Start-up Company - Legal Advice and beyond...Where do I go from here?


1

My question is pretty broad, but I am just wondering the next logical steps to take in establishing and distributing equity in an iOS App Business Startup.

What form or document do I would need to prepare to outline the percentages of ownership between the officers, and if this is something that would also need to be amended in the articles of incorporation?

Also, for business startups seeking investors/angels, is it common for startups to secure business representation without a retainer?

I want to prepare paperwork that I can send off to the officers (all whom live in different states) that outlines the agreement stating something along the lines of each officer's stakes in the company and what the equity share entails.

Equity Distribution Agreements Shares

asked May 24 '11 at 13:47
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Canty Jeffrey
10 points
  • Welcome, @CantyJeffery! A useful feature of the site can be found in the right column under the subheading "Related". These are questions that have already been asked that may pertain to your question. You may find some useful information there in addition to the answers you get directly to your question. – Kenneth Vogt 9 years ago
  • Welcome to the site @CantyJeffery. We are glad you found us and I hope that you leverage the community here for advice and expertise as your grow your iOS Apps Business. I think that you will find some great people -- even make some new friends -- and it will help grow your business. I edited your question to bring it into the format that is the culture of the board. I trust that it kept to your original intent. – Joseph Barisonzi 9 years ago

3 Answers


2

Venture Hacks is a great place to find information about startups, the legal aspects, founding paperwork, etc. Specifically, have a look in the archives.

answered May 24 '11 at 23:48
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Tim J
8,346 points
  • +1 for making it simple by linking to the archives. – Kenneth Vogt 9 years ago

2

There are several questions that you present -- all of them circulate around the desire to make sure that you set up and communicate to your corporate officers the structure of the company properly and in a way that will make

My question is pretty broad, but I am
just wondering the next logical steps
to take in establishing and
distributing equity in an iOS App
Business Startup.

The next logical step is strongly dependent on what you have done to date, what the structure of the entity is, and what type of real value the company has. As mentioned by @Kenneth Vogt, there are a lot of great related questions about how to divide up the equity. Here is one from one of our communities' most respected members.

What form or document do I would need
to prepare to outline the percentages
of ownership between the officers, and
if this is something that would also
need to be amended in the articles of
incorporation?

Assuming that you set up your company properly the distribution of your stock is probably not embedded within your articles of incorporate. The founding paperwork set the overall available shares. You should be able to do the allocation within that amount. If you need to change that overall amount, that will take amendment to your incorporation paperwork. The allocation of that ownership is a decision that will be made by the board and recorded in the board minutes. You will want to make a board resolution, and have a resulting buy-sell agreement. Both of these should be drafted by your organization's attorney. A failure to do this correctly will have significant negative implications for you, the other officers and any dream you have of capitalizing the business. If you can't afford to secure a lawyer to do this yet-- then it is too early in your development as a business to be taking these steps.

Also, for business startups seeking
investors/angels, is it common for
startups to secure business
representation without a retainer?

It is common enough for those business representatives to continue to stay in business. If it is a good idea is a different question. Assuming that you want to know about that -- the cost of representation becomes part of the cost of money. The cost of money will have a direct impact on the resulting business options you have available. Increasing the cost of money by contracting for representation too early is unnecessary. The overwhelming majority of investors (especially angels) whom I have met much prefer to be approached by and work directly with the entrepreneur who they will be investing in.

I want to prepare paperwork that I can
send off to the officers (all whom
live in different states) that
outlines the agreement stating
something along the lines of each
officer's stakes in the company and
what the equity share entails.

That is a great idea. Have a lawyer do it. If you can't afford a lawyer right now -- then document it all as memos of understanding of what will be done -- and have it actually implemented at a time in the future when you can afford to hire a lawyer to do it properly.
answered May 25 '11 at 07:39
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Joseph Barisonzi
12,141 points
  • Joseph, thank you for taking the time to answer this question for me! I really appreciate all of your valuable information! – Canty Jeffrey 9 years ago

0

Regarding your first question, you need to state stock shares in Founders Agreement. Google it for some samples. However, I suggest you get the agreement prepared by some lawyer.
Good luck

answered May 24 '11 at 16:09
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Aviad
281 points

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Equity Distribution Agreements Shares