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Ask HN: Received an incubator term sheet, should I get a lawyer?
I was accepted into an inaugural startup incubator that offers $20,000, mentorship, and office space (the usual benefits) in exchange for a percentage of the company. I am happy with the terms at a high level, but I honestly don't understand everything on the term sheet.
Is it worth it to hire a lawyer to look for anything that may inhibit future funding? Has anyone gone through this process? Specifically, I'd love to know what most startups do in this situation. I think most startups just trust the program, but since this is a brand new incubator, I think we are all learning together.
- briandoll 15y agoI can't help but think that anytime you think you might need a lawyer, you probably do. Personally, I'd get a lawyer to review the contract just so I understood exactly what I'm getting myself into, even if the incubator had been around for ages. I'll also toss out a personal recommendation for Gabe Levine, who has a blog online about lawyering for makers: http://mylawyergabe.com/ http://mylawyergabe.com/
- ActVen 15y agoYes you should get a lawyer to help you understand it. However, try to get a recommendation from someone you trust and then give specific instructions to the lawyer. Tell the lawyer you want to have them review the contract with you in the room and explain what the various terms mean. This will help you learn about some of the topics and see if it is a lawyer with which you might want to build a relationship with for future business dealings. Spending a few hundred dollars on this type of activity will greatly benefit you in the long run.
- phlux 15y agoIs this Rock Health? They stated in the original application, that the 20K was a grant and not for equity... if this is Rock Health, then it looks like they changed that term.
- aquark 15y agoIf there are multiple start-ups being accepted at once into the incubator, and if the terms are identical then maybe you can pool resources to talk to a lawyer and amortize the cost.
- bdclimber14 15y agoThat's a very helpful idea, I didn't think to discuss it with the others.