PNW Startup Lawyer

Seattle startup lawyers helping founders navigate corporate law, venture capital, commercial transactions, and intellectual property.

Post-Money SAFEs Give Investors Extreme Anti-Dilution Protection. Here’s How to Remove It.

Post-Money SAFEs give investors a very strong type of Anti-Dilution protection; one which is extremely unfavorable to founders and other common stockholders. Investors get protection from both downrounds *and* up rounds. This post proposes a solution to remove the extreme investor anti-dilution. It also provides a spreadsheet comparing the economics between Pre-Money SAFEs, Post-Money SAFEs, and our proposed amendment to the Post-Money SAFEs.

Common Option Grant Mistakes Seattle Startups Make

Take some time to learn about these common errors, such as granting options at below fair market value or with a stale 409a valuation, issuing ISOs to a contractor, or promising employees a percentage of the company rather than a fixed number of options.

The (Big) Problem with Post-Money SAFEs

Y Combinator's post-money SAFEs shift dilution from investors to founders.

Short Term Sheets Hurt Startups

Once you sign a term sheet, you are locked in with a 'no shop' clause. Some of your negotiating leverage slips away. Aim to nail down the material terms while negotiating the term sheet, while you have more leverage.

Granting Pro Rata Rights to Convertible Note Investors

'Pro rata' rights are an investor's right to invest money in the *next* round, and in an amount that will maintain the investor's current ownership percentage. Should you grant pro rata rights to early investors in your startup? It depends on a few factors.

Checklist for Engaging a Seattle Startup Lawyer

Do they have the right background? Can they scale? Are they the right size for your startup or just overkill? Can you trust their advice when negotiating against investors?

Trademark Fair Use

You can generally use another company's trademarks, without infringement, for purposes such as news reporting, commentary, parody, comparative advertising and advertising compatibility. The rules are tricky, so discuss your advertising with counsel before going live.

E/N Alpha - Subscription Based Legal Counsel

Egan Nelson now offers subscription-based legal counsel for technology and consumer products startups.

How do I Protect My Trademark Internationally?

Trademarks rights are *territorial*, meaning that you need a trademark registration in each country where you want to protect your brand. Building an international trademark portfolio is expensive, but a worthwhile investment for consumer products and technology companies.

Postponing Incorporation Until Jan 1 Can Save a Bit of Tax

Most startups pay the minimum DE franchise tax of $350. Startups pay this minimum for each year of existence, even if they incorporate on December 31.

Negotiating a Master Service Agreement in Tech Deals

The Master Service Agreement and Statement of Work describe what is being delivered, and what happens when things go wrong. This post runs through common contract terms, provides some negotiation tips, and highlights issues you may want your MSA to address.

Fair Use in Copyright Law

Fair use is a flexible standard that lets artists borrow portions of prior works to use as building blocks for new art and literature.

SAFE Financings Explained Line by Line

A SAFE is a quick and simple doc startups use to raise seed capital. Although simple, there's still a learning curve. This post gives a line-by-line explanation of how a SAFE works.

Should Early Employees Get Anti-Dilution Rights?

Employee anti-dilution rights are problematic, unnecessary, and generally unfair to other stockholders.

Rules for Granting Employee Stock Options

Startups issue equity to employees under Rule 701. The gist of Rule 701 is that a company can issue equity (1) to an employee or service provider (2) as compensation, (3) under an equity plan, (4) but not too much equity.