Start Up #2 - Know your sh*"t
Along my career I have advised a few companies and friends on their legal issues and it's on of those moments where you can really see the added value you can provide to these people.
Whether you do this informally or formally, there is normally a moment where you get a call or you meet in order to explain the situation (I don't want to call them a problem, but...they are).
The main role of a lawyer is minimizing his/her client´s risk, but it normally comes down to turning fires off. So you get in these calls or meetings, they're telling you the story and you, to assess on all the risks, start making questions.
- "Ok, so...¿how many shares do you have and what's the par value?
- I think that it´s 3,000,000 shares at something around 1 or 2 dollars;
- What do you mean you think?
- Well, I don't know man. That's legal sh*"t
- Ok, and what about the by-laws, what do they say on this?
- The what?
- Never mind, do you have a shareholders agreement?
- Yeah, I think we had something but we never sign anything...
That's when you start giving your advice and saying you need to do this, you need to do that, etc...
I have always looked up to entrepreneurs because of the work they put in, the devotion for their product and the risk they take and it is very surprising to me how messy they can have the internal functioning of the company. The shareholders rights, drags, tags and decision-making...all needs to be perfectly agreed, regulated and in writing.
So if you are an entrepreneur, please look into the gust of your company and make sure everything is right. Contact your lawyer if you need help.