Questions tagged [start-up]

A startup company or startup or start-up is an entrepreneurial venture or a new business in the form of a company, a partnership or temporary organization designed to search for a repeatable and scalable business model.

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22 views

Equity crowdfunding fees & P&L statement? [closed]

We managed to raise fund via equity crowdfunding campaign and almost 25% went as cost (site commission, lawyers cost,valuation cost, stocks registration fees ... etc) Now my accountant is insisting on ...
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20 views

If the founders and investors all own SAFE notes, how bad is that for common stock option holders?

I'm interested in joining a startup from San Francisco for a modest pay in exchange for 0.75% of equity (stock options). There has been one round valuing the company at $22 million. The serial ...
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2answers
26 views

Assessing the value of stock options without the strike price or cap table

I recently received a job offer that offers me a certain number of stock options, but when I asked for the strike price or cap table they said that they cannot share that information with me. Instead ...
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89 views

What do I need to do to prepare for starting a business? [closed]

I have this service business that I've been working on the backend (planning, relationships, coding etc) for a couple of years but I don't know how I can get the time/money to launch it. I work 40 ...
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6answers
2k views

How to structure equity buyout?

Years ago, I helped out a friend on his startup as a software engineer. Spent ~500-600 hours on it, was compensated a little under half my hourly rate + 4.5% equity in the company, because the company ...
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26 views

Tax benefits for investors holding SAFE agreement with closing US-startup

I hold investments in a startup, using a SAFE agreement as the investment instrument. The startup is no longer existing, and as per the nature of the agreement, the investment is lost. I'd like to ...
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1answer
111 views

When selling a startup, how is the sale price taxed?

I'm interested in understanding how the sale price of a company passes through an LLC and ultimately finds its way to the founders. Let's say i have a startup which is filed as an LLC, taxed as an s-...
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2answers
404 views

What's the deal with startup CEOs making shedloads of money while his company records yearly losses?

Like say, X company, where the CEO is already a billionaire while his company has lost many billions of dollars in the course of several years? Do you need investment from someone else to do this? If ...
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2answers
90 views

What is the name for a company formed only to make an investment?

What do you call it when someone gets X number of people who all want to invest in Y company; so u create a corp where equity is spread among them, and this corp invests in X company? Sounds like an ...
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2answers
78 views

Stock dilution during funding round?

A fictitious scenario: Suppose a start-up has issued 100 shares. The company is valued at $1,000. The owner has 50% of the shares, and an investor has 40% of the shares, and an employee owns the ...
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2answers
110 views

Is there a place to see who all invested in a start-up before I invest? [closed]

I want to invest in a start-up but first want to know if it's possible to locate all the current investor? I want to know every detail about this company from how they work internally to how they ...
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2answers
118 views

Statistically who gets higher **average** income, an employed engineer or IT startup founder? [closed]

Founding a startup is a great idea, you may become as rich as Jeff Bezos, Elon Musk, Bill Gates or Mark Zuckerberg. Wait... or may not. It of course depends on your skills and perspiration they say. ...
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65 views

How do I document cash capital contribution and digital assets assignment for single member LLC?

I have a single member LLC, which is currently a disregarded entity status (will be upgraded to S-Corp within a month or two). I'm making an initial capital contribution via cash deposit while opening ...
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1answer
48 views

liquidation preference and other loop holes when joining startups who offer equity

There are lots of startups that want to provide equity in exchange for labor rather than a salary or a combination of both. Reading online it seems there are a ton of loopholes where I may not get ...
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1answer
175 views

Why do startups dilute their equity?

I am trying to understand why, when a startup raises funds, it dilutes its equity by issuing more shares, rather than just issuing a portion of the existing shares. For example, let's say a startup ...
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51 views

Seeking Equity Split Advice between four co-founders, two of them who have invested money and two who haven't

Founder A,B,C,D are equally responsible for the execution and the idea. At the pre-development stage, Founder A invests $12,500 and Founder B invests $7,500, whereas Founder C and D aren't investing ...
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1answer
52 views

Startup Expirable Equity

I own a startup that is user-based. We are close to finishing the building of the prototype so therefore it has no users, no revenues, nor any investment. I have 4 unpaid co-op students working full-...
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1answer
218 views

Can Directors issue themselves shares during raise?

