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Startup Questions: Answer the Bell at Our Friday Free-For-Alls

Answering Your Startup Questions During this Challenging Time

We hope that you and your loved ones are, and continue to be, healthy and safe as you navigate the challenges of Covid-19.

Even though the business landscape and our work environments have changed dramatically, we need to lace up our gloves and continue advancing our companies – together.

And, we want to do more to help entrepreneurs continue to advance their companies – and answer the bell – during this challenging time.

Here’s how – Friday Free-For-Alls at the Legal INCubator:

So named because it’s free and on Fridays and all are welcome.  We’ve blocked off each Friday to speak one-on-one with entrepreneurs, founders, startups and growing companies to answer your key startup questions and discuss your challenges.

As startup and deal attorneys, we have seen the good, the bad and the ugly when it comes to founders, formation, funding, M&A and other startup matters.

We want to help you avoid common startup mistakes and point your company in the right direction, especially now.  Each session will be one-on-one with us, so that you have the opportunity to raise your most pressing issues and startup questions.

Startups and growing companies will fuel the recovery – Let’s answer the bell together!

Remember – all are welcome: entrepreneurs, founders, startups and growing companies, whether or not clients of California Counsel Group, Inc.

UPDATE: Friday Free-For-Alls – Startup Questions and Topics Discussed:

Round 1 (Held April 3, 2020)

  • Foreign technology companies and establishment of parent and subsidiary operations in the U.S., including entity types and states of formation (e.g., benefits of Delaware corporation)
  • Seed funding options for startups – convertible debt, SAFEs and priced-equity funding using Common Stock or Series Seed Preferred Stock
  • Pros and cons of debt versus equity funding for early-stage startup
  • Founder Agreements and Stock Restriction Agreements
  • Founders’ equity and ownership restructuring with new scientific founder
  • Stock option awards versus restricted stock grants
  • Cap table basics – authorized shares, outstanding shares, stock option pool and equity ownership dilution from convertible debt and equity funding
  • Advisory Board formation and size and vesting of related equity compensation for advisors
  • Employees versus independent contractors and timing and compensation issues for proposed employee hires

Round 2 (Held April 10, 2020)

  • Growth funding, including financing alternatives, funding toolkit (e.g., pitch deck, executive summary and term sheet), approach and timing and related state and federal securities law compliance
  • Keep It Simple Security (KISS), including debt and equity alternatives, key financing terms and conversion mechanics
  • Funding outlook and alternative approaches for startup funding and likely changes in key financing terms
  • Biotech startup and corporate formation issues, including how to structure founders’ equity, and negotiation and contractual issues relating to drug discovery platform

Round 3 (Held April 17, 2020)

  • Corporate structure and cleanup required for biotech startup to onboard consultants and advisors and prepare for initial round of outside funding, including vesting of founders’ stock and proper contribution and ongoing assignment of IP and work product
  • Insurance to further protect corporation’s operations and next steps
  • Equity capitalization, including restricted stock arrangements and vesting and exercise of outstanding stock options and related contractual provisions and mechanics
  • Review of relative pros and cons of SAFEs (Simple Agreements for Future Equity), KISS (Keep It Simple Security) equity and debt, and convertible debt
  • Independent Contractors and IP assignment provisions in related agreements
  • Commercial agreements, including co-marketing, distribution and development agreements, and related allocation of intellectual property rights
  • Equity crowdfunding and the proposed use of SAFEs, including the key terms to negotiate such as the conversion discount and valuation cap
  • Investor due diligence and next steps to coordinate and organize process
  • Corporate governance matters, including Board structure and best practices
  • Securities law, governance and other compliance issues relating to equity crowdfunding
  • Using independent contractors and compliance with California AB 5

Round 4 (Held April 24, 2020)

  • Business development, marketing and networking strategies to keep startup afloat and finding new areas of business
  • Various corporate cleanup matters relating to do-it-yourself legal startup, including state of formation, founder vesting, stock option grants and related terms and approvals, securities law compliance with friends and family round, and preparations and next steps for seed funding round
  • When to incorporate a medical device company, in this case with a provisional patent to be filed and plan to engage engineers as consultants (the answer is yesterday or as soon as possible)
  • Planning for Series A round, including the financing toolkit (executive summary, pitch deck and term sheet), how to approach investors, how to position financing in compliance with federal and state securities laws

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