The HBS Blog offers insight on Delaware corporations and LLCs as well as information about entrepreneurship, start-ups and general business topics.
What differentiates a tech start-up from any other type of small business?
BeatBeat wrote a piece on this not too long ago. I think usually the term ‘tech start-up’ is used broadly, and utilizes the internet and/or technology as a core aspect of the business. Loads of ‘tech start-ups’ simply use the internet to acquire new customers or to distribute their product (like yelp or Living Social), and others offer a technological utility (like dropbox or evernote). In all cases, the hope is to leverage your tech use to scale. I’d say this scaling makes strong talent imperative to get the technology in the right place, and also often biased towards a work environment focused on fun, perks and culture to attract and keep talent.
What is your perception of the tech space here in NYC and why so few have in-house HR staff?
Start-ups in general need to operate lean. Tech start-ups perhaps even more so, as they want to focus on their technology and not operational overhead and process. Any staff can be a liability when you need to pivot or when you need to scrimp and save over lean months. HR is often seen as an unnecessary cost, something hiring managers and other leaders can take on and doing so more effectively.
What are some of the advantages of this reality?
Ultimately, I think if these tasks can be done effectively with current key staff they should be. You have a true lean, mean machine. Obviously, you can save money on headcount but also business units will be more intimately connected with how the hiring process is going, ensure onboarding is smooth, and be guardians of efficient work conditions, performance, feedback, etc... If you are getting by without HR, all the power to you! If it’s not broke don’t fix it.
What are some of the disadvantages?
Like many things in life, reality doesn’t always work out the way we’d like. People are, and should be, busy with their core duties. Taking the CEO, lead engineer, or sales person away to post a job and screen applicants or enroll someone in the health plan is not the best use of their skills, time, or interest. This is especially true if you are scaling.
How can HR pros do to better to understand the needs of those in the tech start-up space?
Most often the first HR member is brought in for recruiting, so you need to be creative, resourceful and bring in recruiting structure and best practices. You should spend time learning about emerging and relevant technologies. I think strong HR generalist experience is also important. You should know how to select benefit plans, manage equity offerings, administer payroll, handle exits, give opinions and guidance on feedback systems, handle employee relations and compensation strategies. It’s also important to understand the fast paced and changing needs of start ups - be prepared to multi-task, change course, and pick up tasks outside of your comfort level.
Are you filing a new company directly with the state of Delaware? Then you may already be aware that a Delaware Registered Agent is required by law. In order to file your company and receive approval, you must have a registered agent.
If you are currently searching for the most cost-effective and efficient Registered Agent service for your new or existing Delaware Company, our secure website offers a vast collection of helpful information that may influence such an important decision.
Simply click on “Registered Agent Services” on the home page and you can appoint HBS as the Registered Agent for your new company or switch from your current Registered Agent to Harvard Business Services, Inc.'s low annual fee. You can also make a payment.
By clicking “Appoint HBS As Your Registered Agent Now!” you will be directed to insert 3 pieces of information: company type, contact information and payment details. Options will be provided for the amount of time you wish to elect HBS as your Registered Agent. You can choose one year at our guaranteed low price of $50, 2 years at $90 or 3 years at $125. A formation option is offered for your convenience.
Once you’ve submitted your request to appoint HBS as your Registered Agent, you will receive an order receipt which includes all the necessary Registered Agent details for the preparation of your Certificate of Formation/Incorporation. The time elected with HBS will begin upon the approval notice from the state of Delaware.
If you designate HBS to prepare, file and list us as a Registered Agent for your new company, you can feel certain your new venture is in good hands. You will receive acknowledgment of your order followed by the approved documents within a day or two of your order request.
Want to save on your Registered Agent fee? The switch is easy if you have an existing Delaware company current with Delaware annual taxes. Simply click “Change Agent to HBS Now.” For $50, HBS will prepare and file the required amendment on your behalf with the state of Delaware and include 1 free year of Registered Agent service. Follow the 3 easy steps and you are on your way to a successful relationship with Harvard Business Services, Inc. Typical approval time is 2 business days. The date-stamped amendment will be forwarded to you and Delaware will notify your previous Registered Agent.
We look forward to long and successful relationship with you as your Delaware Registered Agent.
