“Lawyers are the only ones for whom ignorance of the law is not punished.” J. Bentham #1: Lawyers lie and get away with it Lawyers are skilled liers. “I can do that”. “I have experience with this”. “References? Portfolio of past work? Sorry, that’s all confidential”. Lawyers lie about a numbers of things to sell themselves. But…
“A business is your personal utopia, where everything is how it should be” D. Sivers Charlie Munger taught me that sometimes it helps to approach a problem from an angle of inversion. This means that you focus on what not to do. This is helpful when you don’t know what to do, because you narrow your…
“All trends are overrated.” P. Thiel A lot of CEOs miss out on lucrative ways to use their lawyer. They don’t know that the right lawyer is a potent tool. Fact is that lawyers have carried out hundreds of years of stealth marketing globally. Learn to use this to your advantage. In a technology-centric world with a primary focus on substance, lawyers are…
“It’s a little bit like riding a convertible.” W. Tompkins I’m writing this post due to popular demand. Convertible notes are possibly overrated these days. They are not the holy grail of start-up financing. Still, they are useful in the right context. Convertible notes may seem a bit counterintuitive until you understand how the mechanics work. There’s a lot of…
“It’s legal because I wish it.” Louis XIV In essence, law exists to promote fairness. To ensure this, lawyers in turn exist to communicate knowledge about law. In this way, everybody gets what they deserve. Right? Well, not in the world I operate in. In this world companies, their leaders and owners manipulate their surroundings to advance their…
“The cause is hidden; the effect is visible to all” Ovid A typical term in a term sheet is the option pool. Sometimes the pool is called an employee, incentive or warrant pool. The pool normally makes up 10 to 20% of the shares in the company. The idea is that the pool is set aside to provide…
“Necessity never made a good bargain” B. Franklin Leverage If you’re a start-up, negotiating with one investor may be good. But negotiating with multiple investors is better. The reason is leverage. If you’re more or less forced to accept the terms of any single investor, your bargaining position suffers. You can’t walk away. You can’t let more investors…
How to give employees equity in Denmark “Keep salary low and equity high.” S. Altman When you add equity to the salary, the right employees will be extra motivated. It often makes sense to let employees earn equity instead of giving them ownership immediately. Enter stock options. A stock option is a right for a person to…
“A start-up messed up at its foundation cannot be fixed.“ P. Thiel #1: Create the right framework early on Agree on how to split the equity between co-founders. It doesn’t have to be an equal split. The individual contribution may have different value or co-founders may not be equally involved. Incorporate an ApS or IVS right away to formalize…
In Danish start-up financings, investor often insists that the founders take on non-compete clauses. In essence, a non-compete means that a founder cannot start a competing business for a period of time if the founder leaves the company. Under Danish law, unlike in California, non-compete clauses are generally valid. Usually, founders don’t have a lot…
