (or set of provisions) designed to prevent a Company employee or contractor from absconding with the Company’s valuable information.

Today we discuss those provisions in more detail.