Closing Time Podcast

Startup Incorporation 101: Everything You Need to Know

Mar 13, 2024

The podcast delves deep into startup incorporation, covering entity structures, founder equity splits, and vesting structures. It emphasizes the importance of simplicity and open conversations among co-founders. It explores the optimal number of co-founders, equity acceleration, and protections in acquisitions.

40:10

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Quick takeaways

Delaware is a preferred destination for startups due to its sophisticated legal code and court system.

Transparent discussions on equity distribution and vesting structures are vital for a cohesive founding team.

Deep dives

Incorporation Considerations

Incorporation is a critical aspect for startups, with Delaware being a popular choice due to its sophisticated legal code and court system. Delaware offers progressive laws and a specialized court dedicated to corporate matters, ensuring consistency and expertise in business regulations. The state's rich history and well-defined rules make it a preferred destination for startups due to its clarity and legal infrastructure.

Introduction

2min

Healthcare and Technology Conference Anticipation

4min

Navigating Startup Incorporation and Legal Structures

18min

Navigating Equity Split and Long-Term Commitments among Founders

2min

Equitable Equity Distribution in Startup Teams

9min

Exploring Equity Acceleration and Founders' Protections in Acquisitions

4min

You only get to incorporate once, and you want to get it right. In this episode, we dive deep into the process of incorporation for startups. We cover everything from choosing the right business entity structure to splitting founder equity. You’ll want to listen to this before filing your incorporation paperwork!

We discuss:

- How the choice of business entity structure depends on the goals and plans of the startup

- Why you should prioritize simplicity and avoid over-engineering the legal structure in the early stages

- Vesting structures, including alternatives to the traditional four-year vesting with a one-year cliff

- How to have open and transparent conversations among co-founders to determine fair equity splits and relative contributions

- Single vs. double trigger, and the importance of acceleration protection in the event of termination or an M&A exit

- What we think is the optimal number of co-founders

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Closing Time Podcast

Startup Incorporation 101: Everything You Need to Know

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

Incorporation Considerations

Entity Structures & Choosing Delaware

Founding Team Dynamics

Acceleration Protections & M&A Considerations

Remember Everything You Learn from Podcasts