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Institute for Entrepreneurship

VENTURE ACCELERATOR

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Managing and Early-Stage Startup

BEST PRACTICES… ESPECIALLY IF YOU'RE WORKING FULL-TIME

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Be realistic.

  • Keeping a FT job gives financial security, until your startup takes off
  • No matter how much you need $, there’s only so fast you can move
  • Choose the right co-founder, hire the right team
  • Raising money is extremely hard, try to bootstrap and grow your business first
  • Starting a business is extremely difficult, remember to celebrate each win

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Be prepared.

  • Research and build an organized plan before diving headfirst into anything
  • Develop a communication flow with teammates
  • Plan a timeline and schedule it out
  • Use the right productivity tools that add value in the areas you need support
  • Understand your realistic time commitments and work-life balance needs
  • Don’t waste money on unnecessary things

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Be strategic.

  • Think about where you want to be in 1, 5, and 10 years from now
  • Separate your day job from your startup
  • Learn to say no to workload you can’t handle
  • Prioritize and be okay with a work-in-progresses
  • It will never be perfect, and it’s much easier to test and build at the same time

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LEGAL Q&A!

Launching a startup can feel exciting and glamorous, but it’s also a tough emotional roller coaster.

Make sure you're willing to put in the work, because no one else will.

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Ownership Agreement

AN INTERNAL DOCUMENT THAT DEFINES HOW THE BUSINESS OWNERS PROFESSIONALLY RELATE TO ONE ANOTHER.

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Ownership Agreements

  • Form of Company
  • Owners
  • Decision Making
  • Transfer of Ownership
  • New Owners
  • Departure of Owners
  • Liquidation
  • Company Organization & Operations
  • Taxes

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Issues to Discuss Ownership

  1. Form of Company – Will the company be an LLC, S Corp, C Corp, etc.
  2. Owners
    1. Who are they?
    2. How much does each own?
    3. How did/will each Owner acquire their share of ownership (investment of cash, payment over time, contribution of personal property, or is it a non-cash consensus decision on the share each owns)?
    4. How is company initial Operating Capital being provided (equity investment by Owners, loans, LOC)?

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Issues to Discuss: Decision Making

  1. Decision-Making

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    • What decisions must be made/approved collectively by the Owners?
      • Annual Business Plan and Budget
      • New Ownership Offer
      • Management Team Assignment, Authority Limits, Compensation
      • Annual Financial Statements
      • Major Purchases, Changes in Business
      • Profit Distributions
      • Assumption of Debt
    • How will Ownership decisions be made (voting by amount of Ownership, percentage approval required)?�
    • What decisions may be made by the Management Team members individually or collectively?
      • Employment Related Decisions
      • Procurement (to limits of authority)
      • Signing Contracts
      • Assuming Debt (to limits of authority)

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Issues to Discuss: Changes in Ownership

  1. Transfer of Ownership
    • Are any transfers of ownership permitted?
    • How will transfers be approved?
  2. New Owners
    • How will new owners acquire their share (purchase, in-kind contribution, award, options)?
    • How will new owners be approved?
    • How will share value be determined for new buyers (book value, market value)?
    • May a non-employee own shares?

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Issues to Discuss: Ownership Divorce

  1. Departure of Owners
      • May a former employee, disabled employee, retired employee, or heirs of a deceased employee continue to own shares?
      • How will the company buy back shares (over time, with interest)?
      • Is there a minimum time of employment required for a departing Owner to sell back shares at an appreciated value (vesting)?
      • What becomes of shares in the case of Owner’s divorce (can ex-spouse receive shares in settlement)?
  2. Liquidation
      • How will liquidation be approved?
      • How will company assets be distributed upon liquidation.

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Issues to Discuss: Operational Excellence

  1. Company Organization and Operations
    • How is the company organized?
    • How will management decisions be made?
    • How will financial records be maintained?
    • How will expenses be approved and paid? Who may sign checks / make purchases?
    • How will owners and employees be compensated?

