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Comment by timr | Hacker News Reader

They used to be, and still can be -- if you have a bad investor who wants to play hardball (hint: don't play that game). It doesn't take much to run up $10k in legal fees if you have a problematic negotiation.

That said, there are a lot of resources out there now (convertible note generators, "standardized" series AA paperwork, etc.) that can lower this cost substantially if you try. Wilson Sonsini has a note term sheet generator [1], and there are probably others.

Also, keep in mind that many reputable, startup-savvy lawyers will work on a deferred fee for this kind of thing. You can also negotiate prices for simple contract reviews.

[1] http://www.wsgr.com/WSGR/Display.aspx?SectionName=practice/t...

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What is the least amount of money that you could get away with? Do you even need a lawyer for a seed round if you're not doing anything fancy?

You don't technically need a lawyer, but I would advise you to retain one.

Even if raising money with a convertible note, and using the community documents, you'll still need someone to file your Form D, prepare your board consent, and ensure all i's are dotted and t's crossed. You don't want to run afoul of the SEC.

Is your corporation established? Are you authorized to sell shares?

If you bring your own paperwork, you should be able to get away with <= $5k via a negotiated fixed price or cap on the legal work.

Some firms are also willing to defer payment up to a certain amount and/or until you raise additional funds down the line.

So do most people invest a couple thousand dollars in legal fees? What about kids for whom that would be over half of the money they have to their name?

Yes, startups typically retain counsel to assist with incorporation and fundraising. Mistakes made early on can come back to haunt you.

Check with your school. Perhaps they have an entrepreneurship program that can help?

This is not uncommon. Incorporation alone will cost you around $1-2k, after all filing fees, services, etc. are included in the cost, and you need to do that before anything else.

I recommend using something like clerky.com for incorporation and post-incorporation setup. They might also be able to help you with the later parts of the process.

As far as the cost goes...you gotta spend money to make money. Don't do any of this until you're absolutely sure that you have committed investors, and you'll minimize your risk.

I have taken investment from people I trust using boilerplate convertible notes that I know and understand.

The "people I trust" part is important, as is the "that I know and understand" part. Common sense dictates that you probably don't want to take investment on terms given to you by a total stranger that you don't fully understand.

If you've never done this before and/or you don't understand the docs you're using, you should probably consult someone who does.

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