The internet is such a huge resource but sometimes it is hard to find what you need because there is so much to choose from. This informative article from DesignSponge Biz Ladies. It is a fantastic round-up of the best online tools for your business. From accounting to project management, help is just a click away. Here's an excerpt:
The research is done for you. All you need to do is select your favorite pick from the options below. Let’s get started!
Online Project Management Software
These tools help you keep track of project details, whether you work alone or with a team.
Summary: Basic collaborative sharing and editing of documents, forms, spreadsheets, videos, etc. Create documents of your own or use a template to help you get started on a project.
Compatibility: Access available through computers and smart devices.
Sharing: Invite others to share your documents through e-mail. Check who made changes, and decide to un-publish at any time. You can even edit the same document with others in real time.
Summary: “All-in-one tool” for managing your projects, time sheets, invoices, and contacts. Graphs, dashboards, and diaries help with planning, invoicing, and project management. You can hold, track, and graph all your freelance business data in one place.
Compatibility: Create an online account to access Solo through a desktop or smart phone web browser, and you can import contacts from your current address book.
Sharing: Capabilities to share information with clients coming soon.
Price: $10 per month after a free 14-day trial.
Summary: A project collaboration tool to share files, set deadlines, and track the time each team member spends on different tasks. Template options allow you to save a framework design if you work on similarly formatted projects or create an automatic standardized checklist for every project you begin. When sharing files, Basecamp keeps both old and new versions of the file so you can see who changed what. Supports most popular file types, including Photoshop and Excel, and language translation tools are available.
Compatibility: No apps needed to visit this site on your desktop or on mobile device. Just load the web browser on your mobile and visit http://basecamphq.com to be automatically redirected to the mobile site.
Sharing: A message board area is used for group communication, and you can choose to receive an e-mail when your project is updated. You can also leave comments in any area, from the calendar schedule to report folders.
Price: From $20–$150 per month, following a 45-day free trial.
Summary: Share notes, files, and projects with your team. Generate reports, track hours, and view an interactive timeline.
Compatibility: 5pm mobile edition available for free for all 5pm users with iPhone, Android, Windows Mobile, BlackBerry Bold, and Palm Pre/WebOS devices.
Sharing: Available in over 20 languages, and you can import files from Google Docs and Basecamp. Two-way notifications work to send e-mails to your collaborators, or create a notification in your 5pm schedule when you send a message about a project from your e-mail.
Price: Multiple plans from $18 per month for five users to $175 per month for unlimited users. Free 14-day trial available.
Here’s how to make keeping on top of finances as quick and easy as possible.
Summary: Links with eBay, Etsy, PayPal, Amazon, bank accounts, and credit cards, eliminating data entry and making it easy to track your business finances. View easy-to-understand charts and complete tax reports.
Compatibility: View on your computer or using the iPhone app.
Price: Free level of service always available, and paid accounts available starting at $9.95 per month.
Summary: Track your time, organize your expenses, and bill clients, including links with PayPal and other payment gateways. Use add-ons to link project management systems like Basecamp.
Compatibility: Manage from your computer or using a mobile app.
Price: You can use a free account indefinitely to manage up to three clients. Paid accounts range from $19.95 to $39.95 per month.
Summary: Pay bills, manage invoices, and track expenses with this online software that has both import and export functions to other software and offers some online syncing options.
Compatibility: Online access and mobile access for iPhone, Blackberry, and Android.
Price: Free trial for the first 30 days and then monthly plans available ranging from $12.95 to $78.95.
Summary: Online software allows you to get a quick picture of how much you’re earning and spending as well as your cash situation. Also automatically downloads account balances and transactions to eliminate data entry.
Compatibility: Online access
Price: Free plan with limited historical data. Monthly plans starting at $19.95.
Did you know that Napster was incorporated by Harvard Business Services? One of the best parts of our job is hearing your great ideas and seeing them realized. We like to keep up with what our clients are up to. Here is a look at Napster's founders, Shawn Fanning and Sean Parker's next venture.
The JOBS Act dramatically changes the regulatory requirements and limitations governing the offer and sale of securities by early- and mid-stage businesses by, among other things, permitting "crowd funding," whereby a large number of individuals make small individual contributions to provide an early-stage business with capital. Below, we discuss briefly the provisions of the JOBS Act related to crowd funding.
