Lecture 18 – Legal and Accounting Basics for Startups (Kirsty Nathoo, Carolynn Levy)

Conference Transcript:

There is a lot going on behind the scenes in running a boot. Getting the right, finances (capital allocation, acquiring rights), accounting and other head rights will save you a lot of pain in the long run. Kirsty Nathoo, Chief Financial Officer of Y Combinator, and Carolynn Levy, General Counsel of Y Combinator, cover these very important issues at this conference.

View slides and readings at startupclass.samaltman.com/courses/lec18/

Discuss this conference:

This video is under Creative Commons license:

Video credits to How to Start a Startup YouTube channel

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    Lecture 18 – Legal and Accounting Basics for Startups (Kirsty Nathoo, Carolynn Levy)

    Comments 30

    1. The concept of idea = 0 is totally wrong, it is intangible, it is as important as implementation, it is the spark to start the engine, it is the very beginning of everything developed, it is the creation part, idea = 0 is totally BS. Stop telling these kids this kind of BS.

    2. from 2:306:30. They literally give no advice or information. Just say: 'Register in delawate! Why? Because trust us and shut up! Thats why". haha

    3. Thanks for posting! Isn't creating a corp. a bit much for a brand new start-up? There are a lot of fees and compliances required that might not be ideal for a budding company, no?

    4. Why women always so bad in business? In society it's said that women are so sensitive, but in business they're always all for themselves – that's not how economy works – that's why men take over at some point and women are less successful

    5. there's a better summary. If you get it right, you will get screwed over. Why? There is always some greedy fuck ready to take it if they can – always.

    6. So was it Guy Kawasaki who said he'd just like to skip the venture capitalists, thank you.

    7. 2:00 Talk Topic: Getting your startup set up in the right way so it can be made a success. How to setup the legal entity, how to protect assets, raise money, enter contracts, who's going to be in charge, how will equity be split, etc.

      2:45 Formation. Forming your startup into a separate entity so that the company, and not you, take responsibility. Delaware is the standard state to set up in.
      8:13 Equity allocation or how to divide the pie. Allocation should be equal because it makes the whole team feel equal. 
      11:18 Putting the equity allocation onto paper. A stock purchase agreement. The company will own the code, IP, patent, etc. Sign an 83b form.
      13:49 Vesting = stock ownership over a period of time. Typically 4 years. Founders too.
      18:30 Logistics of fundraising. Priced (valuation) vs Non-priced. Paperwork. 
      24:25 Understanding investor terminology. 4 common investor requests: Board seat, advisor, pro rata rights, information rights.
      29:07 You've raised money. Now you incur business expenses; the cost of running your business. Expenses are tracked in the company bank account it's not personal money.
      32:30 Founder employment. Founders are employees of the company and paid as such. Set up a payroll service. Minimum wage.
      35:36 Hiring employees. Employee vs Contractor.
      40:22 Firing employees. Best practices: fire quickly, communicate, etc.
      42:50 Key take-aways. Summary.

      44:35 How do you search for an accountant and when?
      46:08 What's the budget for a lawyer?
      47:31 Do you have advice for working with cryptocurrencies?

    8. As far as I know companies are formed in Delaware because of tax benefits, not because of investor pressure. 

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