Ruler

Many startups ask us about reserving an option “pool.” The “option pool” is a reserve of authorized but unissued shares of stock that the founders intend to use to compensate future key employees and investors. There is no size of option pool that is right for every company, although you’ve probably read that a “standard” option pool is generally somewhere between 10-20%. Many founders aren’t terribly concerned with the exact size of the option pool, although we think they should be. The size of the option pool has a considerable impact on the valuation of a startup when it raises capital from investors and ultimately the amount of dilution to founders’ shares.

Pre-money Valuation and Option Pools

As we’ve discussed in our…

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mediation history

Mediation is a process where a third-party neutral (the mediator) guides the parties through the negotiation process, and the parties decide on a mutually-beneficial agreement. Mediation is generally a non-binding alternative to litigation that allows parties to work with a neutral to air their grievances and receive neutral feedback on how best to reach a resolution.

Mediation dates back to...

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alternative dispute resolution

The phrase “Alternative Dispute Resolution” (ADR) refers to the different methods parties in conflict use to resolve disputes rather than filing a traditional lawsuit in court. The process can be as simple as meeting to discuss a possible settlement or as formal as an arbitration that can look a lot like a trial. ADR is growing industry, because many...

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Lease Structure Comparison

To understand your commercial lease, it is important to understand your lease structure. While no two leases are really the same, there are a few major types of commercial lease structures that most leases fit into. Understanding the lease structure your lease fits into will help you understand the major economic drivers and issues affecting your lease. And understanding...

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International Trademark

If your business plans to expand overseas (and perhaps even if it doesn’t), it would be wise to register your trademarks in potential countries of expansion in order to protect your brand. Today, we will be explaining how international trademarks work and the process to obtain them for your business.

The Madrid Protocol

The Protocol Relating to the Madrid Agreement Concerning...

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Coffee & Cream

Successful Founders Get Diluted.

We often get asked by founders what they can do to protect against dilution. A few answers:

You can build a crap company nobody wants to invest in. You can build a cool company that doesn’t need to scale. You can pour your own money into the venture, if you have enough of it. You can scale at a slow...

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Bullhorn

A recent Delaware court case discussed what type of action is necessary for directors to resign from a corporation’s board of directors. Ultimately, the court held that director resignations need not be in writing because Delaware Code Section 141(b) is a permissive statute.

 Summary of the Case

The CEO of Biolase, Inc, Federico Pignatelli, thought that Biolase’s board needed more experienced...

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Business Lending

Nearly every business will at some point need to obtain financing to start or grow. While many startups and other businesses will look for investors to fund their business by means of equity investment, most businesses will take on debt either instead of or in addition to investment. The “5 C’s” of business lending are five key elements that...

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COPPA

Are you about to launch a new app with youth appeal? Are you hoping that your new game will trend with tweens? Hold on—you might have to comply with the Children’s Online Privacy Protection Act (COPPA).

The government isn’t known for being on the cutting edge with technology, but the Federal Trade Commission seems to be well aware of apps...

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LLC Member Salary

As we’ve discussed in previous posts, the limited liability company (LLC) entity offers a ton of flexibility when organizing the management and economic structure of the company. Because of this flexibility, the LLC has quickly become the most popular entity to form when seeking limited liability protection for new businesses. One question that often crops up is, “Can I...

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