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?
