Company Valuation and Dilution — the Minimum You Should Know to Raise Capital and Issue Stock

How should company stock be allocated among founders, employee stock options, and financial investors?   What happens to everyone’s share of the company when new stock is issued?  How do you know how much of the company should be offered to new financial investors?  These are the fundamental questions regarding valuation and dilution that we will be addressing at our next  workshop on April 22nd  hosted by ExtraSlice Smart Space.  Carter Mackley will review basic capitalization table mathematics, dilution, and pre-money valuation metrics.  He will show how to use the Startup Valuation and Dilution spreadsheet (download here)  to analyze the dilutive impact to founders of alternative fundraising scenarios.

When:

Where:

ExtraSlice – The Place for Tech

3600 136th Place Southeast, #300

Bellevue, WA 98006

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Attendance is free of charge.

Seattle Angel Conference Workshop: Washington’s new crowdfunding law—Is it right for your startup?

WHEN:  January 6, 2015 @ 6:00 pm – 8:00 pm
WHERE:
SURF Incubator, Suite 700
999 3rd Avenue
Seattle, WA 98104 USA
Hosted by Seattle Angel Conference COST:  $10

Register here.

ESHB 2023, the Washington Jobs Act of 2014, has been effective since November.  Is this new fundraising mechanism right for your Company?  Carter Mackley will review the new law and compare it with other fundraising methods such as SCOR offerings, Circleup.com, and presenting to local angel groups.  Carter will review the forms for filing a 2023 Offering or a SKOR offering in Washington and tell you how to initiate a crowdfunding offering.  You can read more about the Washington Jobs Act here.

Washington Crowdfunding CLE Lecture

On October 9th Carter will be giving a lecture on the new Washington Crowdfunding law to Washington Small Business Development Center Advisers.  The meeting qualifies for CLE credit for Washington lawyers, who are invited.  If you are a lawyer and interested in attending the CLE, please contact Carter through this website.

Startup Legal Documents Redux

Save the date! Tuesday, July 29, 2014 from 6:00 PM to 9:00 PM (PDT)

Impact Hub, Kirkland Washington

If you missed last month’s startup legal documents webinar you have a second chance.  Carter has been asked to repeat the lecture for Seattle Angel Conference.  This will be a live lecture so space will be limited.  Registration information at this link.  

This will be a nuts and bolts discussion for recent founders or potential founders.  Our discussion will cover:

  • Articles of Incorporation and Bylaws (with brief discussion of when an LLC might be preferred to c-corporation or s-corporation)
  • Stock Ledger, Capitalization Table, Stock Certificates, and their related function.
  • Shareholder Agreement (including discussion of voting agreements, rights of first refusal, co-sale agreements, drag-along, and other provisions often recommended for startups)
  • Founder Restricted Stock, Stock Option Plans, warrants, and other methods for granting equity
  • Founder and Employee Intellectual Property Agreements and Confidentiality Agreements
  • Non-disclosure Agreements (used for potential business partners and investors)
  • Consulting/Independent Contractor Agreements
  • Convertible Notes and other seed round financing instruments such as Y Combinator SAFE (simple agreement for equity) 

Collaborating before you incorporate – risks and benefits

At our Startup Law Talk workshop on September 9, 2013 we discussed the issued raised when founders work together on their startup before actually incorporating a legal entity. 

Before a tech startup is officially incorporated there is almost always an exploratory phase where one or more founders are writing code, producing business plans, and validating concepts and markets.  When more than one person is involved, the ownership status of code and other IP created during this phase is often ambiguous and misunderstandings are frequent.  Well-advised founders will have sorted out these issues with appropriate legal documentation upon formation of the company, but it doesn’t always make sense to form a company before certain fundamental questions about the proposed business are vetted.

The  following issues were covered:

  • When does it make sense to incorporate?  (How long should the exploratory period last?)
  • Ownership status of code, business plans, and other IP created by founders, volunteers, and others before incorporation.
  • What happens if the founders part ways before a company is formed.
  • We will present attendees with a basic partnership agreement that can be used as a preliminary step before incorporating and discuss the ramifications of using it.

 

East Side Incubator is located at 2711 152nd Ave NE – Building 6, Redmond, WA.

Hiring Your First Employee – Basics that every founder should know.

Employees are essential to growing a healthy business, but poor human resource management or failure to comply with regulatory requirements can be one of the most significant expenses dragging your startup down.

At our August 12th workshop, Janelle Milodragovich, formerly with the Foster Pepper employment law group, presented on employment law basics for startups.

Janelle covered the following topics, which every founder should be familiar with:

• Independent contractor v. employee 
• At-will employment 
• Employment agreements (including intellectual property provisions) 
• Payroll laws and best practices 
• Performance management 
• Termination procedures