Wednesday, October 31, 2007
Entrepreneur Colloge follow-up
I just got back from the Entrepreneur College at Wilson Sonsini Goodrich & Rosati (WSGR). It was great! I highly recommend going if you are remotely close to WSGR or a satellite office (see link in my last post about how to sign up).
The speaker today was Mark Reinstra, a partner at the Palo Alto office. He specializes in corporate law, M&A, and VC. Today's discussion was focused on incorporation and stock option pools. The session was quite interactive, with great Q&A brought on by the audience relating to incorporation issues, stock option grants, vesting scheduling, NDA's, employees, liability, etc.
Mark was also available afterwards for more specific questions. I had a word with him about creating an equity pool without incorporating, since we're focused on spending our money on our project and not on legal fees, incorporation fees, and potential tax liability. Something he mentioned, which we knew a little about, is that WSGR offers legal services for startups, for deferred fees, pre Series A. What this means is that they will offer you legal services for free before you raise money and will simply get paid back when you raise your Series A. No money technically comes out of pocket up front. I say technically, because it will eventually come out of the company. A few other companies offer deferred payment terms so you'll have to look into it with whatever legal team you want to represent you.
Bottom line: If you're a typical software startup like we are, you're going to want to incorporate as a C Corp, in California or Deleware, with 20% equity set aside for employees (these are the things I was most curious about).