I’m liking the Hoboken Tech Meetup experience. As I remarked in my last HTM post, there are advantages with smaller groups and a limited roster of speakers. The pace is less hurried, the demos more leisurely, the speakers can make extended points, and the Q&As have more educational value.
Obviously, I hope that HTM grows and prospers, but I would recommend NYCers take the Path or ferry and try this more intimate tech gathering. And the views of the NYC skyline from the Babbio Center are quite stunning.
Kudos to Aaron Price and his staff.
I’ll confess that I come to these meetups just for the demos, but at last night’s Hoboken Tech Meetup I arrived earlier and stayed later to listen to the speakers. To my surprise, I was able to understand some of the inner legal and financial aspects of the startup world, which were the subject of two of the talks.
Bigger surprise: I enjoyed it.
In his presentation, attorney Stephane Levy of Cooley LLC navigated us all through a brief course on legal issues for startups. Here are some of the takeaways for would-be entrepreneurs:
LLC vs. Delaware C-Corp: Limited liability corporations are easier to set up and enjoy tax advantages (pass through treatment of income) but prove unwieldy when more investors are brought in. Angels and VCs normally fund only S-Corps. So at some point, preferably before financing, a startup should convert to an S-Corp.
Intellectual Property: Get assignment of IP rights from developers and consultants early on. Just do it and avoid lots of problems later— e.g., when potential investors do their due diligence and discover IP risks.
Founder shares and vesting: It’s a tricky area. Founders’ shares are typically vested over four years “within market terms” and with some “acceleration” if there’s a change of control or termination without cause or both conditions satisfied in a so-called “double trigger.” Angels and institutional investors like to see vesting agreements: basically, it is a balancing act between incentivizing founders to sell the company and outside investors’ concerns about keeping the original crew on. Just set this vesting up early, and you’ll have less aggravation down the road.
Stephane Levy brought us all up to speed on startup agreements.
Enough law. Now to finance.
This financial-phobic writer was pleasantly surprised that he grooved on listening to serial entrepreneur Jeff Stewart. His abridged list of accomplishments include launching an early Internet company called Square Earth, starting and selling Mimeo, a hosted document printing service, co-founding a carbon offset company, and founding a financial analysis company. He is also an active angel investor, and his talk was on “What Angels Look For.”
Stewart took the contrarian view that early investment is overrated. (I liked him already!) In fact, many successful companies didn’t get outside investment until they were quite well on.
But angels can be helpful, outside of their roles as high-wealth individuals. One of Stewart’s key points was that angel investors provide intangibles to startups: principally, business advice, expertise, and access to other investors with different skill sets.
They can be your guardian angels. In return for their cash, though, angels generally want a committed team in place, domain expertise, large potential markets and with that, the chance for very large returns (to pay for all the less satisfactory deals).
Enough law and finance. What about the demos?
I liked StorageByMail, which I guess could be described as a hosted storage company— that is, storing actual stuff, not bits. It’s self-storage made easy with customers boxing up and shipping their closet and garage overflow, and StorageByMail sending it back when the contents are needed. No, they don’t take furniture.
I had a chance to see Xydo, a recommendation service I’ve been writing about. I was under a different impression, but I discovered this startup service has chosen to use actual human recommenders (supplemented with some limited automated ranking) to suggest web content, Tweets, and blog posts.
As soon as I get a beta invite, I’ll be posting more about them.
Related articles
- Tech Meeting Across the River (Hoboken Tech Meetup) (technoverseblog.com)
- Stephane Levy, Associate (cooley.com)
- Jeff Stewart (urgentspeed.com)
- StorageByMail
- Xydo
