While private companies are free to manage their own books however they wish (as long as they pay their taxes correctly), high-growth startups eventually need to organize their books according to standards known as GAAP: Generally Accepted Accounting Principles. GAAP was created and is maintained by the Financial Accounting Standards Board (FASB) for the purpose of standardizing financial reporting. While failing to us...
It’s nearly impossible to grow a startup with zero capital. For one, you’ll need to show investors that you’ve contributed to your startup financially at some level. Two, you have to present investors with more than just an idea, and the only way you can turn that idea into a product is by having some money to develop it. To ensure that you achieve these two things and make your money go as far as possible, you’ll need...
In order to facilitate fundraising, easily reward shareholders, and protect themselves from legal liability, most sophisticated founders of high-growth startups incorporate their businesses as Delaware C-Corporations. That’s a great first step, but what many founders fail to realize is that it’s only the first one. Right after incorporating, there are several additional steps and ongoing responsibilities that they must...
Deciding how much equity to offer your startup’s team members is confusing and easy to get wrong. Because each startup is different, and each person joins in a different situation, there are no one-size-fits-all rules. To make good decisions, you’ll need to understand the considerations.
Once your startup is ready to seek investment from professional investors, your fundraising checklist should include obtaining the right legal documents. Understanding the purpose of each of these documents and the reasons why they're important will help set you up for success when it comes time to secure funding.
