Welcome to video Fridays from The Start Up Garage
A place where The Startup Garage’s team, answers questions directly from viewers
Key Take Aways From Video:
1) The first thing you want to make sure of is that your startup is incorporated
2) The second thing you’ll want to consider is whether you’ll offer
debt or equity
3) One of the commons documents that a lot of states will require is called a PPM
4) Get your paperwork in place or it will come back to haunt you.
Complete Transcript Below:
Question= I need to have in place to make my family’s investment in my startup legit?
Well Michelle this is definitely a common question that we get all the time, and some people avoid doing the proper paperwork, and it usually comes back to haunt them in the startup process, so I highly recommend you get the proper paperwork in place. The first thing you want to make sure of is that your startup is incorporated.
There’s a number of different types of corporations: SC, LLC, and you’re going to want to talk to an attorney about that to determine what type of corporation you want to set up.
The second thing you’ll want to consider is whether you’ll offer debt or equity. If it’s a debt investment then you’ll want to set up a promissory note or a convertible note, and your attorney will also be able to get those documents for you.
If it’s an equity investment, meaning you’re going to give them shares in your company, then that varies state by state. It also has a number of different variables that will depend on what the requirements are that will make that a legitimate investment.
One of the commons documents that a lot of states will require is called a PPM. So those are just some of the basic outlines of what you’re going to want to put in place, before you get your family investment.
