corporate-structure

name	corporate-structure
description	Prepares founders for all corporate structure and governance questions from investors. Covers entity formation, cap table management, board composition, founder dynamics, accounting infrastructure, and roles and titles. Use proactively when a founder mentions cap tables, equity splits, board seats, corporate structure, where they're registered, accounting setup, founder agreements, or any investor question about how the company is organized. Also trigger for "how should I structure my equity", "do I need a Delaware C-Corp", "how do I set up my cap table", or preparing the corporate section of a data room.
used_by	["investor-agent","business-analyst","revenue-modeler"]

Corporate Structure & Governance — Founder OS

Prepares you for every investor corporate structure question. Covers 6 layers: entity structure, cap table, board, roles, accounting, and founder dynamics.

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Layer 1: Entity Structure

Investor questions: "How is the company organized?" / "Where is it registered?" / "Who is the registered agent?"

The Standard: Delaware C-Corp

90%+ of VC-backed startups incorporate as Delaware C-Corps. The reasons:

• Established corporate law — Court of Chancery handles corporate disputes with predictability
• Investor familiarity — term sheets, SAFEs, and preferred stock structures are Delaware-native
• No state income tax on out-of-state revenue
• Easy to issue preferred stock (required for VC investment — LLCs and S-Corps cannot)

If you're an LLC or S-Corp: Convert before approaching institutional investors. Budget $2–5K in legal fees.

Key Formation Documents

Document	What It Is	Who Needs It
Certificate of Incorporation	Filed with Delaware Secretary of State	All investors
Bylaws	Internal governance rules	All investors
Board Consents/Resolutions	Record of every major decision	Diligence
83(b) Elections	Tax election for restricted stock (file within 30 days of grant)	Required for founders
State registrations	Foreign qualification in states where you operate	Diligence
Good standing certificate	Proves company is current on filings	Diligence

83(b) election: If founders received restricted stock subject to vesting, they must file an 83(b) election with the IRS within 30 days of grant. Missing this window is a significant and unfixable tax problem.

Documents-Ready Test

Can you produce all of the following within 24 hours?
[ ] Certificate of Incorporation
[ ] Bylaws
[ ] Board Consents (all major decisions since founding)
[ ] 83(b) elections for all founders
[ ] Current cap table (fully diluted)
[ ] State registrations and good standing certificates

If any are missing, list them and assign a deadline to fix them.
This is a pre-fundraising blocker.

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Layer 2: Cap Table Management

Investor questions: "How are shares split?" / "What equity has been granted?"

Cap Table Fundamentals

Term	Definition	Typical Range
Authorized shares	Max shares company CAN issue	10M at incorporation
Issued and outstanding	Shares actually distributed	Founders + employees + investors
Option pool	Reserved for future employee grants	10–20% at seed
Fully diluted	All issued + all options + all convertible instruments	What investors calculate ownership from

Standard Seed-Stage Cap Table Structure

Pre-funding (example):
- Founder 1:          4,000,000 shares  (40%)
- Founder 2:          4,000,000 shares  (40%)
- Option pool:        2,000,000 shares  (20%)
  Total authorized:  10,000,000 shares (100%)

Post-seed ($1M on $5M pre-money valuation):
- Founder 1:          4,000,000 shares  (33.3%)
- Founder 2:          4,000,000 shares  (33.3%)
- Option pool:        2,000,000 shares  (16.7%)
- Seed investors:     2,000,000 shares  (16.7%)  ← new shares issued
  Total authorized:  12,000,000 shares (100%)

Equity Split Principles (YC Guidance)

• Equal splits among co-founders are generally recommended
• All work is ahead of you — past contributions matter less than future commitment
• Vesting schedule: 4-year vesting with 1-year cliff is standard and expected
• The 1-year cliff protects the cap table if a co-founder leaves early

Vesting schedule explained:

• 4 years total, 1-year cliff = 0% vests until month 12, then 25% vests all at once
• After cliff: 1/48th vests each month for remaining 36 months
• If a founder leaves before the cliff: they keep 0% (unless negotiated otherwise)

Cap Table Tools

Tool	Best For	Cost
Carta	Standard for funded startups	Free to $100/month
Pulley	YC-backed, founder-friendly	Free to $50/month
Captable.io	Lightweight, early stage	Free
Spreadsheet	Pre-seed only	Free — migrate before raising

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Layer 3: Board and Governance

Investor questions: "Is there an existing board?" / "Any advisors?"

