y combinator startup class #18 : legal and accounting basics for startups
DESCRIPTION
Slide utilisé dans le cours n°18 de la Y Combinator Startup Class de Standford (http://startupclass.samaltman.com/) donné par Ben Horowitz Publiée sur slideshare pour pouvoir être intégrée à l'article http://startupeers.co/y-combinator-startup-class-15-how-to-manage/TRANSCRIPT
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Legal & AccountingBasics for Startups
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Carolynn Levy
Kirsty Nathoo
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What kind of entity?
FORMATION
• Delaware Corporation
• Keep it Simple
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Be Organized• Future due diligence requirements
• Humdrum reality of running a startup
FORMATION
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EQUITY
Allocation Purchasing Vesting
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Allocation
EQUITY
• Execution > Idea (ideas = 0)
• How much equity for each founder?
• Look forward, not backwards.
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Purchasing
EQUITY
• Paperwork Alert!
• 2-Sided Transactions
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Vesting
EQUITY
• Vesting is earning the right to permanent ownership of the shares over time.
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Vesting
EQUITY
• Standard vesting = 4 years w/ 1 year cliff
• If founder leaves, company can repurchase unvested shares.
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Vesting
EQUITY
• Why have vesting?
• Single founders should have it too.
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FUNDRAISING
Logistics Investor Requests Company Expenses
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Logistics
FUNDRAISING
• Priced vs. Non-priced Rounds
• Paperwork Alert!
• Potential Dilution
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Investor Requests
FUNDRAISING
• Board seat
• Advisors
• Pro rata rights
• Information rights
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Company Expenses
FUNDRAISING
• What is a business expense?
• Keeping track of expenses.
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DOING BUSINESS
Founder Employment Hiring & Firing Legitimacy
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Founder Employment
DOING BUSINESS
• Founders are employees of the company and must be paid wages / salary.
• Founder Breakups
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Hiring Employees
DOING BUSINESS
• Paperwork alert!
• Consultant vs. Employee
• Equity for Employees
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Firing Employees
DOING BUSINESS
• Fire quickly.
• Communicate effectively.
• Pay wages / salary up to point of termination.
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Firing Employees
DOING BUSINESS
• Eliminate access.
• Repurchase unvested stock.
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Legitimacy
DOING BUSINESS
• Know your key metrics.
• Balance Sheet & Income Statements
• Tax Returns
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Legitimacy
DOING BUSINESS
• Register as a foreign corporation.
• Financials, Tax Returns, Payroll Taxes
• “Following the corporate form” = Board meetings, management structure
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Legitimacy
DOING BUSINESS
• Proper Contracting
• Insurance
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Biggest Take-Aways• During formation keep it simple, use the
standard, and stay organized.
• Be fair and forward-looking about equity ownership. Have Vesting!
• Stock doesn’t buy itself.
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Biggest Take-Aways• Be savvy about financing instruments,
terms, and common investor requests.
• Founders need to get paid.
• Employees must sign documents to assign IP to the company.
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Biggest Take-Aways• If an employee must be fired, do it quickly
and professionally.
• Know your key metrics.
• Be a legitimate corporation by following the rules and taking it seriously.