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Category: Startup Lawyers

Must Colorado startups hire lawyers in Denver or Boulder?

Background reading: Does my startup lawyer need to be local? Checklist for choosing a Startup Lawyer.  In short: no, and anyone who says otherwise is simply lying in order to cut off competition from potentially better fit lawyers with broader geographic footprints.  Virtually every serious corporate lawyer (startup lawyers are corporate lawyers who specialize in early-stage) with a well-deserved brand has clients across city and state lines. Because the vast majority of startups are incorporated in Delaware, Delaware corporate law governs 99% of the issues they’ll deal with. The 1% will be labor/employment issues, which will typically be governed by the…

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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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Colorado startup seed financing structures.

Background reading: The best seed round structure is the one that closes. Should non-SV founders use SAFEs in seed rounds? In terms of how a typical emerging tech company (startup) raises seed capital, there are 3 options that from our experience make up 95+% of rounds: Equity (Preferred Stock), Convertible Notes, and SAFEs (Simple Agreement for Future Equity). If you want a deeper dive into their pluses and minuses, read the above-linked posts. At a high-level, equity (stock) is more complex to negotiate, draft, and close, but has the benefit of greater certainty. Larger rounds tend to be closed as equity.…

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How Colorado startups are often different from Silicon Valley startups

Background reading: Not Building a Unicorn.  The growth path you intend to take for your company dramatically impacts the legal structure you implement on Day 1. Silicon Valley is known for serving as a magnet for entrepreneurs going after huge, billion-dollar markets, and the entire ecosystem there – including Silicon Valley startup lawyers and firms – has been built around those kinds of companies. In smaller ecosystems like Denver-Boulder, Austin, etc., there are also many firms with great “business lawyers,” but who lack the specialized knowledge of technology and venture capital that startups need. Hiring a small business lawyer to…

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Why so many Colorado startups incorporate in Delaware

Background reading: Should I incorporate in my home state or in Delaware? Why does so much of the international business world speak English? Because it is very efficient to have a common underlying language for people in various places to communicate with.  Delaware is the english language of national business law in America.  The same is true with law. Regardless of what your feelings are about federalism in the United States, expecting American companies to learn and navigate 50 different states’ laws would be a nightmare. So the business community has, over time, coalesced around Delaware as a kind of…

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