startup Timeline

 

The timeline of a startup is about 8 or more years from start to liquidity event. This is the sequence and how plays out: 

SORT OUT EMPLOYMENT ISSUES

Prior to starting your startup, you need to make sure that there are no restrictions or issues while you are still employed elsewhere, this includes issues such as non-compete agreements, misappropriation of trade secrets, and no-moonlighting agreements. 

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address pre-incorporation ip issues

Make sure you know who the intellectual property that you've created or will create will belong to. You don't want your previous/current employer to own the IP that you will deploy into your own startup. You also want to make sure that the IP will belong to the startup that you will create. 

Decide initial ownership structure of the startup

You and your co-founder(s) need to decide who will own what in the company and what your respective roles will be. This can be a difficult, but necessary conversation. You will also need to figure out what the structure of the company will initially look like and how it will be managed (a pre-incorporation agreement.) 

INCORPORATE

This is a process where filings are made with the Secretary of State to actually create the entity that will be your startup. After you receive documents back from the State, the person who filed the documents will hand the company over to the initial board members and you will create bylaws and take care of other incorporation issues. 

FUND THE STARTUP (bootstrap and Friends & Family)

Initial funding will usually be self-funding by the founders, funding by friends and family, or by taking out loans.

OPERATE THE COMPANY

This is where you work on developing, building, marketing, and selling your product. 

A host of legal issues will arise while operating the company. This includes IP issues, contracts, taxes, leases, etc.

HIRE PEOPLE

You will need to hire people in order to help operate the startup.

You will need to abide by employment law. You will also need to properly incentivize employees with pay and/or stock options in the startup. 

get funding (angel investing)

Grow the company by getting more funding. This is usually done with angel investors and takes the form of seed investments or convertible notes. 

get venture capital

Venture capitalists invest in early stage companies that have high growth potential. They are looking for returns of at least three to five times their investment. 

Have a liquidity event

This is how investors get their return on the investment. This is typically by another company purchasing the startup (an M&A event) or an initial public offering.