Entity Formation

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By Riaz Karamali

This blog post picks up where the last post in this start-up series left off, with the assumption that the start-up has been in incorporated, completed its founders’ round of financing, created an executive summary and pitch deck and is ready to begin the hunt for “angel” investors (as used in this post, the term angel investors will include all types of potential investors in a company’s initial or seed round of funding, including founders’ friends and family, “super-angels” and early stage funds). There are several different structures an angel or “seed round” can take — among them, sale of common stock, sale of convertible notes, and sale of a “light” preferred stock. While ultimately, the investor group may have the final say over the structure of the financing, it makes sense to understand the alternatives in advance and approach investors with a clear plan in mind.…

Continue Reading Starting Up the Start-Up: Approaching the Angel Financing Round

By Riaz Karamali

The first two installments of this blog series examined when to incorporate the start-up and how to run a start-up venture prior to incorporation. Once the founders decide to pull the trigger on incorporation (and most often startups that expect to be looking for venture capital funding will incorporate in Delaware), their next significant set of decisions will usually be with respect to the founders’ round of financing.…

Continue Reading Starting Up the Start-Up: Setting Up the Founders’ Round

By Riaz Karamali

Many social media and social gaming companies have launched products and achieved remarkable viral growth on a relative shoe string, in the process setting a new standard for efficient utilization of capital and human resources. We are frequently approached by new entrepreneurs who are about to launch social media or social gaming ventures and asked to incorporate their startups. In keeping with the mantra of efficiency and economy, we like to take a step back and ensure that the time is in fact right to begin the incorporation formalities. It is possible to go through the incorporation process too early. It is also possible to be too late. Let’s take a quick look at some possible consequences of each mistake:…

Continue Reading Starting Up the Start-Up: When is the Right Time to Incorporate?