Inside the Startup
Stefan Nagey @ Capbase, Startup Operations Automation Platform
Nov 02, 2020
Tech Founders & Executives
Nagey recommends best practices for setting up a startup to financially and legally protect the founders and the startup.
- It’s never too early to get your house in order (legal, accounting, etc.). Consider the legal and financial protections you need for the next couple of milestones.
- If you’re going to be fundraising, set up your corporation as a Delaware C corporation, otherwise your investor pool will shrink due to lack of exemptions.
- Don’t give away too much equity; differentiate between founders and advisers.
- Think of incorporating your venture, just like you would register a domain, set up your social media accounts, etc.
- 01:15 – Overview of Capbase (company formation to ongoing management cap table, employee, etc. - contracts, payments, record keeping)
- 03:38 - Key things that make up solid footing: right company formation structure (Delaware C corporation), proper cap table, employee agreements
- 08:45 - Mistakes founders make (e.g. incorporating as LLC/S and losing exemption you reduce tax burden, shrinking investor pool, giving away too much equity).
- 10:37 - Delaware is popular due to familiar case laws and business friendly terms.
- 11:40 - Founder mistake stories (40% to five advisors as cofounders, board authorization)
- 15:35 - How much should a startup do early on? Think of next milestones. Also, ownership and control are never too early to think about.
- 17:23 - Takeaways (see above)