Decrypted Legal & Consulting

@IanLowe_ Equity crowdfunding does indeed open doors for startups seeking capital. It's a game changer for expanding the investor base, but also filled with legal considerations. To avoid any footfaults, talk to us at decryptedlaw.com

Equity #crowdfunding breaks down barriers, allowing both accredited and non-accredited investors to participate. It broadens the pool of potential backers, giving #startups access to a more diverse range of #investors.

@hamiltonchan Solid advice. It's about setting clear expectations from the start and having those tough convos upfront. Handling investments is tricky but sticking to your guns often pays off long-term. For people navigating this situation, reach out to us at decryptedlaw.com

Today in startup coaching: Increasingly, I am hearing of investors asking for their money back from startups. As a founder, do you push back on this request and incur the ire of an irate investor or do you open the door to an equity buyout, risking a run on the startup? My general advice here is to simply push back on the investor. It was a gamble from the start when they made the investment, they did it with eyes wide open, and they knew (or should have known) that their capital was likely to be unreturned. Founders need fewer distractions, so working with lawyers to enable a buyback is just a waste of capital and energy. Far better to reframe the ask as a test of one’s own commitment to running the startup. If you still want to do it and believe in yourself, keep calm and soldier on.

@TheIconicJMS @Trace_Cohen @jefielding Couldn't agree more! At Decrypted Law we get startups and exactly what they need - no more, no less. Happy to chat with folks about setting the legal groundwork without breaking the bank.

I think a lot of us still do this. Founders should really research and shop for counsel that work heavily with startups. We’re out there. And one of the big things we do is talk them out of spending big bucks on legal. Not a good ROI, and there are definitely things that can be done later.

Not sure what’s going on exactly but half the calls I’m getting from founders this month are for advice on handling their lawyers. Rates going up and startups not happy.

@saasauthority Big +1. The hiring struggle for startups is real. Finding good legal support early on can help set the stage for growth and protect against those poaching woes.

@thedinkfive @Replit Interesting take and one we tend to agree with. Still, while bootstrapping can definitely keep equity in founders' hands, every startup's path is unique. Some might find that strategic VC partnerships open doors beyond just capital.

Bootstrapping a company should be the #1 priority for every entrepreneur in the age of LLMs unless it is deep tech. There is no practical reason why a software startup in the age of tools like @Replit should be raising funds and giving up equity to VC.

@mmsmithlegal @jefielding Funny how numbers get big when big law lawyers are in the room, right? Startups love our flat-fee approach for exactly that reason. Check out decryptedlaw.com

@jefielding I've been seeing it a little when I was on Investor side of deals how much they'd estimate for legal fees. Get me those startups as clients. 😅

@WernerCoCPA A trusted accountant is essential, just like an experienced and trusted legal team. Check us out at decryptedlaw.com

Whether you are a manufacturer, professional service, consumer service, or an individual, Werner & Co. Certified Public Accountants has the accounting, tax, and consulting services you need. Wondering if we’re a good fit? Werner & Co. ~ CPAs (610)770-9236 #LehighValley

@GreaterCLE Big moves in Cleveland! Seed funding is a crucial legal milestone. Well done Xploro Inc.

Xploro Inc., a Cleveland-based pediatric digital health startup, has raised $1.7 million in a seed round led by Boomerang Ventures, a venture capital and studio firm headquartered in Indianapolis. 🔗 okt.to/e3rBEG

@spurwar15 @galeforceVC Feels like you're reading our minds Sandeep! We've got those standardized templates down if needed and our fixed fees keep your cash used in value maximizing ways. Check out decryptedlaw.com.

@galeforceVC That's terrible. We need standard validated templates so early-stage founders spend minimal fees on legal or agreement. Every penny raised or earned needs to go back into building the startup.

Big name law firm just quoted a founder in our portfolio $100-125K for seed docs. 👀🤣🤷‍♀️😝

@pandrewhk @galeforceVC Ouch, sounds like a classic case of 'surprise billing'. At Decrypted Law, we're all about that upfront flat fee life (you know, how almost every other service on Earth is handled)

@galeforceVC China 2021. Top VC. Seed round. Term sheet says variable legal costs "up to $50k" covered by the startup, anything over by the VC. Their boutique legal firm then says on a call they've done 200 startups with the same VC, always charging exactly $50k, not less or more.

@hivemindanthony Realize we're biased, but we of course agree -- if you're looking for attorneys who get startups and talk straight minus the bill shock, we're here at decryptedlaw.com

Build a legal team as early as possible for your startup. Attorneys are an intelligent group of guys.

@adamvietDSM Ensuring the startup scales while keeping its core vision intact can be a real challenge.

If you’re in the venture capital or angel investing world, what have you seen to be the biggest struggle after investing in a startup?

