If you're building a million-dollar business, what's a few hundred bucks? (on finding early legal assistance)
LLCs can convert to C corporations pretty easily, but not the other way around.
Locking up IP is important early on
Non-solicitation/non-compete agreements signed among founders and by employees
Lawyers usually can make these documents really easily
- Make sure you pay people you're hiring. No exceptions.
- Withholding requirements
- Use of consulting does not obviate issue
Twitter knocked $100k off the price of a company they bought because the company hadn't paid their founders, and they believed that they might be liable for penalties post-purchase.
Three key questions:
- How to allocate and issue interests among initial stakeholders?
- How to protect against stakeholders that later leave the enterprise?
- To what extent can founders protect themselves against later investment?
On percentages:
- No hard & fast rules
- Map ownership to contribution. Person running the show should have the biggest stake. It doesn't make sense otherwise, right?
- Other constituents include universities & principal investigators (in research)
Question: "At what stage should a founder start thinking about all this alongside putting in work developing their product?"
Answer: "Let the lawyers handle it, focus on your product."