Is There One Right Way to Build a Startup?
Building a startup is a huge undertaking that requires serious effort, time commitment, and resources. Most startup operations services focus on a specific aspect of the startup process, such as hiring an attorney, creating documents, or filing taxes. Some companies offer more full-service platforms, but these platforms tend to provide too many options and not enough structure or guidance, leaving startup founders to make mistakes. Founders need more than just tools and services; they need a place where they can go to start their journey off right and ensure that they have the support they need to do everything correctly as their journey progresses.
Introducing Company-as-a-Service: a new way to launch and grow a startup
With Gust Launch, Gust is introducing a new category of business known as Company-as-a-Service (CaaS). Company-as-a-Service is a subscription-based delivery model that helps founders build high-growth companies the right way, from start through investment and operations. CaaS supplies the critical components founders need to create a fully-functioning business in the form of integrated, scalable packages designed to meet the needs of a company at each stage of its life.
With Gust Launch’s comprehensive CaaS platform, an entrepreneur embarking on a new, high-growth venture no longer has to spend precious time on the operational aspects of creating an investor-fundable enterprise. Just as a cloud-computing platform such as Amazon Web Services frees you from the need to buy, maintain, and manage your own computer servers and the complex software that runs them, Gust Launch frees you from the need to research, select, integrate, and manage the host of financial, legal and equity services that are both (a) absolutely essential to underpin a high-growth business, and (b) ridiculously easy to get wrong. By standardizing key process and providing the appropriate resources and support for them, Gust Launch makes starting a company much easier and sets it up to be more successful.
Founders need help navigating the challenges of building a startup
Most founders may have a general idea of what goes into building a company, but chances are they are not aware of all the specific legal and financial components that make up the process, nor do they have a handle on which components are the most critical. The first big dilemma founders usually face is trying to decide what type of legal entity is right for their startup. While they would normally have to make their own choice among several incorporation types, with Gust Launch, the decision is clear; if a company wants to be investor-friendly and poised for high growth, there is only one option for incorporation, and that’s a Delaware C-Corporation. The C-Corporation structure enables founders to sell stock to investors, grant options to employees, and establish vesting schedules. With Gust Launch, all of the proper legal documents are available in one place and don’t require any modification because they’re already written with professional investors’ expectations in mind.
Founders often have no idea what legal responsibilities they have to fulfill after they incorporate, or don’t realize that just “incorporating” doesn’t mean that they actually own anything yet. Among the multiple post-incorporation steps a founder will need to take, the first things to do are to file a foreign qualification and issue stock. Gust Launch streamlines the post-incorporation process so there are no guessing games or risks of mistakes. Every startup authorizes an industry-standard amount of stock and can issue common stock grants right on the platform. Founders will also find all the information, forms and services needed to file a “foreign qualification” so they can start doing business in their home state. Gust Launch explains how important these steps are and walks you through why they must happen in order for founders to continue with their ventures.
Once a founder starts moving full speed ahead with their venture, working with contractors, developing products, deploying to a cloud hosting service, spending money out of their pocket, and raising money from friends and family or angel investors, they’ll typically get bogged down by a host of legal obligations which they’ll try (and often fail) to handle on their own, or they’ll fail to address them entirely and have to deal with legal costs (or worse, audits and fines) down the road. Avoiding bad outcomes means that hiring an attorney is not a “nice to have”—it’s a non-negotiable investment. Unfortunately, finding and hiring an attorney is difficult and costly, which is why Gust Launch connects founders with appropriate attorneys—all of whom also offer some free legal work through the platform.
Finances are no less complicated. Gust Launch includes expense tracking tools for founders to keep a record of their initial expenses, which they can then easily share with Gust Launch’s professional bookkeepers when the appropriate time comes. Bookkeepers ensure that a startup’s expenses are handled properly, and just as in the case of startup legal needs, Gust Launch’s tools and resources don’t replace professionals, but rather supplement them.
When founders are ready to begin fundraising—the quintessential need of every fast-growing startup—their considerations will ultimately become far more complicated. Founders might assume that if they’re raising money from people they know, they don’t necessarily have to follow a specific process as they would for professional investors. However, there is, in fact, a correct way to raise money from pre-professional investors. For most entrepreneurs, the first stop on their fundraising journey is a friends and family round. Increasingly, the industry standard fundraising instrument for friends and family rounds is what’s known as a SAFE, short for “Simple Agreement for Future Equity.” But while a founder’s friends and family may be willing to back the fledgling startup using a simple agreement, professional investors typically require a higher level of protection and documentation before they are willing to write a check. That’s why Gust Launch’s SAFEs easily roll up into investment-standard Convertible Notes specifically designed to ensure that founders who raise money from pre-professional investors won’t have difficulty fundraising from professional sources later on.
Having successfully established their company, with operations in place and some capital available, founders have to determine how they’re going to spend their money. Most founders at this stage decide that if they are going to build a truly venture-fundable business, they will need to expand beyond the founding team and outside contractors. They will need to hire employees. From every operational perspective—legal, financial, equity, and regulatory—everything changes the moment a startup brings on Employee #1.
High-growth companies need to ensure that everyone on the team knows that when the company does well, they will do well, but employee equity works differently from founder equity. Instead of giving employees outright grants of stock, industry-standard practice is to grant them stock options in addition to their cash compensation. In order to grant options the right way, founders need to create a comprehensive Equity Incentive Plan that is legally sound. Gust Launch helps founders build and administer an EIP that meets all of the necessary legal requirements and costs much less than a law firm would charge to create.
With so many different considerations and steps along the way, and without the proper knowledge and expertise, founders can very easily make mistakes right out of the gate. By removing unnecessary choices and giving founders a clear direction, Gust Launch gives founders the freedom to focus on growing their startup rather than trying to become legal or financial experts—and prevents them from making many mistakes along the way.
As the world’s first Company-as-a-Service platform, Gust Launch supports the high-growth entrepreneur every step of the way with expertise and tools designed specifically for their needs. By providing a comprehensive, industry-standard, best-practice platform for founding, funding and operating high-growth companies, Gust Launch handles the operational aspects of scaling a startup from concept all the way to investment.
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This article is intended for informational purposes only, and doesn't constitute tax, accounting, or legal advice. Everyone's situation is different! For advice in light of your unique circumstances, consult a tax advisor, accountant, or lawyer.