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Issues to Discuss: Tax Management

  1. Taxes
    • How will the company’s taxes be paid?
    • If individual Owners pay tax on company profits, will a distribution be made to cover this cost?
  2. Print Names, Date, & Signatures
    • Future adjustments to this document will require all outlined decision-making owners to formally discuss, date, & sign

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Articles of Incorporation

A PUBLIC DOCUMENT THAT LEGALLY ESTABLISHES A BUSINESS AS A CORPORATION

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Articles of Incorporation 

  1. Check if your company name is available
  2. Incorporate your company with the State
  3. Create articles of Incorporation
    1. Corporation Name
    2. Address of Registered Agent
    3. Type of Corporation
    4. Areas of Operation
    5. Conflict Negotiation*
    6. HR Hiring Processes*
    7. List of Directors (including their equity)
    8. Future Equity Distribution*
    9. Duration of Operation
    10. Name, Address, & Seal of Incorporating Body

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AoI: Business Overview

  1. Your Business Name
  2. Registered Agent: The person responsible for important communications (think IRS)
  3. Type of Incorporation: This will dictate how you operate
  4. Areas of Operation: Must disclose what you are selling/your services and type of business you’re involved in

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AoI: Conflict Negotiation

  1. How will you handle issues that arise?

What if you can’t come to an agreement?

Who will have the ultimate vote/say?

Will you use a third-party negotiator to settle disagreements? Who?

How long will parties have to come to a decision?

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AoI: Hiring Process

  1. How will you hire?

Where will you source candidates from?

How will you agree on labor needs?

What are your qualifiers for a good job/skill fit in a candidate?

Will you hire friends? If so, what qualifiers?

What if you can’t come to an agreement?

Early-stages: How will you pay them?

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AoI: Equity Distribution

  1. List of Equity Owners: Names, titles, & addresses – AND their equity stakes.

How will equity holders get paid? Owners?

  1. Future Equity Distribution: How will you handle future equity?

What will equity be used (& NOT used) for?

Will you equally dilute or take % from all or some founders/equity holders?

Will you set aside equity for purpose of future investors/equity holders? What percentage?

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AoI: Duration of Operations

  1. Duration of Operation

Will you operate perpetually or for a fixed period of time?

Define the period of time (rough)

Define ideal exit scenario (goal)

  1. Close with Name, Address, & Seal of Incorporating Body (Registered Agent)
  2. Founder/Owner Signatures

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Planning for Success 

WHAT DO YOU NEED TO HAVE IN PLACE BEFORE YOU GET STARTED?

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Privacy Policy, Disclaimers, and Terms & Conditions

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Boost Your Credentials

  1. Licenses
  2. Certifications
  3. References
  4. Associations
  5. Additional Required Credentials

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TOMORROW: Funding Pitch I

  • Structure: 5min Pitch with 5min Review/Q&A from mentors
  • Criteria for Funding:
    • Detailed “need” established
    • Realistic use of funds
    • Appropriate amount established
    • Goals & Metrics outlined
  • Goals: Transparent and educational funding review process

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Business Overview

Timeline, Goals, & Milestones

Team &�Partners

Competitive Advantage/Value Proposition

Solution + Impact

Market Research + Customer Discovery

Business Model + Demo/MVP

Problem

Next Steps�& ASK

ASK

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Next Monday: Workshop

  • Venture Workshop Week 2�Monday, June 5th �9AM – 12PM

Monday topics include:

  • Value Proposition Canvas
  • Brand Strategy
  • Brand Style Guide

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Homework this week…

  1. Finalize 1st Draft of Ownership Agreement & upload to Google Drive
  2. Finalize 1st Draft of Articles of Incorporation and upload to Google Drive
  3. First Mentor Meeting & Venture Status Report
  4. Prepare for Workshop Week 2
  5. Morning Fresh Dairy Site Visit �(Thursday, June 6th)

Watch Micro-Learnings:

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Homework this week…

  1. Finalize 1st Draft of Ownership Agreement & upload to Google Drive
  2. Finalize 1st Draft of Articles of Incorporation and upload to Google Drive
  3. Prepare for Workshop Week 2
  4. Morning Fresh Dairy Site Visit (Wednesday, June 7th at 3:30PM)

Watch Micro-Learnings:

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Thank you!

SEE YOU NEXT WEEK