FAQ: What startups should know about the U.S. crowdfunding bill
On November 3, the U.S. House of Representatives passed H.R. 2930 (the “Entrepreneur Access to Capital Act”), a crowdfunding bill that will allow startups to offer and sell securities via crowdfunding sites like Kickstarter, as well as social networking sites such as Facebook and Twitter.
As I discussed in my post, “FAQ: What the new U.S. crowdfunding bill means for entrepreneurs,” this change could be huge for startups and lifts certain securities law prohibitions that … Continue Reading
The legal checklist every startup should reference
I’ve been a corporate lawyer for more than 17 years, and there are certain fundamental legal mistakes that I’ve seen startups repeatedly make (many of which surface when investors are conducting their due-diligence investigation).
Accordingly, I thought it would be helpful to provide a simple checklist for startups that includes links to indepth posts for a more detailed discussion.
Startup checklist:
1. Form a corporation, not an LLC (see post here) or a partnership (see … Continue Reading
Four deadly legal mistakes startups make
A reader asks: My co-founders and I are working on a cool new site, and we’ll be ready to launch in a few weeks. I’ve been reading a lot on the web about incorporation and other legal stuff. We have no money, so we’re going to do the legal ourselves. Assuming we might mess something up, are there any mistakes that can’t be fixed down the road? We know that once we get money in … Continue Reading
Demystifying the VC term sheet: The investors’ option to walk
(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
For the past few months, I’ve been exploring some of the more confusing terminology in VC term sheets. In my last post, I discussed redemption rights. Today, I’m looking at the non-binding and conditional language in term sheets.
VC term sheets are non-binding -… Continue Reading
Should you use an investor’s lawyer?
(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
A reader asks: We’re a startup based in Palo Alto, and we just received a Series A term sheet for a $725,000 investment. The investor is basically insisting we use his lawyer at a big Valley firm to represent us. He said he doesn’t … Continue Reading
Fight! Fight! Are you liable when your employees and customers mix it up?
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: I am starting a company that will put my employees in contact with customers in social situations. Hopefully this will never become relevant, but if there is a physical altercation between my employee and a customer, can the company potentially be liable?
Answer: Any altercation between an employee and a customer … Continue Reading
Where are the lines in employee surveillance?
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: I have had theft of trade secrets in my office. Can I install video cameras or other surveillance measures to view the activities of my employees?
Answer: While spying on your employees happens all the time in movies, if you’re planning to monitor your employees in the real world, it’s best … Continue Reading
What are the rights of minority stockholders?
(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
For the past few months, I’ve been discussing the rights of VC investors in connection with preferred stock financings, such as veto rights, redemption rights, liquidation preferences, Board seats, etc. All of these rights are contractual in nature – that is, they are initially … Continue Reading
Where should you incorporate your LLC?
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: What is the best state to incorporate an LLC? I have a plan for a website in which the only source of revenue will be from ads, so the revenue stream won’t be coming from a particular state. I’ve heard Nevada, based on their tax laws, is the best state in terms … Continue Reading
Demystifying the VC term sheet: Redemption rights
(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
For the past few months, I’ve been exploring some of the more confusing terminology in VC term sheets. In my last post, I discussed conversion provisions, which address the right (or obligation) of the investors to convert their shares of preferred stock into shares … Continue Reading
4 legal pitfalls startup owners must face
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: What types of legal issues do I need to consider when starting my company and how much will it cost?
Answer: As an entrepreneur you have your work cut out for you. There are many of legal pitfalls that you need to overcome, in addition to the day-to-day challenges. A lot, … Continue Reading
How to launch a startup and avoid ending up in jail
(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
One of the most enjoyable (and sometimes complicated) part of working with startups is protecting founders and watching their backs. Not only are there key contractual issues that must be buttoned-down (like vesting and IP assignments), but there are also a minefield of laws … Continue Reading
Cut-and-pasting legal language vs. hiring a lawyer
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: I have a website and can’t afford a lawyer to draft up essential legal notices. I have decided to cut and paste all necessary legal language from a similar website for my site. Is there a problem with this?
Answer: Given the staggering number variables that can play into this, it’s … Continue Reading
Demystifying the VC term sheet: Conversion Rights
(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
For the past couple of months, I’ve been exploring some of the more confusing terminology in VC term sheets. In my last post, I discussed “pay-to-play” provisions, which are designed to provide a strong incentive for investors to participate in future financings. Today, I’m … Continue Reading
How legal is content scraping?
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: I have a business in which we scrape content from other websites to our website. Do we face any significant legal hurdles in doing so?
Answer: It really depends on a number of factors. These days, the legality of scraping is something that’s in flux – and you’ll certainly want to … Continue Reading
How to hire a superstar engineer for your startup
(Editor’s note: Scott Edward Walker is the founder and CEO of Walker Corporate Law Group, PLLC, a law firm specializing in the representation of entrepreneurs. He submitted this column to VentureBeat.)
A reader asks: We launched a consumer Internet site about a year ago, and we’re starting to get some really good traction. We’ve spoken to a bunch of angel investors and they all told us that we need to get an engineer on our … Continue Reading
Legal danger zone: 'Friending' your boss – or your employee
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: I’ve friended a few employees on Facebook, but I’m seeing them admit to a few things in their status updates that, while legal, are clear violations of company policy. Can I discipline or fire them for that conduct, even if it didn’t happen at the office?
Answer: This is one of … Continue Reading
5 things to consider before firing back at online critics
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: My business has been hit with several negative reviews online that I believe are unfair. Can I stop them?
Answer: In general, you cannot stop someone from saying something negative about your company unless they are violating a law, such as libel.
Defamation and/or libel are generally untrue statements that damage … Continue Reading
Ask the attorney: The auto-renewal conundrum
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: In order to more easily collect revenue for my website, I have set up an automatic renewal payment system. Am I legally in the clear to do so?
Answer: It really depends on where you are and/or how you do it. If you are doing it in the right way, auto-renewals … Continue Reading
Not every contract is set in stone
(Editor’s note: Curtis Smolar is a partner at Ropers Majeski Kohn & Bentley. He submitted this column to VentureBeat.)
A reader asks: I have a contract with a company coding my website. During work, emails flew back and forth. She now says that I changed the contract and have to pay more. What can I do?
Answer: An ounce of prevention can be worth a pound of cure. You may preclude or undercut this contention … Continue Reading
