In this episode, Bethany Corbin and Dr. Brittany Barreto discuss:
How to choose between C Corp vs LLC for your FemTech startup
When you should start forming your company
How much to budget for legal fees
What six documents you should have when starting your FemTech company
What to expect in Part Two of our discussion
Key Takeaways:
While startup companies can form as either LLCs or C-Corps, the preferred corporate vehicle for attracting investment is the C-Corp. In fact, venture capitalists and investors prefer to invest in Delaware C-Corps.
When forming your entity, think carefully about the number of shares you’ll need and the price for those shares. Issuing 10 million shares of stock is common if you’re looking to create a company that attracts investors. If you’re an early-stage startup, you’ll want to set the par value of your shares low, as your company is not yet profitable and par value can have tax implications.
Make sure to prioritize legal services within your budget and think carefully about your anticipated monthly legal budget. Investors will want to know that you are serious about establishing your company properly and adhering to applicable laws and regulations. Depending on the stage and size of your business, legal fees may range from $2,000-$5,000 per month for early-stage companies.
Here are six key documents you should consider having when starting your femtech company:
Non-Disclosure Agreement (NDA)
FAST Agreement
Employee agreement
Restricted stock agreement
83(b) Form
Contractor agreement
“Some founders, as soon as they have an idea, they'll set up their C Corp and then all of a sudden they have an annual franchise tax. Form [your company] when you’re about to really start to do business. Get revenue. You really need a bank account. I think the bank account is kind of that pivotal moment where you're like, Okay, this is a real business. This is a real company.” - Dr. Brittany Barreto
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