As almost everyone knows, companies are owned by stockholders and that ownership is represented by shares of stock. However, legal terminology used to describe stock ownership, and how to determine and set up ownership, can be confusing both to new and experienced founders and investors alike. For this blog, we will look at the difference between “authorized” and “outstanding” shares. The number of shares Read More
The First Fork In The Road For Investor-Backed High-Growth Companies
Investor-backed companies face a myriad of critical decisions throughout the life of their business. One of the earliest is what kind of legal entity to establish. As a practical matter, most investor-backed companies will elect to establish themselves as a limited liability company (LLC) or a corporation. This choice will set the foundation for the future and form the basis for liability protection, stakeholder Read More
Stock Valuation Issues
For most high-growth companies, the ability to offer equity to founders, employees, consultants, advisors, directors, and others is often critical for success. Equity-based compensation can align interests, keep everyone motivated to ensure the enterprise’s success, and allow companies that can’t afford to compete on salary to attract top-quality talent. However, to use issue stock, options, or other equity-based Read More
Advisor Compensation
Advisors often play a central role in the success of a high-growth startup. Whether providing technical and operational guidance or making introductions to potential employees, customers, partners, and investors, the right advisor can help accelerate the success of a startup. For several reasons, it is typical for early-stage companies to compensate advisors using equity rather than cash. This blog post assumes that Read More