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Category: Legal Technology

Formation options for Colorado Startups

Background reading: The Deflation of Startup Law: Clerky Lies about startup legal fees.  The following are a few points that any startup entrepreneur needs to keep in mind in terms of forming their company from a legal perspective. First, formation is not the same thing as incorporation. Incorporating a company is literally the act of filing a document in Delaware (or another state). It achieves 1% of what needs to happen in a proper startup formation. A full formation involves forming a Board of Directors (or if an LLC, Managers), issuing equity with vesting schedules, assigning IP, forming an equity…

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Why startups hire law firms, not a lawyer.

Background reading: When a startup lawyer can’t scale.  When navigating startup legal issues, it’s very important to learn the distinction between “startup” and “small business,” because it’s not always clear, given that both start out small. When someone says “small business” they are referring to something like a coffee shop, or a restaurant. For the first several years, the customers will be geographically local. If it takes any investment at all, it will likely be 1-2 local “partners” putting in money. Equity likely isn’t used much for compensation purposes, because the much slower growth of its value means it won’t…

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