Board Structure by Stage

Stage	Typical Composition	Notes
Pre-Seed	Founders only (2–3 seats)	Keep it simple
Seed	2 founders + 1 investor observer or independent	Lead investor often gets observer rights, not seat
Series A	2 founders + 1 lead investor + 1–2 independents	Standard 5-seat board
Series B+	More investor seats, independent directors required	Governance expectations increase

Advisory Board Setup

• Advisors provide: domain expertise, introductions, functional guidance, credibility signals to investors
• Compensation: 0.1–0.5% equity, vesting over 2 years with no cliff
• Use the FAST Agreement (Founder/Advisor Standard Template from Founder Institute)
• Advisors should have clear, specific roles — "strategic advisor" with no defined role signals a vanity hire

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Layer 4: Roles and Titles

Investor questions: "Who holds which titles?" / "What unique skills does each owner contribute?" / "Who is most replaceable?"

Standard Early-Stage Titles

Title	Primary Responsibility
CEO	Vision, fundraising, external relationships, board management
CTO	Technical architecture, engineering team, product direction
COO	Operations, processes, scaling infrastructure
CPO	Product strategy, roadmap, user experience
VP/Head of Growth	Customer acquisition, channels, metrics

The "Key Person Risk" Answer

Strong answer structure:

• "I [CEO] own fundraising and investor relationships. [CTO] owns our technical architecture. Neither of us could replace the other on day one, which is why [specific mitigation: documentation, succession planning, key hire plan]."

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Layer 5: Accounting and Financial Infrastructure

Investor questions: "Who handles accounting?" / "What is your burn rate?"

Financial Infrastructure Checklist

Item	Status	Tool Options
Business bank account	Required before any transactions	Mercury, Brex
Bookkeeping system	Required before fundraising	QuickBooks, Xero, Pilot (managed)
Payroll provider	Required when paying employees	Gusto, Rippling, Deel (international)
Expense management	Best practice	Brex, Ramp, Mercury
Tax preparation	Required annually	Startup-specialized CPA
409A valuation	Required before issuing stock options	Carta, Preferred Return
R&D tax credit	Offsets payroll taxes even pre-revenue	Ask your CPA about this

Books-Ready Test

Can you produce these within 48 hours?
[ ] P&L statement (last 3 months)
[ ] Balance sheet (current)
[ ] Cash flow statement (last 3 months)
[ ] Bank reconciliation (current)
[ ] Burn rate calculation (current month)

If not, fix bookkeeping before investor meetings.

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Layer 6: Founder Dynamics

Investor questions: "Name someone not included as a founder and why" / "Anyone who may claim ownership?"

Founder Agreement Essentials

Document	What It Covers
Founders' Agreement	Roles, responsibilities, decision-making authority
Equity and vesting terms	Shares, vesting schedule, cliff, acceleration provisions
IP assignment	All IP belongs to the company, not the individual
Right of first refusal	Company can buy back shares before outside sale
Buy-back provision	Company repurchases unvested shares at cost if founder departs

The "Someone Who Left" Answer

Investors will ask about anyone previously involved. Prepare this now:

Template:

"[Name] was involved as [role] from [start date] to [end date].
They contributed [specific work].
They left because [factual, neutral reason].
They [retained X% equity per vesting schedule / departed with no equity —
they left before their 1-year cliff / received a negotiated buyout].
We have a signed [separation agreement / IP release] on file.
There are no outstanding claims or disputes between us."

If you can't complete this template cleanly for everyone who's been involved,
fix the gap before fundraising — a surprise mid-diligence is a deal-killer.

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Corporate Readiness Score

Rate yourself before investor meetings (1 = not done, 5 = complete and documented):

Area	Score	Priority if <3
Delaware C-Corp formed	/5	Convert immediately
83(b) elections filed for all founders	/5	Irreversible if missed — check now
Cap table on Carta or equivalent	/5	Before fundraising
All founder IP assignments signed	/5	Before fundraising
409A valuation current	/5	Before issuing options
Clean books (P&L, balance sheet, CF)	/5	Before fundraising
Board consents for all major decisions	/5	Before fundraising
Founder vesting schedules in place	/5	At incorporation

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Integration with Other Skills

• Corporate structure data feeds → investor data room (corporate sections)
• Cap table modeling feeds → skills/public/financial-modeling/SKILL.md dilution analysis
• Board gaps analysis feeds → investor targeting (fill gaps with right investors)
• Run alongside → skills/public/ip-legal/SKILL.md (ownership chain documentation)