Ask HN: Does having the right corp lawyer help you find investors?

#1

Post by ucdaz » Thu, Jul 30, 2009, 9:36 PM UTC

I was recently approached by some lawyers in the Valley telling me that I should incorp my startup. The told me they'll defer the cost until we get funded, and they'll introduce us to their investor community. With that said, do lawyers really help you get funded or is it just a bunch of horse Sh$%!?

Re: Ask HN: Does having the right corp lawyer help you find investors?

#2

Post by pg » Thu, Jul 30, 2009, 9:39 PM UTC

That's true. A lot of intros to investors come through lawyers.

Re: Ask HN: Does having the right corp lawyer help you find investors?

#3

Post by ucdaz » Thu, Jul 30, 2009, 9:47 PM UTC

pg wrote: post #2

That's true. A lot of intros to investors come through lawyers.

Thanks Paul. Oh and I know you like to eat cheese. Anyways, so should I be picky about which firm to go with? Does anyone have any good law firm recommendations in the Silicon Valley?

Re: Ask HN: Does having the right corp lawyer help you find investors?

#4

Post by pg » Thu, Jul 30, 2009, 9:50 PM UTC

ucdaz wrote: post #3

pg wrote: post #2

That's true. A lot of intros to investors come through lawyers.

Thanks Paul. Oh and I know you like to eat cheese. Anyways, so should I be picky about which firm to go with? Does anyone have any good law firm recommendations in the Silicon Valley?

http://www.paulgraham.com/angelinvesting.html#f2n

Re: Ask HN: Does having the right corp lawyer help you find investors?

#5

Post by icey » Thu, Jul 30, 2009, 10:01 PM UTC

ucdaz wrote: post #3

pg wrote: post #2

That's true. A lot of intros to investors come through lawyers.

Thanks Paul. Oh and I know you like to eat cheese. Anyways, so should I be picky about which firm to go with? Does anyone have any good law firm recommendations in the Silicon Valley?

You should be picky. I've had an instance where a lawyer ruined the prospects of getting a startup funded by acting in a very inappropriate fashion while "helping out" during fund seeking.

Re: Ask HN: Does having the right corp lawyer help you find investors?

#6

Post by grellas » Thu, Jul 30, 2009, 10:09 PM UTC

The VC introductions are an invaluable asset offered by the large law firms in the startup area - if your business model is capital-intensive, you will find no better way to open doors to this type of funding.

The big-firm model is highly VC-focused, though, and can be somewhat inflexible for bootstrapping types of ventures. It all depends on where your company is at.

Re: Ask HN: Does having the right corp lawyer help you find investors?

#7

Post by ucdaz » Thu, Jul 30, 2009, 10:25 PM UTC

pg wrote: post #4

ucdaz wrote: post #3

Earlier quoted context omitted.

Thanks Paul. Oh and I know you like to eat cheese. Anyways, so should I be picky about which firm to go with? Does anyone have any good law firm recommendations in the Silicon Valley?

http://www.paulgraham.com/angelinvesting.html#f2n

Any cons with large firms like Wilson Sonsini, meaning would they charge an arm and a leg once a startup gets funded?

Re: Ask HN: Does having the right corp lawyer help you find investors?

#8

Post by alain94040 » Thu, Jul 30, 2009, 11:22 PM UTC

The best introductions to VCs come from entrepreneurs who made them millions. Lawyer intros are definitely lower on the list, but far better than cold calling.

Deferred costs is a fair deal. Of course, the bill will be large once you have to pay it, but at least it's deferred. Just make sure that it's truly deferred forever. If it's deferred for 6 months or funding (whichever comes first), it's a bad, bad, deal. Debt bankrupts companies.

Re: Ask HN: Does having the right corp lawyer help you find investors?

#9

Post by ivankirigin » Thu, Jul 30, 2009, 11:39 PM UTC

ucdaz wrote: post #7

pg wrote: post #4

Earlier quoted context omitted.

http://www.paulgraham.com/angelinvesting.html#f2n

Any cons with large firms like Wilson Sonsini, meaning would they charge an arm and a leg once a startup gets funded?

Large firms have done a lot of business with a lot of companies. When we needed some urgent advice, our big firm couldn't give advice specific to the situation before a conflict waiver, which delayed things significantly.

We don't use them anymore, and I don't think there is much value added to justify the added cost of a large firm.

Do go with vanilla docs though.

Re: Ask HN: Does having the right corp lawyer help you find investors?

#10

Post by pg » Fri, Jul 31, 2009, 12:13 AM UTC

ucdaz wrote: post #7

pg wrote: post #4

Earlier quoted context omitted.

http://www.paulgraham.com/angelinvesting.html#f2n

Any cons with large firms like Wilson Sonsini, meaning would they charge an arm and a leg once a startup gets funded?

The top firms are expensive, but worth it. It's usually not worth trying to economize on lawyers unless you really know what you're doing. Once a startup is established, it can make sense to try cut down one's legal bills by e.g. hiring an in-house counsel, but when you're inexperienced you don't want to be cutting corners in the legal dept. Better to overpay your lawyers than end up with some disastrous term in your funding agreement.