I was wondering if it is legal for company directors that also work and operate the business to gift themselves shares during a capital raise in order to retain their controlling interest in the ...
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2answers
51 views

Diluting Shares vs Reserving Shares

I often read about a startup company diluting its shares, in order to provide additional shares for an investor during an investment round. This means that the ownership % for the co-founders is ...
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2answers
307 views

Why do some startup unicorns lose value as soon as they go public?

It seems that some startup unicorns lose value as soon as they go public (e.g. Uber). Would that mainly be because its shareholders (early VC) eventually want to pull out. And that would be the most ...
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8answers
857 views

Why is it ever a good idea to found a company?

I have a side project with a few friends that's gradually getting more serious. We're nearly at the stage where we'll be taking some early clients, which is really exciting after about a year of ...
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2answers
164 views

Employer won't allow early exercise of options because “RSUs are uncommon and too complex” for venture-backed startups

I asked my employer (a Series A startup) if I could early exercise my stock options for the tax benefits described here. They replied that that would not be possible because the company did not issue ...
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3answers
147 views

How to accurately evaluate the financial potential of a startup with little understanding of business finance?

TL;DR I have been tasked to reevalute the possible financial potential (and by financial potential I mean possible cash-flow, profit, return of investment) of the startup I work in as an R&D ...
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73 views

How to contact an investor for a business?

I recently opened a startup and I am preparing a well-crafted presentation of my idea for potential investors. I have to admit that I really don't know how to contact them. Finding them is ...
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1answer
92 views

Lease equipment to someone or sell it? [closed]

I am currently designing a data logging system for an interested party. The cost of the items assembly and purchase is about $100 (board, power supply, 2 sensors). I want to get lets say 15$/month ...
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1answer
187 views

Tax implications to sell my pre-IPO shares through Sharespost

Several years ago, I was granted some RSUs from a company and I'd like to sell those RUSs in Sharespost (sharespost.com). I want understand the tax situations here. Let's just say I paid those shares ...
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72 views

At formation, in exchange for stock, X contributes cash, Y contributes only “services provided” (sweat equity). What's a smart way to do it?

Setup: X has cash, Y has an idea, experience and contacts and wants to work on this idea full-time. X wants to create a corporation with Y and contribute $100,000 for 50% of its equity. Everything ...
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1answer
171 views

How to find clients for my start-up? [closed]

I will launch a start-up with a couple of friends. We will work as data science and data engineering consultancy. All of us have similar backgrounds in maths, physics, and electrical engineering. How ...
2
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0answers
199 views

Tipping point with Cofounder. Is it him or me?

I have been working on a fin tech startup part time for the past year and a half and I am feeling like I am getting screwed over. Currently I have 10% of the equity that will be vested over 4 years ...
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3answers
485 views

What does “burned through $300 million” mean?

In the book "Antifragility of Islamic Finance: The Risk-Sharing Alternative" by Umar Rafi and Abbas Mirakhor, on page 101 I read the following line: Pets.com, the poster-child company of ...
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1answer
90 views

What type of financial instruments can a company with no assets or money use to raise seed/starting capital

Long story short, I have a LOT of experience as a web administrator, and a lot of experience in retail. I want to raise the money to do acquisitions of small ecommerce operations that output enough ...
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1answer
105 views

Are there any other benefits to exercising EMI stock options straight away vs. as late as possible? (UK)

Once my options vest, according to the EMI scheme I have ten years to exercise them. I'm weighing up the pros and cons of exercising exactly at the point they vest versus leaving it to the last ...
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2k views

CAP table for single founder bootstrapped startup

I have bootstrapped my LLC for two years and am now seeking investment. In this case, I'm considering VC. Sequoia pitch deck templates recommends a CAP table. Since I don't have investors currently, ...
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1answer
250 views

Could my app take deposits from and execute stock trades for others but using my own brokerage account?

