Hiring a team before securing funding
It is almost unheard of that an entire team would be in place before securing a first round of funding. In fact, the primary use of a first round of outside capital is often to hire additional team . The network and reputation that your future investors bring to the table can also be tremendously useful when recruiting new hires. Many entrepreneurs find that they are able to recruit more talented team (and without giving up as much equity) after securing funding from strong investors.
While you don’t need to have your whole team in place, your ability to secure funding will depend in large part on the capabilities of the current team and the confidence of potential investors in your ability to build out the remainder of the team. Venture capitalists are well-known for investing in teams over ideas—after all, it is much easier to pivot the business model than to replace the management team.
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- The right time to incorporate
- Determining the right type of entity to create
- Where to incorporate
- Defining “qualified to do business” and where to be qualified
- Who makes decisions for the company?
- How startups compensate employees
- Foreign employees and their need for a visa
- Who owns your IP
- Licensing IP from a university or hospital
- Retaining a license to your IP
- Non-competes with former employers
- Reserving shares under the company’s option plan
- Allocating equity among founders
- Vesting restrictions on shares held by the founders
- Vesting terms that make sense
- Accelerating vesting on a sale or termination
- Tax implications related to shares that vest
- Rules for foreign founders in the US on a student visa
- Who owns your IP
- Non-competes with former employers
- Take a good idea with you when you leave a company
- Retaining a license to your IP
- Founder compensation
- Founder employment agreements
- Vesting restrictions on shares held by the founders
- Accelerating vesting on a sale or termination
- Vesting terms that make sense
- Tax implications related to shares that vest
- Difference between options and restricted stock
- Tax differences between ISOs and NSOs
- Granting options vs. issuing restricted stock
- Advisory board setup and compensation
- Reserving shares under the company's option plan