start-up in the us: issues for foreign companies

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© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com Majda Barazzutti January 10, 2014

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What issues would an Italian and other foreign entrepreneur who wants to do a start-up in the US have to deal with? A legal perspective. Legal entity, management, financing, investors, venture capital, term sheet.

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Page 1: Start-Up in the US: Issues for foreign companies

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 1

Majda Barazzutti

January 10, 2014

Page 2: Start-Up in the US: Issues for foreign companies

What issues would an Italian entrepreneur who wants to do a

start-up in the US have to deal with?

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 2

Page 3: Start-Up in the US: Issues for foreign companies

U.S. vs. Italian Process Informal Private No statutory auditors No minimum capital requirements No legal impediments to ongoing losses

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 3

Page 4: Start-Up in the US: Issues for foreign companies

Choice of Entity Corporations LLC’s All the rest (LP, LLP, branches) Where to incorporate? Cost: Be aware of Voucher Program

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 4

Page 5: Start-Up in the US: Issues for foreign companies

Management Board of Directors Officers:

President Treasurer Secretary

An all-Italian management? D&O

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 5

Page 6: Start-Up in the US: Issues for foreign companies

The Golden Rules

• Prepare, prepare, prepare…

• Employment issues: Employment “at will” , but…

• Follow the rules

• Immigration: Take it seriously

• Pay your taxes

• Time IS money

2009 Valla & Associates, Inc., P.C.

Page 7: Start-Up in the US: Issues for foreign companies

Financing is a Staged Process Common Stock

Bootstrapping Friends and Family Angels: Equity, Warrants, Convertible Notes

“Series Seed” Series A Preferred (B, C, etc.) Liquidity Event

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 7

Page 8: Start-Up in the US: Issues for foreign companies

Alternatives: Strategic Investors

Stage of Product Development: Scalability

Aims Differ Not Interested in Helping the Company

Grow Conflict of Interest: greater returns from

commercial rights than growth Expertise Could affect future VC financings

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 8

Page 9: Start-Up in the US: Issues for foreign companies

Venture Capital Identify the Right VC Due Diligence The Risk of “Finders”

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 9

Page 10: Start-Up in the US: Issues for foreign companies

A Typical Term Sheet Valuation/Number of Shares/Price Liquidation Preference Redemption Conversion Antidilution Voting Rights Protective Provisions Vesting of founders' stock

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 10

Page 11: Start-Up in the US: Issues for foreign companies

(Almost) anything can be negotiated Make sure you understand what you’re

signing Find expert advice

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 11

Page 12: Start-Up in the US: Issues for foreign companies

Thank you!In bocca al lupo!

Valla & Associates, Inc., P.C.

1990 N. California Blvd., Suite 1060 Walnut Creek, CA 94596

USA

E-mail: [email protected]: +1 925 705 7623 Fax: +1 925 705 7629

www.vallalaw.com

© 2014 Valla & Associates, Inc., P.C. www.vallalaw.com 12

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