SamanthaG

What do you mean by "operating"? You could well be right but there is no hackin or anything going on here, its more the founders going round looking for customers and creating relationships with strategic partners etc. There are no contracts signed yet, no shareholders invested yet. Don't get me wrong, I am not trying to discount in anyway what they have done, I am just trying to get to a situation where I can understand the best way to "value" what I am being offered a stake in, so I can compare what they are offering me against their stake.

Thanks for this.

We're still in early discussions. No it wouldn't be preferred stock, just ordinary. They seem to be proposing that a shareholders agreement will contract for my stake to be protected, but, as you know, a VC will restructure all the shareholders if it wants to, so that doesn't work.

My calculations are based around a sale value of around £50million to £90million in about 5 years which at 2% would make my stake worth £1million in 5 years time (if £50mill sale price) but that assumes I don't get diluted below 2% etc and that is why I think it is a too low % stake for me to accept since it would only give me double the salary I could otherwise earn over the same period.

Thanks, this is useful and gives me a better perspective.

Yeah, I am trying to negotiate a bigger stake but with dilution.

None of the founders have been working on this full time over the last 18 months, I would say about 50% of their time, it is only now that everyone is coming on board full time. We have lots of customers knocking on the door for the product which is down to them. I am being told the figures being presented to VCs indicate the company may be worth about £6m today, though we have no contracts in place yet.

If funding comes in, we will all have some salary, albeit well below market rate, which I suppose is fine, its a start-up. Why is 8% high for a late joiner?

As a lawyer, I would advise you to consider your options with an accountant or lawyer

Hi - is your business based in the UK or in London?

Crikey what is "boolean"? I thought my law books were complicated!

Thanks for taking tiem to reply. The humour cheered me up!

Thankyou too.

Many thanks, thats helpful

I am a lawyer in the UK, English qualified, we're not all bad, honest.

Hi,I'm a uk based lawyer (also doing a start-up - looking for a co-founder), in the UK we have a free council run service for small start up businesses called "Business Link", is there anything similar in the US for you? If not, I think if you pick up the phone and call 3 or 4 law firms, explain that you're a small start up doing whatever and ask if they know anywhere/one that can help you for free at this stage. You should try and avoid paying legal fees just yet. If it were me, I would pick a very large, prestigious law firm, get some email details for attorneys in the corporate/business areas and email them and ask if they can recommend where you can look for some free guidance at this early stage. They are often quite helpful and like to assist if they can. Hope this helps.

Hi, I don't think I'm a hacker (unfortunately I'm a lawyer) in Birmingham UK, but may be looking for any interested hackers to collaborate with me in overhauling the provision of legal services to people via a personal startup. If anyone wants to share any ideas or comment,I'd be grateful.

Looking at the all the positive responses to the Hacker News post "Are you a UK- based hacker..." posted by "dood", it seems readers of this site might well appreciate a forum area on the site for networking other YC readers or YC seed companies. There is a huge amount of goodwill amongst YC readers and this may be better accessed through a new part of the YC site rather than "Hacker news", eg perhaps you can build something in to allow readers to describe their skills/ideas and the type of YC readers they are either hoping to contact or happy to help etc.Just a thought.

I agree with the additional comments below, but whether you incorporate as an LLC or set up as a partnership or carry on by yourself, if you are going to ask someone else to join you (leaving aside the exact legal nature of your relationship)you must protect your intellectual property rights and if you carry on working with someone else and don't get the legals sorted there are risks.

Hi,I'm a lawyer (in the UK) and you do need a legally binding agreement in place to protect you. I'm sure someone at Y combinator can recommend a decent lawyer over there. You should not have to pay a great deal for this, but it is best to have it done professionally so that in the worse case scenario (that you guys fall out with each other), you're legally sorted from the outset. Its probably not a good idea to try and do this yourself. I do mean that sincerely and not in a patronising way at all, you want to be able to focus on your start-up and not be worrying about what would happen if things went wrong. Good luck.