The crowd funding provisions of the JOBS Act are both novel and controversial. Crowd funding involves large numbers of relatively unsophisticated investors making small contributions to early-stage businesses, essentially creating a large pool of venture capital investors. Given the excitement surrounding crowd funding in many circles, the SEC has issued a special notice reminding the public that the crowd funding exemption does not become available until the SEC issues appropriate rules required by the JOBS Act.
A. Limitations on Amounts and Information Requirements. An issuer using crowd funding cannot raise more than $1 million in any rolling twelve month period, though at the beginning of its offering it must set a target amount it seeks to raise in a given offering. An issuer must file certain information with the SEC and provide such information to investors and the crowd funding portal (described below) used to offer investments, including:
1. the name, legal form, physical address and website of the issuer,
2. the names of the directors and officers (or persons acting in a similar status),
3. a description of the issuer and its current and anticipated business,
4. a description of the financial condition of the issuer (potentially including financial statements and other information), the scope and nature of which depends upon the target amount sought,
5. a description of the intended use of the proceeds of the offering,
6. the target amount, the deadline for reaching the target amount, and regular updates regarding the progress of the issuer in meeting the target amount,
7. the price of the securities being offered and the method for determining the price, and
8. a description of the ownership and capital structure of the issuer, including the names of certain large shareholders, the terms of any securities.
In addition to this initial information the issuer must provide the SEC and investors with annual reports including, among other things, the a report of the results of operations and the issuer's financial statements with such content as the SEC deems appropriate by rule. Notably, the SEC may require that an issuer provide additional initial or ongoing information in its rules implementing the crowd funding exemption and may dictate the required content of any such filings and reports.
B. Crowd Funding Portals. Under the JOBS Act, a crowd funding portal (a type of matching service created by the JOBS Act) must act as an intermediary in a crowd funding transaction. An issuer using crowd funding cannot advertise its offering except to direct interested parties to the relevant portal site.
A crowd funding portal would generally list businesses and give subscribers access to information about the businesses, including the information required above. Prior to the JOBS Act, these entities operated outside the U.S. or catered only to extremely sophisticated investors to avoid pursuit by the Securities and Exchange Commission (the "SEC"). Although the JOBS Act imposes a number of responsibilities on crowd funding portals, many of the details of the crowd funding regulatory framework and regulation of crowd funding portals will be developed by the SEC through rulemaking which must be issued within 270 days of the JOBS Act's April 5, 2012 passage. As a result, companies interested in providing crowd funding portals are lobbying the SEC and seeking to form a trade association to assuage the doubts of state and federal officials who are concerned about the potential for fraud in crowd funding.
C. Limitations on Amounts Investors Can Purchase. The JOBS Act places a limit on the amount of crowd-funded securities that can be sold to an investor in any 12-month period. An investor with annual income or net worth of less than $100,000 can invest the greater of either (1) $2,000 or (2) 5% of his or her annual income or net worth. An investor with annual income or net worth greater than $100,000 can invest up to 10% of their income or net worth, up to a maximum of $100,000. The JOBS Act provides for the manner of calculating annual income and net worth. It is unclear whether a crowd funding portal or issuer can rely on a mere representation from an investor or if it must seek to obtain some documentation related to annual income or net worth. For instance, it would be difficult for a portal or issuer to track crowd-funded securities purchased on another portal in assessing the investor under the above thresholds.
D. Resale of Crowd Funding Securities. Crowd funding securities can be freely resold by the holder one year after their purchase. This could create a form of minor secondary market for small and emerging business's shares or debt.
E. State Law. Securities purchase pursuant to the crowd-funding exemption are exempt from state registration. This is an extremely important feature of the crowd funding provisions of the JOBS Act, and was strongly opposed by state regulators and their representative body, the North American Securities Administrators Association (or "NASAA"). An issuer is still subject to the anti-fraud provisions of state law, but is not require to go through a state-by-state process of registration and oversight.
No one is certain whether crowd funding will be successful in helping small and emerging businesses raise capital. The utility of the exemption will largely turn on the implementing rules issued by the SEC and the additional requirements or limitations those rules impose. Regardless of how widespread the use of crowd funding becomes, it is a laudable step toward improving small and emerging business's access to a new, broader source of capital. This update is not intended as legal advice. The rules governing the offer and sale of securities under state and federal law are extremely complicated. Prior to raising capital, you should consult with counsel.