@UnicornExit @0xKeef @galeforceVC Agreed in principle, bu paying 30k in fees sounds like the old way of doing things. We've got fixed fees without the fuss.

@EvergreenMEP Absolutely, Greg. The right legal partner can help founders navigate those nuances and make informed decisions.

The journey to securing venture capital is complex and nuanced. It's not just about getting funding; it's about understanding the implications it has on your business and your role as a founder.

I’ve raised over $300m in equity. Our guests on The Founder’s Journey Podcast have cumulatively raised over $1b. These insights will get you on the right path to raising money:

@danhightower Totally hear you on the cap table pains, Dan. We're all about smart spending and no surprises with legal fees. Check us out at decryptedlaw.com for a different approach.

Dirty secret: cap table software doesn't do the job startups pay it to do. Startups also need legal teams to manage the cap table for the complex jobs to get done. Justifiably so. Equity is complex, and startups need support. But the combined all-in costs are wild, and it’s cap table software’s fault. High cap table software prices force expensive cap table errors b/c companies have less money left in the budget for legal help, so corners often get cut. If AngelList Equity can cut traditional cap table software prices in half, then companies will have more financial breathing room to spend on legal help to ensure their cap table is well-managed. And the savings are not linear. An additional $1k spent on legal support instead of cap table software can save $100k tomorrow. Ask your law firm to refer you to AngelList Equity today for their discounts on our pricing. If your legal team wants to learn more: angellist.com/equity/lawfirms

@BrandiSakaluk Smooth sailing through legal seas is what we do for startups. Check us out at decryptedlaw.com when you hit those waves.

More than 5 million new U.S. businesses were started in the U.S. last year — and startup founders need to be wary of the legal obstacles that could derail their success. advisorstream.com/read/the-legal…

@OHWallStreet Interesting point and exactly why legal due diligence is key for startups. Having the right foundation matters beyond just vibes.

So you work in early stage VC. You’re investing in companies with limited financials and materials. Then your diligence is only based on vibes? You’re investing off of vibes?

@SimDesai Great insights! It's crucial to understand the ins and outs of stock options and other types equity awards before diving in. If anyone's navigating these waters, we're here to help clarify the fine print and secure your rights.

Thinking of joining a startup and getting valuable stock options as part of your compensation package? THINK AGAIN. You might know that those stock options will "vest" over time, typically four years. The idea is that you earn your way into ownership of these options and that the value of the options is a meaningful part of your compensation during that time. The company could terminate you at any time and you would only be entitled to the options that had vested up to the point of termination. The longer you work, the more you get. After four long years, you now have "vested" stock options, which means you now have the right to buy a certain number of shares in your employer, and usually your purchase price (which was set at the time you joined) is cheap compared to what the shares are now worth. Once you "exercise" your options and purchase the stock, you are now the proud owner of a valuable asset, and you have the right to sell to someone else and cash out. Right? WRONG. There's something that nobody told you when you signed your employment offer many years ago and something you never realized all those years you thought you were earning stock in a valuable company. The company (and its Board of Directors) can arbitrarily stop you from selling the shares without giving you any reason at all. But what if you wanted to buy a house, pay for your kids education or just diversify your net worth away from this one big asset? No dice. Found your own buyer? Doesn't matter. The company and the stuffy suits on its board will decide when, and if, you are allowed to sell, and could stop you from selling forever. What if you don't need cash now? Won't your options be worth something when the company IPOs or is acquired? GOOD LUCK. There are hundreds of thousands of technology startups in the world and thousands of unicorns. Only a small handful of these companies went public in 2023. Meanwhile tens of thousands of startups go bankrupt every year. There is a high probability that your company will never go public. Or you could go through what happened to Instacart's employees: be one of the rare few companies to actually go public, only to find that your stock is trading 70% below what buyers were willing to pay you before the company went public. Before you sign that offer, do yourself a big favor. Find out what is the company's share transfer policy. Better yet, get it in writing. There are ways that companies can exert control and set limits on secondary trading. They can let people sell a percentage of their holding every year. They can limit selling to only those employees with 4+ years of tenure. They can work with marketplaces to pre-approve buyers. But if they ban you entirely from selling, then I believe that they are depriving you of your valuable property rights.

@PeterJ_Walker Nailing the employee option pool strategy is key for startups. It's all about finding that sweet spot tailored to your growth stage.

How startups managed their employee option pools last year. Many begin at 10% during the SAFE fundraising stage, then slowly grow the pool as they jump up in valuation. Important to not default to a round number just for convenience

@RayceJWriter Sounds like the kind of out-the-box thinking we like to look at. Check out decryptedlaw.com, we might just help that idea grow.

Looking into if it's at all legal to purchase stocks with gold. I have an idea for a startup.