Can I Be Held Personally Liable for My Startup’s Debts? One of the main reasons founders form an LLC or corporation is to separate business risk from personal risk. The expectation is simple. If the company fails, creditors can pursue company assets but not the founder’s house, savings account, or personal investments. In most cases, […]
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Which Decisions Need Board, Stockholder, or Investor Approval at My Startup? In the early days of a startup, decision-making is simple. The founders discuss an issue, make a choice, and move forward. That changes after outside investors come in. A financing round introduces new governance requirements, new approval rights, and new stakeholders who may have
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Who Counts as a Major Investor in My Term Sheet, and Why Should I Care? You are reviewing a term sheet and come across a phrase that looks harmless: “Major Investor.” It appears to be little more than a definition. Most founders skim past it. That can be a mistake. The major investor threshold often
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Which New State Privacy Laws Does My Startup Have to Follow in 2026? You have customers across the United States. Your startup is not based in California. You do not consider yourself a data broker. You are focused on product development, customer acquisition, and growth. Privacy compliance feels like someone else’s problem. That assumption is
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What Is a Management Rights Letter and Why Does My VC Insist on One? You are preparing to close a financing round. The term sheet is signed. The investment documents are nearly complete. The wire transfer is ready to go. Then one of your investors sends over a document called a Management Rights Letter (MRL).
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What Are Registration Rights and What Do They Force My Company to Do? You signed an Investors’ Rights Agreement during a financing round several years ago. At the time, most of the discussion focused on valuation, board seats, liquidation preferences, and dilution. Registration rights received very little attention. They felt like provisions that might matter
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What Am I Really Paying in Management Fees Over the Life of a Venture Fund? You review a venture fund’s offering documents and see the familiar phrase: “2 and 20.” The 20 percent carry gets your attention immediately. It sounds significant, so you spend time evaluating whether the General Partner (GP) deserves that level of
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Should My Startup Switch From Stock Options to RSUs as We Scale? In the early days of a startup, stock options are usually an easy decision. The company’s valuation is low. Strike prices are low. Employees see meaningful upside if the company succeeds. Founders can offer equity packages that feel exciting without creating immediate tax
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Should I Reincorporate My Startup Out of Delaware in 2026? You keep seeing the headlines. Major companies are talking about leaving Delaware. Commentators are debating whether Texas or Nevada offers better alternatives. Social media is filled with discussions about “DExit,” the growing conversation around companies considering a move away from Delaware incorporation. Naturally, founders start
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Should I Make Investors Sign an NDA Before I Pitch My Startup? You have spent months building your startup. The product is taking shape, customer conversations are promising, and you are finally ready to start meeting investors. Before sending your deck, a question comes to mind: Should investors sign an NDA first? For many founders,
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Should I File a Provisional Patent Before I Show My Startup’s Technology? Your product is almost ready. A conference demo is coming up. Investor meetings are scheduled. A product launch announcement is drafted and waiting to go live. Everything feels aligned. Then someone asks a simple question: “Have you filed a patent application yet?” Many
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Do I Owe Taxes in Every State Where My Remote Employees Live? You raised a financing round, the team is growing, and you are hiring talented people wherever they happen to live. The arrangement seems straightforward. Your company is incorporated in Delaware. Your headquarters are in one state. Payroll is running smoothly through a modern
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Do I Need a Terms of Service or Customer Contract Before My First Customers Sign Up? You are about to launch. The product is live. Customers are visiting the website. Someone is preparing to enter payment information and create an account. Then a question comes up: Do you actually need legal terms before customers start
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Do I Have to Collect VAT When My Startup Sells Software Abroad? You just landed your first paying customers in Europe. Your company is incorporated in the United States. Your bank account is in the United States. Your team is in the United States. Naturally, you assume European tax rules are somebody else’s problem. That
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Can I Hire Employees in Another Country Through an Employer of Record? You found the perfect candidate. The problem is that they live in another country. Opening a foreign subsidiary to hire a single employee can take months, require significant legal work, and create ongoing compliance obligations. For an early-stage startup, that often feels unrealistic.
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Can I Claw Back Carry From My Fund Manager If Later Deals Go Bad? Your fund had a great start. Two portfolio companies exited early and generated strong returns. The General Partner (GP) carried interest distributions, and everyone seemed pleased with the results. A few years later, the picture looks different. Several remaining investments underperform.
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An Investor Wants to Fund Me Through an SPV. What Does That Do to My Cap Table? You are raising a financing round. A prospective investor offers to participate through a Special Purpose Vehicle (SPV). Instead of dozens of individual investors appearing on your cap table, only one entity will hold the shares. The investor
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How Do Change-in-Control Provisions Affect Employees During an Acquisition? Your company is in acquisition discussions. The buyer’s legal team is reviewing employment agreements, equity grants, and executive compensation plans. During diligence, they identify an issue: several members of your leadership team have single-trigger acceleration provisions. Suddenly, a clause that seemed harmless when it was signed
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What Is a Zombie Fund and What Rights Do Limited Partners Have When a Fund Stops Investing? You invested in a venture fund expecting a fairly predictable lifecycle. The General Partner (GP) would deploy capital, support portfolio companies, pursue exits, distribute proceeds, and eventually wind down the fund. Years later, the fund is still operating.
What Is a Distribution Waterfall in a Venture Fund and How Does It Affect My Returns? You invested in a venture fund several years ago. One of the portfolio companies just announced a successful exit. Headlines are positive, the valuation looks impressive, and you start expecting a meaningful distribution. Then the distribution arrives. The payment
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