What type of incorporation should I use for my business?
There’s no one-size fits all answer here. It is important to understand all structures available, and choose the best structure for your business. When raising capital, investors will typically prefer a C-Corporation structure.
How do I incorporate?
To form a legal entity, you would typically want to work with an experienced lawyer and then file with whatever state you plan to operate from.
How should my co-founders and I split up the company equity?
This is another question that needs to be answered on a case-by-case basis. While we cannot give you any hard and fast rules as to how your company should split equity, it is generally not advisable to make an even 50/50 split, as it can lead to a lack of control and motivation. Have an honest, open discussion and don’t be selfish.
This conversation needs to be held early, and put into writing. Once you’ve had this hard conversation, you can focus on the task at hand: starting a company.
How do you know when you’re ready to go full-time with your venture?
This is a tough question for any founder. Many startups are started on the side as a part-time project on nights and weekends. Inevitably, the time commitment will grow as you start to find success.
When determining whether to go full-time, it’s a personal decision that will involve a fair to high amount of risk. How confident are you in your business? How hard are you willing to work? How big of an appetite for risk do you have? What exactly is that risk? Do you have a family to support? If you start this business, how much runway do you have to start making revenue?
We strongly recommend considering all the above questions. In addition, take some time to create an honest assessment of your “worst-case scenario.” If things completely tank, where are you now? Is this worst-case that bad? Many founders will find that the pain of wondering, “What if?” is more severe than their potential worst-case scenario.
How do I protect my idea?
You can file for patents, trademarks, and copyrights. If you have something propriety about your company, you should consider filing for a patent to temporarily protect your business in its infancy to get it up and running.
Should I ask investors or others to sign NDAs before I share my idea with them?
No. Investors will have no interest in signing a non-disclosure agreement, and neither will most individuals. The reason being, if you ask someone to sign a contract agreeing not to speak about your idea, they will need to be consciously aware of that agreement for the length of the contract. That is often far more work than it is worth to hear your idea in most peoples’ minds.
In reality, people aren’t out to steal ideas. They are busy and have their own lives as well, and likely would not be willing or interested to drop everything and try to steal your idea. And even if they were interested in doing so, you should have a few steps on them by that time.
What is the ideal team size?
Founding teams tend to be 2-3 people, ideally with at least one technical cofounder. Having many more founders will get distracting and slow things down.
