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Ask HN: How do you start a startup?
4 points by DiabloD3 924 days ago | 1 comment
I've seen a lot of writing on HN about how to manage and make startups and succeed, and lots of writing about minimum viable product, but nothing about the legal aspects of startups.

I know its more than just registering an LLC and selling a product, otherwise everyone would be doing it and the kind of people who get HN love is a select crowd.

Are there any tips or tricks that I should know about? Also, how do LLCs accept investment funding? Is there anything required in an LLC's articles/operating agreement for this? How do you negotiate investment contracts fairly?

I know a lot of you will say "talk to a lawyer", but I'd like to know what I'm getting into before I do; also, how does someone shop for a lawyer?




There have been a few related questions recently, so in lieu of actually writing out a really long answer to yours, I'll just post the links to the other ones, as some of the answers (my answer anyway) would be very similar.

http://news.ycombinator.com/item?id=5161818

http://news.ycombinator.com/item?id=5162707

http://news.ycombinator.com/item?id=5183697

Also, how do LLCs accept investment funding? Is there anything required in an LLC's articles/operating agreement for this?

It's covered in the "How to start an LLC" books. But the tl/dr; from a startup perspective is this: If you want to grow to be a big company, and/or if you expect to take institutional capital, don't organize as an LLC, organize as a traditional C corp. This is because A. LLC's have a limit to the number of owners, and B. VC's won't, as a rule, invest in an LLC. There are detailed technical reasons to explain why this is, but I'm not qualified to explain them, I'm just aware they exist.

That said, you can start out as an LLC and then reorganize as a C corp later if needed. Whether or not that makes sense for you depends on way to many factors to explain here, and, again, I'm not really qualified. "Talk to a lawyer".

How do you negotiate investment contracts fairly?

There's a fair amount of baseline knowledge that you need to have, if you're going to take outside money, related to valuations, standard term-sheet terms, etc., etc. It's not really something that is easy to put into a ready-to-digest capsule. There are some good Quora questions with pointers to info about term-sheets, and a lot of info about funding, VC, term-sheets, etc. can be found at http://venturehacks.com/

Also check out the blogs of some of the well known angels and / or VCs who blog: Dave McClure, Fred Wilson, etc. http://www.forbes.com/sites/truebridge/2013/01/30/vc-blogs-y...

This video might be useful: http://danielodio.com/how-to-hack-your-funding-by-naval-ravi...

Did I mention, "ask a lawyer"? Also, seek out mentors, preferably experienced entrepreneurs who have done this stuff before, and pick their brains. If you have VCs operating in your area, connect with them well before you plan to raise money, and just get to know them. Many VC firms do various "meet and greet" type events, where people can come in, meet them, ask questions, etc. I suggest taking advantage of those opportunities.

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