1. Introduction to Entity Formation for Venture-Focused Entrepreneurs
November 2016 CT Entrepreneurs Meetup
November 14, 2016
Presented by:
Ben Wiles
(860)
@BenWilesCT

2. When to form an entity?
When you will be entering into your first contract with a “third party”
When you bring on a co-founder
When you accept outside investment
For SBIR/STTR grant purposes
When you undertake activities that may result in liability

3. When type of entity? Corporation (“C-corporation”)
Favored by “institutional investors”
Favored on the West Coast
Subject to “double taxation”
Standardized structure, formalities, management
Difficult to convert from a corporation to an LLC
Limited liability company (LLC)
“Pass through” tax treatment
Favored by some individual “angel investors”
(Relatively) easy to convert to a corporation
Infinitely customizable (this is both good and bad!)

4. Founder equity issues Founder vesting
Remember the 83b election!
Consider Repurchase Rights and Buy-Sell Agreements
Should migrate from the “back of the envelope” to formal documentation sooner rather than later

5. What about incentive equity?
Corporation (“C-corporation”)
Equity incentive plans
Options, restricted stock grants
Limited liability company (LLC)
Profits interests plan
Interest option plan

6. Formation - intellectual property considerations
Each founder should (probably) contribute all IP owned by them (as of the date of their receipt of founder equity) to the company
Each founder should contribute all IP they produce going forward to the company
Nondisclosure and noncompetition obligations for founders are also often appropriate

7. Questions? Ben Wiles bwiles@uks.com (860) 548-2657 @BenWilesCT
DISCLAIMER: The materials and information have been prepared for informational purposes only. This is not legal advice, nor intended to create or constitute a lawyer-client relationship. Before acting on the basis of any information or material, readers who have specific questions or problems should consult their lawyer..