People often ask me if you should talk to other people about what your idea is or should you have people sign a non-disclosure agreement (NDA). In 40 years of practicing law, I’ve only seen one lawsuit concerning an NDA. If you have a really good idea, meet with a patent attorney, see if there’s something you can file a provisional patent on, which will cost a few thousand dollars. You file that provisional patent,Read More…
The Secretary of State in the state in which you’re incorporated, California for our cases, requires you to file a statement of information each year, which lists your officers and directors in the company. If you don’t file it, they can fine you and suspend you, so make sure that you do this filing in a timely fashion every year. The information should come either to you or to the person who formed the corporationRead More…
It’s important to understand what pre-money valuation and what post-money valuation are when you’re going out to find capital for your company. Pre-money valuation is the value that you put upon your company that you think it is worth. That value comes from how much you’ve accomplished, how far you’ve taken your business plan, how much of your business is proprietary that other people may not be able to take from you, and how goodRead More…
We often have people come to us asking us to sign a non-disclosure agreement (NDA) or asking a client to sign an NDA. An NDA is basically a document that says: “I haven’t heard this idea before. You’re giving it to me for the first time. It’s not common knowledge out there. But I will keep it a secret for you for a period of time.” We have been asked to sign an NDA numerousRead More…
When you’re determining how much stock an individual owns and how much stock you’re going to give up when you go to raise money, we establish a cap table. It is basically a spreadsheet that has the names of the people who own stock, how much stock they own, and what percentage they own. When we issue additional shares to an employee or to somebody who is investing money, we amend the cap table byRead More…
A corporation or an LLC provides a level of liability protection to the people who are involved in the company. The issue is forming properly, issuing stock properly, putting sufficient capital into it ($10,000 would be great to have at the start), then keeping up the corporate formalities. These formalities include: filing tax returns, having annual minutes, issuing stock, issuing additional stock, and keeping track of the money that goes into the company in theRead More…
A non-disclosure agreement (NDA) is basically a document that says whatever information a company is giving someone needs to be kept confidential. We’ve been practicing law for over forty years, and we’ve only had one lawsuit concerning an NDA. They’re not very strong documents. What we advise you do is go out and see if there is any information that you have that can be protected — whether it be with trademarks, patents, or copyrights.Read More…
You need a person on your team to be the “chief money man.” This person should be able to take your really good idea and the stories behind it and translate it for the investors that you’re looking for in a way that they can understand and in a way that will make them want to invest in your company. This is an important person to have involved in your company. If you don’t haveRead More…
When a new startup goes out to seek money for the first time, they often can’t get a high enough valuation to make it worthwhile to raise money. Instead of taking money as purchase of stock and equity, you will often take it as convertible debt. The way convertible debt works is you give out a promissory note to the person who is investing the money which converts over into equity at some future event,Read More…
When you start a new company, we are often asked about creating a buy-sell agreement in case somebody leaves the company or in case you want to remove somebody from the company. The issues are quite complex, and it is a much more difficult agreement to put together and get signed than almost any other agreement when you are starting a company. Usually when you start a company, we put in a right of firstRead More…
