Legal Advice for Equity?

[z3r0p4r4d0x]

Hey guys,

I'm working on my first startup right now. It's not affiliate sales or MLM scheme, it's an actual tech startup. It's actually an online financial transactions provider like PayPal. I need legal advice about the project before I launch, which I plan to do soon considering this recession has HUGE opportunities lurking in the dark. As it's a bootstrapped business, I cannot afford to pay for legal advice, hence, I'm willing to give equity in the project in return for legal and business advice. If you think you can offer me that, then I can offer you equity in a profitable and stable business with a solid business model. I study at Monash University in Melbourne, Australia. If you're interested, email me gaurav[dot]dadhania[at]google's email service and we'll meet up for a coffee.

Cheers,
Gaurav

[akula]

i'm a lawyer in sydney, and as a bit of legal advice, i'd recommend that you avoid splashing around your equity in this haphazard manner. what you're doing creates a multitude of legal and operating difficulties in the future. instead, rather than equity, try paying in convertible notes if you don't have cash...better yet, approach your local BEC, ask for free advice, barter with other BEC members, or ask for free advice at your law faculty or the Monash-Oakleigh Legal Service

all in all, keep in mind that as far as professionals go, any offers of equity are usually treated with prejudice. serious entrepreneurs simply don't offer equity to other people...for a lot of reasons...and when such offers are made, this reflects poorly on the person making them.

offer the notes or ask for trade credit...the second option is usually the best.

[numberman]

I totally agree with Akula. Don't offer equity, it rings alarm bells.
The advice of going to your law faculty is excellent, just ask them what books to read on the specific area of law you are interested in and they will be more then happy to help.

Here's an idea if you're desperate for cheap vague advice. Put a note on the board of your law faculty for a competition- Best Essay On The Legality Of Independent Financial Transaction Provider With Particular Reference To blah blah blah Gets £500. Students are broke, you'll get loads of submissions, pick the best, but get advice from all of them. Combine that with advice from faculty, your own reading etc. and you'll have a real good level of understanding. It wont stand up in court but nothing you get over a coffee will anyway.

Best of luck!

[z3r0p4r4d0x]

Yup, I'll ask some of my mates in the Law Faculty today for some contacts. The only reason I was willing to give equity is because this is my first real startup and I don't want to be sued and shut down in 6 months cause of some legal loophole I overlooked. But I love your suggestions, I'll try such cheap and effective ways to get legal advice to the ball rolling.

Cheers!

[mcstartup]

Since I'm new and don't have enough posts, I can't give you direct links to articles I've written on this very subject, but if you take the time to read through my posts, I think you'll be well served.

There are a few easy ways to handle equity issues for startups, and it's just as easy to completely screw it up if you aren't careful. You'll want to carefully look at setting up option plans or restricted stock plans so you don't get hosed if someone walks away unexpectedly (or you have to fire them).

My blog is at www-dot-mcstartup-dot-com. Click past articles on the left. At minimum, please read the article "How to Structure Equity for the Founders."

I'm not a lawyer, and I'm don't have experience in Australia, but I'm pretty sure the business laws will be close enough to here in the USA that the same issues apply.