Startup Equity & Funding: 5 Catastrophic Startup Mistakes

A thoughtful strategic approach to equity structure and allocation is critical for all startups. Yet, over and over again, startups often make avoidable mistakes that can have catastrophic downstream effects. In this #DreamitLive, Managing Director Adam Dakin speaks with Geoff Starr, Partner at Cooley, about five common mistakes and how to avoid them. Geoff has developed great pattern recognition, having counseled hundreds of startups on raising capital and allocating equity.

Table of Contents:

  • 6:00 Common mistakes in allocating equity, how to understand relative contributions

  • 11:00 Controls and restrictions, forfeiture restrictions

  • 28:00 The importance of managing your cap table

  • 30:45 Ways to manage your cap table

  • 34:00 Common funding round types, priced rounds vs. safe notes, what's more appealing to investors

  • 37:00 Mistakes in setting valuation, tying funding to a defensible plan of action

  • 40:30 Setting milestones for investors

  • 44:20 Avoiding complexity on the cap table

  • 50:00 Starting company as an LLC or a C Corp

  • 55:00 When should a founder agree to a valuation cap?

  • 1:06 How much equity should you give to board members or advisors?

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