Price-based antidilution protection
Price-based antidilution protection reduces the dilutive effect on an investor of a later financing at a lower valuation (a “down-round” financing). Price-based antidilution protection of some sort is a characteristic of most preferred stock and operates by increasing the number of shares of common stock into which a share of preferred stock converts (i.e. it [...]
Why founders should assign IP to their company
A problem we encounter with startling regularity is a team of founders where some or all of them have not assigned the relevant intellectual property they’ve developed to their company. This may not seem like a big deal when the value of unassigned IP is hard to determine, but it can become one if the [...]
Introducing VC Ready’s Daily Tidbit
After a long winter’s nap, the VC Ready Blog is back! To kick off the new year, we’re introducing a daily Twitter/Facebook supplement to our blog: the VC Ready Law Group Daily Tidbit. Each week (Monday through Friday) the Daily Tidbit will offer a Twitter-sized (max. 140 characters) piece of information or advice on a [...]
How to determine the right equity structure for your startup
When you’re ready to incorporate, you’ll need to give some thought to the proper equity structure for your business. Because equity is a currency startups can trade for money or services, your company’s initial equity structure should take into account your plans for near-term growth. There are no hard-and-fast rules on the proper equity structure [...]
Employees v. Independent Contractors – What Startups Need to Know
Even if you’ve never run a business before, you can probably imagine that there are many more laws governing the relationship between a company and its employees than between a company and its independent contractors, so you might rightly conclude that it is generally less costly to hire independent contractors instead of employees. What you [...]
Five signs it’s time to get your business organized
All entrepreneurs face the question: “when should I form a company?” Transitioning from partners in an informal collaboration to co-owners of an actual business may seem like a big step, but it is a necessary one that every successful startup eventually must take. Forming a corporation or limited liability company not only protects founders by [...]
Advantages of Convertible Debt in Seed Financing
We’ve already written about the difficulties and risks of trying to put a value on your company too early (here), but how does an early stage company raise money without a reliable valuation? One way is through convertible debt.
Convertible debt is pretty much what it sounds like: debt that can convert to equity. A convertible [...]
Common Contract Terms: Representations, Warranties and Covenants
If you own your own business, sooner or later you’ll encounter a contract with legal terms that will send you scrambling for a dictionary (or a lawyer). We can’t rid the world of legalese (believe it or not, there’s often a good reason for it), but we can try to make reading legal documents a [...]
Our Favorite FREE Networking Events in the Boston Area
With dozens of networking events every month in the Boston area it’s difficult to figure out which events to attend. So for what it’s worth, we thought we’d give our readers the benefit of our experience by sharing a few of our favorite local events. These events make the list because they’re all great opportunities [...]
Founders Agreements
Whether you’re starting a company with your best friend or a few guys you met at a coffee house, you can’t predict how the relationship among Founders will change over time. Many companies (and friendships) have been ruined because a difficult situation arose and the Founders could not agree on how to resolve it, so [...]