John Bautista, Orrick Partner, joins Immad Akhund, founder and CEO at Mercury, for a discussion on every legal optimization you can make to structure and build your startup.

This conversation was filmed live on Zoom with questions from the audience:

00:01:02: What are interesting optimizations you have to do right at the start?
00:02:33: What is Founders Preferred and do you have it to do it at incorporation?
00:12:24: Does the sales of Founders Preferred stock blow QSBS treatment?
00:13:49: One disadvantage is that Clerky and Stripe Atlas don’t do Founders Preferred. Does this have to slow down the formation of the company?
00:15:35: Why not convert all stock into Founders Preferred? Is there a correct ratio?
00:17:38: Is there an advantage to Founders Preferred besides doing a secondary?
00:19:20: I’ve talked to founders that know about Founders Preferred but don’t do it because they think investors will get scared off. Is that a reason not to do it?
00:22:02: If you only have common stock and you haven’t done a preferred round, and you want to do Founders Preferred, what’s a rough price for getting a conversion done?
00:24:05: Let’s talk about board composition. If you’re about to raise a Series A, what’s an ideal board pre-Series A to put you in the best position?
00:27:00: Why should a founder be in control of the board?
00:29:50: How does this affect solo founders? Can one founder sit on multiple seats?
00:33:19: What do you do if you’re raising and don’t want to give up board control?
00:34:55: Should you forego funding if you don’t want to lose control of the board?
00:37:00: Do you see a trend of growth investors not taking board seats?
00:37:55: Let’s talk about dual-class. Google and Facebook founders have 10x votes. How does that happen and when does that happen?
00:43:51: Sometimes founders get massively diluted down so they have less than 5%. Many people IPO with less than 2%. When can founders push for equity refreshers?
00:50:30: When you’re doing a new round of funding, and multiple VCs are trying to win the round, one of them may offer an equity refresher. How does that work?
00:53:54: What are you seeing in the market right now? Are terms founder friendly?

About the speakers:

John Bautista, Orrick Partner and Board Director: John Bautista, a partner in the Silicon Valley office, co-leads the Emerging Companies Group, which advises emerging companies and venture capital firms. He is a board member and co-founder of the Long-Term Stock Exchange, as well as an advisor and co-founder of Clerky.com

Immad Akhund, Mercury Founder and CEO: Immad Akhund is the co-founder and CEO at Mercury, a tech company building banking for startups. Prior to founding Mercury, Immad was the CEO and co-founder at Heyzap, a mobile developer tools company, which sold for $45m in 2016. He is an active investor in Silicon Valley and has invested in 100+ seed-stage startups including Airtable, Substack, and Rappi.

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