Startup Mistake 1 of 13: Competing With Current Employer
Building a startup while still employed can create serious intellectual property disputes, especially when the new business overlaps with your current role.
Startup Mistake 2 of 13: Poor Choice of Entity
Choosing the wrong legal entity early can create avoidable tax and fundraising issues for emerging tech companies.
Startup Mistake 3 of 13: Failing to Properly Vest Founder Shares
Improper founder vesting structures can create costly equity issues, especially when team dynamics or investor expectations change.
Startup Mistake 4 of 13: Failing to Make a Timely 83(b) Election
Failing to file an 83(b) election on time can create major tax consequences and even disrupt a startup financing.
Startup Mistake 5 of 13: Not Locking Up Intellectual Property
Failing to secure proper IP assignment agreements can jeopardize ownership and reduce a startup’s value during financing or acquisition.
Startup Mistake 6 of 13: Overcomplicating or Underestimating Complexity
Founders often struggle by overcomplicating simple decisions and underestimating complex processes, leading to costly delays and missteps.
Startup Mistake 7 of 13: DIY Lawyering for Critical Matters
DIY legal work on high-stakes matters can create expensive problems that are far harder to fix later.
Startup Mistake 8 of 13: Not Understanding the Basics of Investor Deal Structures
A weak grasp of investor deal structures can leave founders surprised by dilution, control terms, and sale outcomes later on.
Startup Mistake 9 of 13: Focusing Only on Valuation for Investor Funding
Founders who focus only on valuation can miss deal terms that have an even bigger impact on control and eventual sale proceeds.
Startup Mistake 10 of 13: Raising Capital with a Short Term Mindset
A short-term fundraising mindset can create runway, cap table, and investor alignment problems that make future financing harder.
Startup Mistake 11 of 13: Improperly Classifying Personnel
Misclassifying workers as independent contractors can create tax, compliance, and audit problems that are costly for startups to unwind.
Startup Mistake 12 of 13: Running Afoul of 409A or Other Deferred Compensation Issues
Section 409A mistakes can trigger immediate taxation, penalties, and compliance issues that many early-stage companies do not see coming.
Startup Mistake 13 of 13: Poor Corporate Records
Poor corporate records can delay financings, complicate diligence, and create expensive legal cleanup that startups could have avoided.
Paul Temple – A Man We Will Miss
Paul Temple, skilled attorney, treasured AlphaTech colleague, and dear friend, died unexpectedly on August 23, 2021.