Both are common at the earliest stages. SAFEs are simpler and don’t carry interest or maturity dates, making them easier for founders. Convertible notes function as short-term debt and may be preferred by some investors who want added protection. Either way, model the impact on dilution before signing.

• Pre-money valuation: The company’s value before new capital is added.
• Post-money valuation: The company’s value after adding new capital. For example, a $10M pre-money valuation with $2M raised results in a $12M post-money valuation. Ownership percentages are calculated using the post-money figure.

Enough to hit meaningful milestones that will position you for the next round. For most pre-seed and seed companies, that means 12–18 months of runway. Avoid raising “as much as possible” — overcapitalization leads to unnecessary dilution and pressure.

No. Many great businesses are bootstrapped or funded through revenue. Venture capital is best suited for companies chasing large markets and rapid growth. If your business can thrive without outside capital, you retain more control and ownership.

You’re ready to raise when you have clear evidence of progress — whether that’s a working MVP, early customer traction, or revenue growth. Raising too early, without proof points, often leads to rejection or unfavorable terms.

It depends on the jurisdiction. Some states (like California) ban most non-competes, while others enforce them only if narrowly tailored in scope and duration. A safer approach is to rely on confidentiality and non-solicitation clauses, which are more broadly enforceable.

Not necessarily. Equity is a powerful incentive, but it should be allocated strategically. Early hires often receive equity, while later hires may receive market-rate salaries with smaller or no equity grants. What matters most is aligning compensation with company stage and employee contribution.

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Misclassification can trigger back taxes, wage penalties, benefits liability, and lawsuits. Regulators look at the reality of the relationship, not the contract label. If a worker acts like an employee - taking direction, working set hours, or performing core functions - they probably are one in the eyes of the law.

Yes. While not legally required for very small teams, a handbook sets expectations, communicates policies, and helps protect against legal claims. As soon as a startup hires beyond a handful of people, a simple but tailored handbook becomes a best practice.

Contracts should be revisited whenever your business model, regulations, or relationships change. As a rule of thumb, review key agreements annually. For privacy policies and TOS, updates may be required more frequently to stay compliant with evolving laws like GDPR and CCPA.

At a minimum, most startups need:

• NDAs for protecting confidential information.
  
• Employment/contractor agreements with IP assignment clauses.
  
• Customer contracts (sales, SaaS, or licensing).
  

Terms of Service and Privacy Policy for digital products. Additional contracts like MSAs, vendor agreements, and partnership agreements become essential as the company grows.

Templates are a useful starting point, but rarely sufficient on their own. Every deal has unique elements - scope, payment, IP, liability - that need tailoring. Using a template without legal review risks leaving out critical protections or including terms that don’t fit your situation.

Yes. Trust is important, but contracts provide clarity and prevent misunderstandings. Even well-intentioned partners can recall terms differently months later. A contract protects both sides and preserves the relationship by setting expectations upfront.

Use original objectives and metrics (revenue growth, cost synergies, retention, integration milestones) to measure success over 12–36 months.

Advisors help structure the deal, manage process, run auctions, negotiate, draft agreements, coordinate diligence, and maintain alignment between parties.