Startup Corporate Structure By Sutter Law a San Francisco Business Law Firm

Startup Corporate Structure By Sutter Law a San Francisco Business Law Firm

What is the default structure for a scalable startup. As a San Francisco Business Attorney I get asked this questions over and over again. Yet I always have the same answer. If you are planning on taking accredited investors you generally have to play by the default rules. Theses are the rules but not the explanations, which are offered in other blog post. (1) Entity Choice: C Corporation not an S Corp, LLC, Benefit Corp, or Flexible Purpose. (2) State of Incorporation: Delaware (3) Authorized Shares in Charter: 10,000,000 Shares (4) Type of Shares: Common Stock (5) Par Value of Common: $0.00001 (6) Initial Founders Issuance: 8,000,000 Shares (7) Founders Equity Split: The founder will have to divide the shares depending on contribution and work, (keep in mind there should always be a tie breaker) (8) Vest Founders Shares: (Investors almost always require a vesting schedule “four year with a one year cliff”. (9) Consideration for Founders Shares: Founders will have to purchase their shares, transfer their intellectual property and invest their like. This is the list of the MUST does for scalable startups. If you don’t follow these rules does that mean you will not get investors? Well maybe not, but if you want to have a structure that will pass Venture Capital Due Diligence this is your best bet. If you need legal advise with your startup structure call Sutter Law a San Francisco Business Attorney Firm for a Free consultation....