This Week in Startups

Legal must-haves before raising capital with Becki DeGraw | Wilson Sonsini Startup Legal Basics

Aug 22, 2024

21:21

Snipd AI

Becki DeGraw, a partner at Wilson Sonsini and an expert in startup legal matters, joins the conversation to shed light on crucial legal considerations for startups. They discuss common legal oversights like cap tables and employment agreements, highlighting the risks of DIY legal documents. Becki emphasizes the significance of early legal counsel to prevent costly mistakes. The duo also dives into the intricacies of pro forma cap tables and employee stock option plans, preparing founders for potential mergers and acquisitions.

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Early involvement of legal counsel is essential for startups to navigate complex financing stages and avoid costly delays.

Accurate cap tables and understanding financing structures are critical for startups to secure investment and manage ownership effectively.

Deep dives

Engaging Legal Counsel Early

Involving legal counsel early is crucial for startups reaching significant revenue milestones. Founders often underestimate the importance of having legal representation during key financing stages, which can lead to delays when issues arise. If counsel is only brought in after obtaining a term sheet, startups may face weeks of delays due to necessary cleanups of documents and structures. Planning ahead with legal support enables startups to be organized and prepared, which is essential as they transition into more mature phases of growth.

Intro

3min

Navigating Legal Pitfalls in Startup Financing

12min

Navigating M&A: Management Rights and Carve Outs

2min

Navigating Financial Negotiations and Waterfall Structures in Capital Raising

2min

Navigating Board Dynamics and Fundraising Challenges for Founders

3min

Todays show: Wilson Sonsini Partner Becki DeGraw joins Jason on the latest edition of Startup Legal Basics! In this episode, they break down common legal oversights (5:26), risks of DIY legal documents (9:15), pro forma cap tables & ESOPS (18:31), and much more!

Timestamps:

(00:00) Wilson Sonsini partner Becki DeGraw joins Jason

(1:13) Legal preparations for startups and the importance of early legal counsel

(5:26) Common Legal Oversights: Cap table, IP assignments, and employment agreements

(9:15) Risks of DIY legal documents and safes

(11:53) Cap tables and equity management

(15:49) Impact of mismanagement on legal and financial outcomes

(18:31) Pro forma cap tables and employee stock option plans (ESOPs)

(21:39) Preparing for mergers and acquisitions (M&A) scenarios

Check Out Wilson Sonsini: ⁠⁠https://www.wsgr.com⁠

Check Out: https://www.thisweekinstartups.com/basics

Subscribe to the TWiST500 newsletter: https://ticker.thisweekinstartups.com/