Start-Up Entrepreneur Series: Preferred Stock

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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Unless your new start-up is fully capitalized by its Founders, one of the first questions a new company must ask itself is “How are we going to fund this thing?”.

Last week we discussed the most common preliminary funding mechanism: “convertible debt“.  Today, we’ll talk a bit about the primary form in which institutions invest in start-ups: “preferred stock”.

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Start-Up Entrepreneur Series: Convertible Debt

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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Unless your new start-up is fully capitalized by its Founders, one of the first questions a new company must ask itself is “How are we going to fund this thing?”.

Over the next few weeks, we’ll be looking into different funding avenues available to the start-up entrepreneur, as well as at the various types of investors from which a company might pursue those funds.  And for more in-depth analysis of preferred equity financings in particular, be sure to check out our Financing Term Sheet Deep Dive Series.

Today, we’ll talk a bit about one of the most prevalent forms of early fundraising: “convertible debt”.

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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?

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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.

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Start-Up Entrepreneur Series: Information and Inventions

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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Every new company has (or hopes to have) assets of some kind.  Some are physical. The retailer has his inventory, the service provider her equipment, the tech company its hardware.  For others (or for other parts of the same companies) its intangible. Software, information, prototype designs. But while many companies don’t need to worry about the protection of these “proprietary” assets, for others it is an absolute necessity.

Today we’ll take a look at one of the foundational incorporation documents for these IP-based companies: the Proprietary Information and Inventions Assignment Agreement (“PIIA”).

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Start-Up Entrepreneur Series: Founders Stock

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 the nature of a company’s operational organization through a discussion of its officers and directors.  This week we’ll take a deeper look at another major organizational question (and one whose answer is needed to elect those officers and directors):

“How should the founders split up the Company?”

That question, as it turns out, is difficult to answer before a series of smaller, but equally important, questions are considered.

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Start-Up Entrepreneur Series: Directors and Officers

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 talked about the various documents that make up the governing “law” of a corporation (or LLC).  This week, we’ll talk about the individuals that govern the actions of a corporation: the Board of Directors and Officers.

(Note that because of the inherent flexibility in the LLC structure, a discussion of an LLC’s management at a generalized level is not possible.  Know that an LLC can be organized as we discuss below (and that many do in order to emulate the more understood corporate form), but that it can also be organized in myriad other, distinct ways.)

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