Building Your Team Pre-Financing

Create a Small, Balanced Team"Invest in teams of two to three founders. Five is unstable, one is too hard.The best combination is one founder who can sell and one founder who can build.The team matters more in enterprise deals, traction matters more in consumer deals"One Leader Might EmergeDividing Up Something that Does Not ExistPurely verbal. "We're all buddies and understand each other, right?"Each of you hires a lawyer and lets them hammer away at each other on your nickel. Hm, now where's that nickel?Document what you have verbally agreed on via email exchanges, and the next time you're all together, print it out and sign it.Download a legal template, put in the terms you have agreed on, and sign it, possibly after getting one hour of legal advice from a buddy at law school.Get Your Due Diligence Ducks in a RowThe two to three founders saying that each of them owns X amount of Newco (your to-be-established company) and assigning all of their IP related to this venture to Newco.A buddy who writes some super code just because they're a friend confirms that they have no financial expectation and assigns all of their IP related to this venture to Newco.Somebody who provides a service in return for equity and assigns all of their IP related to this venture to Newco.Paying with EquityWhat cash rate would this person normally charge? Check that this is normal for the market.Agree to pay twice that amount in equity. The doubling is to cover the risk that they never see anything.Convert the cash into equity at the valuation of the first round.VestingDiscuss