Legal Aspects of Entrepreneurship (15.390, Monday, Week 12)
new-enterprisesyear-twoWhen to incorporate? Right now. Form a Delaware C Corp; issue stock before you have a pre-money valuation.
Why?
-- Forces conversations about equity.
-- Lets you issue stock.
-- Establishes a vehicle for your IP (the company), allows NDAs, etc.
Non-competes typically last a year in Massachusetts. They are enforceable.
A resource (that real lawyers don't like): LegalZoom
Keep your secrets to yourself/NDAs are overrated: If you're a startup and someone walks off with IP, are you really going to sue them? No, you don't have enough time, money, or energy...
Incorporation with a good lawyer (Editorial comment: Why bother?):
Upfront cost = $2-5K
Monthly fee = $500-2K
How to get people to sign legally binding contracts/not argue that you coerced them into signing something: give them a consideration in return.
Example: You hired some people but didn't make them sign confidentiality agreements (because you're stupid). Now you want them to sign CAs. Give them $500 in exchange (or something); makes it really hard for them to argue afterwards that you forced them into it.
"If someone asks to be on your Board of Advisors, you should say, 'No.'" -- JC
Get impressive and excited people to serve on your Board of Advisors. You should probably have to reach out to them. If they're on 200 other Boards of Advisors, they won't do anything for you anyway.