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Mark S Britton

Mark Britton’s Answers

139 total


  • How much seed money should you have saved when starting a business?

    What's an average amount of time to break even? I've heard some people say 6 months, others say 2 years. I know realistically it will vary depending on the business/industry, but what's a safe estimate?

    Mark’s Answer

    • Selected as best answer

    You have to do some math here: What are you selling and what is the average sales cycle? Considering that you are a new-entrant, figure that your sales cycle will be 2-5x that average. Then look at your burn rate. How long will it take you to cover that burn rate with your anticipated sales cycle? That should give you a feel for how much cash you need from the time of your product launch. You might even think about doubling whatever number you come up with bc every start-up thinks they are going to the moon, and the reality is that getting early traction is hard and usually takes longer than bullish founders anticipate. Good luck with your business!

    Mark
    CEO Avvo

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  • I am looking to hire a general consul for my start up business where do I look to hire one?

    I have a startup media and technology company that seeking to have internal representation for the corporation. We are currently looking for a general consul to build an elite staff to protect and advise the corporation in all legal matters.

    Mark’s Answer

    As a startup founder and former general counsel, I doubt you need a general counsel at this early stage of your company. The question is whether you have 40 hours of weekly work for a lawyer, and I just can't imagine that you do. My guess is that you have a lot of work *now*, but you are better off paying a firm during your spikes in legal need rather than employing someone year round. A solid general counsel will cost you a big salary + overhead + stock. An outside law firm can act as your GC until you have legal issues on a daily basis. Yes, it is expensive but not as expensive as hiring and incentivizing a solid GC.

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  • What actions can I take? Can they use my money as a 0% free loan? Is this a criminal matter?

    Almost 12 months ago I signed a contract with a startup to provide them with $xx,xxx. I accepted the terms on a strong business plan/ outline. My money was going to be used to fund a proof of concept for further investments. When this time came, t...

    Mark’s Answer

    This feels like a business dispute rather than criminal activity. For criminal activity, you would need to convince law enforcement that the company is acting with criminal intent or more broadly running a criminal enterprise. Then they (not you) would need to pursue criminal charges, and law enforcement is always suspect of quarreling business people claiming criminal activity. Every day there are a multitude of business disputes across the nation and a minute fraction of them relate to criminal activity. As for your remedies in a business dispute, do you have a written contract? I hope so when you are speaking about tens of thousands of dollars. If the CEO and company are not doing what they agreed to in the contract, then you can sue for breach of that contract. However, that is a process that would take time and could cost as much as you are trying to recover. If you do not have a written contract, things get much murkier and make it harder to recover - but you still have potential breach of contract remedies.

    Here are business lawyers in Miami who can help you think through all of this: http://www.avvo.com/search/lawyer_search?utf8=%E2%9C%93&q=business&loc=miami+fl&commit=
    Look for one that does both business and litigation. Maybe he or she could write a letter to get the CEO responding and negotiating a settlement where you can get at least some portion of your money back - or some sense of what you are getting in return for your investment. If negotiation is possible, it is usually a less expensive and frustrating alternative than full-blown litigation.

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  • How would vested stock option in startup be divided during divorce?

    My wife works for a startup, she has some vested share of the startup. How would these be divided during divorce? she was saying that I am only entitled to half of the current value (less than 5K), but in the fact of high likelihood of the startup...

    Mark’s Answer

    There are a number of discussions regarding this issue in the Avvo forums:

    http://www.avvo.com/legal-answers/how-stock-option-get-splited-in-case-of-a-divorce-688643.html

    http://www.avvo.com/legal-guides/ugc/restricted-stock-units-rsu-s-in-california-divorce-cases

    Use the search box to look into other CA-specific discussions. You can also re-ask your question, selecting "divorce" or "family law" as the practice area.

    Mark
    CEO, Avvo

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  • How to find a lawyer to help with legal filings for a startup?

    Me and a few other individuals are looking to form a startup here in Houston. We would like some guidance from a lawyer with the legal process in filing documents, advantages and disadvantages of each of the business structures, and tax liabilitie...

    Mark’s Answer

    I would start by reaching out to one or more of the top-rated corporate lawyers in Houston:

    http://www.avvo.com/search/lawyer_search?utf8=%E2%9C%93&q=corporate&loc=Houston%2C+TX&commit=

    While incorporation itself is pretty easy, there are a number of considerations that you need to get right: entity selection (which can impact things like small business tax treatment), 83(b) election, founders' agreements, etc. If you expect your start-up to be big (which most do), I always recommend that you work with a lawyer, or at least have a lawyer look over what you have done on your own. Getting your business on the most solid of regulatory footing is paramount - don't be pennywise but pound-foolish.

    Good luck with getting your business started!

    Regards,

    Mark
    CEO, Avvo

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  • What type of attorney should I look for if I want to start a new business in California with foreign investors who want an eb-5?

