Category Archives: Articles

For startup companies inevitably constrained by limited funding and resources, independent contractors have historically provided a cost-efficient supplement or even substitute for their workforce. Without shouldering the costs of training or, in many cases specialized equipment, startup companies can retain the services of skilled professionals to help develop and establish their companies’ core business.
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In the context of raising capital for early stage or start up ventures, what it means to say that a company is “financeable” is generally well understood. Common factors include: the business model looks attractive from a revenue/profitability standpoint, the market opportunity is substantial and there is a strong management team. However, even when these factors are present, there can be others that can render a business unfinanceable
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As a scientist or engineer, you may have daydreams about starting your own company. Better yet, you have already made plans for a technology-based enterprise. If so, you will find yourself in good company. A study conducted in 1997 found that MIT graduates alone had at the time founded 4,000 companies, which employed 1.1 million people and had generated $232 billion worth of sales. If we were to include companies founded by scientists and engineers generally and on an updated basis the numbers would be even more profound. …read more

I often analogize the co-founding of an enterprise to a marriage. It shares many of the same key elements, including a common purpose, shared culture and commitment, and some degree of permanence to the relationship. And, like marriage, conflicts can arise over the so-called “marital assets” if things do not work out in the relationship, even when the separation is otherwise amicable. For this reason, whenever there is more than one founder, one of my first tasks is to help the company work through an allocation of “founder’s shares” and in that connection to raise the possibility of preparing what I characterize as something akin to a prenuptial arrangement.
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Many companies that have traditionally relied on stock options to attract, retain and incentivize employees are now finding themselves wondering how to deal with “underwater” stock options (i.e., stock options whose exercise price exceeds the fair market value of the underlying stock). Many such companies are considering “repricing” their stock options as a way to make their stock options more valuable to employees. …read more

In this difficult environment, many start-ups are deciding which financing vehicle would be best to enable them to continue to move forward toward their goals. The instinct is to jump into a next round of equity financing. Before making this decision, however, a company should consider the potential effects of a valuation event on the company at that moment, including the effects on the prospects of any future equity rounds of financing. …read more

Much has been written of course about the fall of the NASDAQ and associated debacles with “dot-gones” and “dot-bombs.” We won’t bore you with a recapitulation of this old news. But we will give you a sense of what we are seeing first hand in our own practice.…read more