Questions

What strategies are there to form a company at an early stage that is flexible (equity, control/titles, and business model)?

We are spinning out a company based on a platform technology from a university. My co-founders are the co-inventors and professors at the university. They will act as scientific advisors. We need to form a company to apply for some non-diluting funds. We recognize as we continue with customer discovery and R&D that our business may need to differ from our original business vision and that the people we would need to add to our team is not certain. I'll be the only full time member, and CEO. My question boils down to: - With a lot of uncertainty on the path forward, how can we form a company that allows for us to be flexible in terms of equity, control, and business model? - Would flexibility be a liability? - Would it make sense to form a LLC to begin, and handle these issues when converting to a C-Corp? Is that even a possibility?

3answers

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Answered 2 years ago

The short easy answer is to create an LLC. However, headed down a path with outside investors will probably mean you will be switching to a C-Corp. Save the time (and legal fees), and go straight to C. It won't restrict who you can hire, what your business model looks like or flexibility for it to change. Be sure all your agreements related to ownership/licensing of the IP is in order. Many Universities will have angel groups they work with to facilitate a smooth transaction. Good. Luck!


Answered 2 years ago

If I understand correctly I think you are confusing legal structures with the business side. Apart from the equity split, your business model can change 100 times and it won’t affect your legal structure. The legal structure will affect in the easiness of fundraising, or applying for grants but it in the business model or titles themselves.
If it will be in the tech industry you should get a C-Corp for future posible fundraising. Apart from that the other questions are not tied to the legal structure.
At least from a business perspective.


Answered a year ago

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