    I want to start a venture capital business in California with a foreign partner from China who wants an EB-5. Approximately 1.2-1.5 million dollar investment. This business will then invest in another business. This "other" business will then sign...

    Mark’s Answer

    All of the previous answers are solid. I would simply add that an experienced start-up attorney can help you find immigration, taxation and other lawyers to address ancillary issues. Start-up attorneys are used to being such a hub for their clients. Those attorneys might come from the the start-up lawyer's own firm or other lawyers in their network.

    You are surrounded by some of the best start-up lawyers in the business right across the bay in Silicon Valley. You can find a list of them here.

    http://www.avvo.com/search/lawyer_search?utf8=%E2%9C%93&q=start+up&loc=Palo+Alto%2C+CA&commit=

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  • How many shares should a founder of a business sacrifice if he does not want to actively run the business?

    After 4 years of running a well-known publication in a niche market that is currently unprofitable but significant in terms of audience and presence, my business partner and I would like to set up the company and start selling services. Considerin...

    Mark’s Answer

    There is no “right” answer here. It is all a question of what is fair to everyone involved, with imo a percentage advantage to those who will be grinding it out every day.

    I’m a big believer on being generous to those that do the work. Otherwise, resentment can build-up (that you kept too much ownership) over time.

    Here’s how I would calculate it: Write down the following percentages vis-à-vis you partners:

    • Money you will invest
    • Time you will contribute
    • Know-how you will contribute
    • Marquee-value you will add
    • Any other value you offer (e.g., advertising in your magazine)

    Average those, and you should keep shares roughly in that percentage range. If appropriate (and it probably is) give a meaningful portion away to those partners who will be doing all of the hard work. If engaged, they are the ones who will make your venture successful.

    Good luck!

    Mark Britton
    Avvo CEO

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  • What is a typical service and fee structure a lawyer would provide/charge to help with fundraising for a startup?

    I am a founder of a startup in VA and getting interests from investors. I am looking for a lawyer to help with all the legal aspects involved in fund raising. However, I am not sure what is a common fee and service structure usually offered by law...

    Mark’s Answer

    Although I'm a member of the VA bar, I have never been involved in start-up work there. However, I have been extensively in Seattle and Silicon Valley and the first thing I would highly recommend is hiring a lawyer who has represented *a lot* of start-ups, particularly in angel and venture capital financing.

    In addition to being up to date on investment terms and structures, many of these firms will also not collect for their legal fees until your first financing. They will let you run a tab, so to speak. To do this, however, they must believe in your business plan and they must also believe that your financing will come relatively soon. They are not a bank and need to get paid for their services at some point.

    If a firm will not postpone their billing, they will sometimes offer discounted billing until you reach a certain level of financial fortitude - e.g. again your first financing but could be later financings if your initial financings are small. Other firms sometimes offer fixed fee pricing for certain discreet tasks or a discounted monthly retainer. But beware of the retainer bc if you don't use the law firm much, you can in effect be paying a much higher hourly rate.

    Eventually, and usually sooner rather than later a firm will charge you an hourly rate for their services. Some firms can be creative with their billing structures, but that is the exception rather than the rule.

    Hope this helps.

    Mark

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  • What is the best way to structure my new business entity?

    I am in the process of forming a company that was inspired by two clients of mine who have developmental disabilities. The one coined a catch phrase that has caught on like wildfire, the other suggested that putting this on certain products would ...

    Mark’s Answer

    This Guide could also be helpful: http://www.avvo.com/legal-guides/ugc/what-type-of-business-entity-should-you-choose

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  • Former employer terminates me "Your services no longer needed". I own startup, not competing, frivolous claims scare investors

    For no reason other than "Your services are no longer needed", CEO, myself, my team terminated. I started my own company, not competing, non-compete not valid due to Fidle anyway. Trying to close on investment, former employer sending me, and some...

    Mark’s Answer

    This is a tough one. First, your opinion regarding the validity of your former employer's claims can be very different than the opinions of your former employer. If we assume that we are dealing with a simple difference of opinion, then there is not much you can do. Your former employer has every right to exercise their free speech and protect their business interests. Even if you could prove through litigation that their opinion was wrong, that simply means they lose the case. It does not somehow cause them additional liability.

    Now, if you believe that your former employer is knowingly trying to injure you by making frivolous claims and making you "unemployable," you could file a claim both against the company for tortious interference with your business interests and their lawyer for knowingly filing a frivolous claim. But these are hard claims to win because, again, so much opinion is involved. Also it is a very expensive process bc I assure you that your former employer (and their lawyer) have much deeper pockets than you and they are not simply going to fold in the face of your lawsuit for fear that it will cost too much. Instead, they would probably relish it, file counterclaims, and commence the war of attrition.

    I've been on both sides of this equation - both as the employer and as the target of frivolous claims -- and all I can say is that this is a hard area. Former employers and employees seldom see eye to eye on whether new employment conflicts with the old.

    Good luck.

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