Don't know if this questions belongs here but I'd figure this place is the closest in relevance. Basically, I want to build an investing application that is open for the public to use. Many ...
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1answer
136 views

If I plan to get investments later, should I start a C Corp now? Or LLC then convert to C later?

Should I start an LLC then convert later once it is time for investments? Or just start as a C-Corp now? At the moment what I have are open source software tools, and ideas on how to monetize them ...
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2answers
327 views

What are the most common partner equity distribution for startups?

Background I'm doing some due diligence regarding a US registered (Delaware C-corp) tech startup in Europe, where the founders are located and living in the EU. Although the business idea is very ...
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1answer
168 views

Buy pre ipo'd start up company stock in small amount? [closed]

Is there any investment website/company through which I can buy small amounts of pre-PIOed company stock in a smaller amount? Most require $100K worth of investment. e.g. as an average investor can ...
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1answer
88 views

Is there a type of investment that doesn't eventually cost the business money for a return?

I have been doing research on types of investing and funding for a startup, but I'm still pretty clueless, so please disregard this question if it's ridiculous. I also apologize if this is the wrong ...
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1answer
106 views

Equity vs Stock options?

I am a co-founder of a startup in the UK, the other co-founder wants to give me options instead of % equity because he believes when I eventually exit I will pay less tax and the company will too and ...
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3answers
186 views

Start-up co-founder Equity vs Salary

What is the best option? I have been asked to work in a high position as co-founder of a startup for 5% equity and $40k salary - this requires over 40 hours of work(hard grind) etc as any position ...
41
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3answers
15k views

How does it work when somebody invests in my business?

Lately I've been curious about how exactly investing in a product works, and I've been thinking about this scenario: Let's say I'm creating some mobile application and I manage to get $1m of ...
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2answers
143 views

What if the vesting period of a startup has not ended when it is acquired? [duplicate]

Suppose employee of a startup company has a vesting agreement, saying she can execute options for 1/4 of total package each year. What if only one year have passed and startup was bought. Which ...
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2answers
153 views

How to pass on personal debt for R&D to a startup?

I just realized that I've lived frugally for the past year and most of what I make goes into paying off some hasty decisions in 6 digits worth of (now) high APR credit card debt. I've spent quite a ...
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1answer
234 views

Regulations regarding investing in a private business

There have been a couple of years where, after maxing out contributions to retirement accounts, I've had some disposable money left over that I'd like to invest in something other than publicly traded ...
6
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1answer
343 views

Prevented from Rolling Over 401k Due to Company Audit - Legal?

A few months back, the startup my wife works for was bought out by a big company. Everyone was thrilled, of course, and it was a great moment for the whole team. Soon after the logistics of the ...
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2answers
167 views

Selling options on acquisition

I've been trying to understand this hypothetical scenario wherein a company in which you own options is acquired. In it, the author posits you own .67% and 20,000 shares ($2 strike price, $4 share ...
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1answer
126 views

Need help negotiating a salary agreement with my boss [closed]

I'm a college student who is interning at a startup company. My job as an intern is to help redesign and launch an app, so that it runs on Android as well as iOS. When I signed up for the job I was ...
16
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3answers
3k views

How to compute worth of my equity?

I am a newly appointed consultant to a startup. I work in another organization which forbids me to receive any salary for being a consultant. However, I am allowed to have an equity. The startup ...
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3answers
335 views

Can a non-profit company make profit? [closed]

My cousin suggested a startup idea to me, I suggested that he could make it a non-profit since it fits all the requirements of an non-profit company and it would be much easier for him to get ...
14
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3answers
10k views

Greedy shareholder that does not want to dilute his portion [closed]

What needs to be done or could be done if a company wants to raise capital and one of the shareholders doesn't want to dilute his shares and brands all the others as "too greedy". The shareholders ...