Entries by Ryan Shaening Pokrasso

For-Profit or Nonprofit or Hybrid?

Traditionally, the divide between a for-profit or nonprofit organization was clear: for-profit businesses would engage in revenue generation and nonprofits would engage in charitable work to solve social issues and would largely stay away from revenue generation. The rise of social enterprises in recent years, however, has made that distinction less and less clear. Social entrepreneurs are […]

Are Term Sheets Binding?

Agreeing on a term sheet is the first step in the exciting process of raising money for startup founders. It sets out the parameters of the deal that will be executed in one or more legal documents to follow due diligence. But you may be wondering to yourself: “Are term sheets binding?” Unfortunately, the answer is that […]

Important Terms in Convertible Notes and Convertible Equity

When negotiating a convertible note or a convertible equity instrument, there are a few key terms in the negotiation that are significant for the investor and the entrepreneur. In a previous article, we discussed the differences between convertible notes and convertible equity. This article discusses the important terms in convertible notes and convertible equity, including […]

When Are Terms of Use Legally Binding?

You’ve done it many times before… you click the box that says “click to agree to our Terms of Use” (and let’s be real – you didn’t read it). Does that check box create a legally binding agreement? What about when companies just post a terms of use and you never click on the link for […]

Raising Startup Funds from Friends and Family

Raising funds from friends and family often seems like the logical first step for a new business to raise money. After all, you will be hard pressed to find an investor who is willing to shell out funds when your whole business is simply a couple motivated people with a great idea. However, accepting money from friends and […]

Debt vs. Equity

When raising money as a business, whether old or new, it is important to carefully consider the best way to fundraise–i.e. whether it will take the form of debt or equity. In short, “debt” refers to loans, while “equity” refers to giving away a piece of ownership in the business. When deciding on debt vs. equity, or […]

S-Corp Basics

S-Corporations are not technically a distinct entity type. Rather, the term “S-Corp” refers to a type of tax treatment available to corporations and LLCs that meet certain requirements. When a corporation makes an S-Corp election, it will avoid double taxation, which is often viewed as the primary disadvantage of creating a corporation (i.e. a C-Corp). Instead, the corporation will […]

C-Corp Basics

The C-Corporation is the default corporate form, meaning when you incorporate your enterprise as a corporation, you are automatically classified as a C-Corp in the state where you incorporate. The C-Corp is generally considered the preferred entity type for businesses that seek funding from sources such as angel investors and venture capitalists. But the tax treatment of C-Corps […]

Limited Liability Company Basics

The limited liability company, or LLC, is a relatively recent addition to the menu of options available when choosing a legal entity. It is a hybrid between a partnership and a corporation, designed to combine the benefits of both. In short, an LLC enjoys the taxation and governance advantages of partnerships while also providing limited liability to the owners […]