Helping with legal issues that pop up for portfolio companies.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34740612)

All that sounds pretty chill to me.

Litigation sucks.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34740873)

even if you dont like the firm, vc in house recruiters call vc in house gcs first (and only, basically)

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34741112)

grinding out 20-50k per financing is a hard hard way to build a long term practice

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34741014)

We have company-side clients but I don't really like the work as much. It's all very routine, lots of it is urgent, lots of education, some big egos. If I were trying to build an empire, though, 200 VC-backed companies is a better goal than is representing a handful of VC funds.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34741053)

but yeah that is basically how midlaw SV firms survive, doing similar but maybe not as complex work at cheaper rates

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34741029)

<3

ChadChadChadington@gmail.com

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34740946)

https://www.youtube.com/watch?v=p8nFR4sXkFE

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34740638)

Whole point of the home office is you can stim out hard in there in there FULL NUDE while you paper your deal.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34741066)

No, I didn't even know what this was in law school. Thought I wanted to do M&A (not for any good reason, though).

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34741890)

Assuming no exposure to venture funding, any good resources or just punt shit to outside counsel on the next financing round and let do?

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34741920)

Yeah, I'd get good counsel. Doesn't have to be one of the 5 biggest names, but you do want to make sure that you don't have associates who don't know shit working on your deals and juniors churning 2 days' of hours "reviewing" your docs for typos. If you go with one of those firms that offers $100K of free hours, those things are going to happen. I'd avoid that and just pay for the work.

Not sure about resources. Anything of substance is going to be handed to outside counsel (financings, separation agreements, big option plan matters). As a very practical item I'd automate what you can, like option grants, cap table matters -- either through WSGR's (or another firm's) software or eShares -> Carta if your firm doesn't have in-house software.

My biggest pet peeves with company-side clients is when they don't ask for advice because they saw someone say something on, e.g., Quora (e.g., we need RSUs! we need super-voting common stock!) or read that Zuck or Elon Musk did something a certain way and they should, too, and when everything is a fire drill for them -- e.g., at 2 p.m. "can I get this [totally non-urgent thing] by COB?"

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34742086)

Bigger Q is being a GC at a successful (but non-unicorn) startup a decent play relative to staying at a firm (which I hate) or going in-house at some other tech co.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34742213)

And you're right that you'd almost certainly be canned in connection with the exit. I'd keep in touch with your current employer and also be friendly with counsel to the startup so that they can be on the lookout to help you land softly after the exit.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34742288)

What do you mean by savvier law firms? Presumably post-exit, going back to a firm isn't an option, so its trying to land another GC/in-house gig as the only realistic option?

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34742459)

1. startup is currently a DE LLC, and we're looking to move over to a C-Corp in preparation of outside capital. We are pre-revenue and no contracts (aside from some NDA's) have been signed yet. LLC doesnt have a company agreement, and three founders have been sloppily paying company expenses from personal credit cards, etc. my thought is that we dissolve the LLC and start a new DE C-Corp rather than do a conversion. agree? how would you treat the expenses incurred by the three founders? can the founders still take the losses (what they spent - which is not proportionate to their equity stake in the entity) on their personal tax returns?

2. in forming the DE C-Corp, thoughts on clerky.com vs. the "public forms" offered by Cooley (Cooley GO), Orrick, etc.? I'm literally new to this field, so i def need some help - which is why I'm looking at clerky. but is there another route to take?

3. Who would you recommend as solid counsel to assist without crazy rates?

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34745583)

1.b. Re: the expenses, it depends what they want. If they want the money back, then just do a very simple (1-page) promissory note with a 3-year term and the lowest interest rate permitted by law (short-term AFR). If they don't care about getting the money back, then I'd issue them SAFEs in the purchase amounts of the expenses paid to date. Up to you but SAFE with a reasonable discount (20%?) and an MFN is probably best/most flexible for this - just take the form of SAFE with a discount and add the MFN provision to it from the form of SAFE with an MFN.

1.c. I don't know. I'd seek tax advice on this question. If someone knows someone, great, or if not, one of the firms that advertises as "CPAs for startups." They will have lower rates than lawyers and are more likely to get to the right answer quickly.

2. I haven't compared all of the forms but I have seen clerky's and they're fine -- I'd just use those and wouldn't spend any more time thinking about this. I've directed potential clients to them when it didn't seem to make sense to pay our firm a few $k to do the same thing. There's always a chance that investors will want amendments, but you can deal with that then.

3. Do you really need outside counsel now? I'd almost wait until you get a term sheet (the first draft, not something that you've signed). There's nothing you're going to screw up so badly at this point that you need counsel. My throwaway is jim_kellyxoxo@hotmail.com if you want recs (not myself) in the future.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34745689)

1a - no IP assignments. finalizing the IP use agreement now, so it will be easy to just change the grantee entity to the newco rather than the LLC.

1b - this is interesting. so let's say that agreed upon startup capital is 100k. to date, 20k has been spent by founders in a sloppy way - paying with their credit cards on an ad hoc basis, etc. can we just do a prom note for what each founder has spent to date and assign the prom note to the newco? then shut down the LLC and forget about the founders taking losses on their tax returns. then when the newco generates revenue, the founders can recoup what they originally spent.

on this note, how does startup capital work? if three founders and two early employees (all with equity stake), does the 100k startup capital get divided by all 5 based on their respective equity shares? or only between the three founders? fyi, this will be a 34%-33%-33% equity split for the founders and then they will all get diluted slightly to account for the 10% being given to the two key employees.

2. should i go through clerky for creating a cap table, etc? or another software? again, at this point, its pretty simple - 3 founders for initial split of equity, then next level dilution will account for 2 key employees plus 20% option pool (i read this is necessary and we'll use it to award equity to board members, etc).

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34745753)

1a - Sounds good. Just make sure that the IP assignment is backwards-looking (i.e. that it picks up IP related to newco's business that was created prior to the date of the IP assignment / formation of newco). This can always be fixed, but better to get it right.

1b - I really don't know -- don't want to say something wrong and have some tax hit. A CPA (or maybe company-side attorney) would be more knowledgeable here.

Sorry - not sure what you mean by startup capital. Do you mean what's in the LLC's capital accounts?

2 - Google Sheets is fine for the simple cap table that you're talking about. When it's time for a 409A, sign up for Carta (fka eShares).

You mention an option plan and I said before that you can't really screw anything up at this point -- the one thing that you can screw up is not filing a 25102(o) with California for your option plan if you have grantees in California. When you adopt an option plan and issue options (the first time, not every time), make sure that you file the 25102(o) within 30 days and also that the company's shareholders approve the option plan within 1 year -- not doing those are problems.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34745861)

1. Have them pay cash for the par value ($0.0001 * # of shares), pay a little bit more for the shares (maybe $0.0009 * # of shares) in the form of assigned IP. Don't assign the rest of the cash above as consideration for the shares because that will upwardly impact the FMV of the shares, which is undesirable for option grants.

2. For the balance (i.e. $33K or $34K - the nominal cash paid for the shares), I'd issue a SAFE to them. One with a reasonable discount and a MFN. If they want this money back near-term, then issue a promissory note (not convertible) for 3 years with interest at the short-term AFR or some other low rate.

3. Make sure they file 83(b) elections re: their shares if the shares are subject to vesting (and they should be subject to normal vesting -- clerky's form RSPAs have this as an option).

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34746003)

Honest truth is that this stuff is super relationship based. Unless you come through a trusted intermediary it is super hard to get the attention of reputable investors.

(http://www.autoadmit.com/thread.php?thread_id=3804804&forum_id=2#34746019)