Playbook on Stack & Scale Journal

The Best Startup Accelerators and the Terms They Actually Publish

Fri, 06 Nov 2026 17:47:00 +0000

An accelerator is a financing first and a program second. The check arrives attached to a document, and that document decides how much of the company the program owns after the next round. Founders who compare programs on reputation alone skip the part that lasts longest.

This list covers seven programs that publish enough of their terms to compare. Where a program’s own site doesn’t state its equity figure, the entry says so instead of filling the gap with a number from a third-party roundup.

This is general information, not legal or tax advice.

Method

Published terms. Check size and equity taken, as stated on the program’s own site. Aggregator summaries were not used for terms.
Still running. Evidence on the program’s site of an open application, a scheduled cohort or year-round intake.
Instrument. Whether the equity comes as a fixed percentage, a post-money SAFE, an uncapped MFN SAFE or a mix.
Stage and sector fit. Who the program says it backs, and who it turns away.

Checked against each provider’s own pages on November 5, 2026.

Terms at a Glance

Program	Published check	Equity on the program’s own site	Format
Y Combinator	$500,000	7% fixed, plus an uncapped MFN SAFE	Batch in San Francisco, Jan to Mar for Winter 2027
Techstars	$220,000	5% common via a CEA, plus an uncapped MFN SAFE	Three-month programs by city or theme
Entrepreneur First	Up to $250,000	8% on the first $125,000, plus an uncapped MFN SAFE	SF residency
Antler	$500K to $1M typical initial commitment	Not stated on the US page	Up to three months, NYC, SF or Austin
500 Global (500 Fellowship)	Up to $50K at the start, up to $1M more	Not stated on the Fellowship page	Four months in San Francisco
Alchemist	$60,000 to $1 million	Not stated on the current site	Enterprise focus, San Francisco base
SOSV	Up to $550,000	Must exceed 10% ownership	Four to six months in the US, deep tech

The Programs

Y Combinator

Included: $500,000 per company, delivered as two SAFEs plus a YC agreement.

Cost: A fixed 7%, plus whatever the $375,000 uncapped MFN SAFE converts into.

The catch: The second SAFE has no cap, so YC’s final stake depends on the price of the company’s next round.

The standard deal page lays it out: $125,000 on a post-money SAFE for 7%, and $375,000 on an uncapped SAFE with a most favored nation provision. The MFN clause lets that SAFE adopt the best terms the company gives later SAFE investors. YC’s own example uses a $15M post-money cap on the next SAFEs, at which point the $375,000 converts to 2.5%. YC also takes a pro rata right in later rounds.

On November 5, 2026, the apply page said YC was taking applications for the Winter 2027 batch, which runs January to March in San Francisco. The on-time deadline of November 2 had passed, but late applications were still being reviewed, and early decision was open for later batches.

Techstars

Included: $220,000 on day one, split into a $200,000 uncapped MFN SAFE and a $20,000 post-money Convertible Equity Agreement (CEA).

Cost: 5% common stock through the CEA, plus whatever the SAFE converts into.

The catch: A side letter adds pro rata, drag-along, digital-asset and reporting terms, and both instruments wait for a priced round of at least $1M before converting.

Per the investment terms page, the 5% includes the existing option pool and is measured after SAFEs and other convertibles convert. The company has to be a US corporation or a foreign equivalent. Companies from some countries must reorganize first. Asia-Pacific programs use a $100,000 SAFE instead, for $120,000 total. The accelerators page describes three months of mentorship-driven support and links out to open applications by program.

Entrepreneur First

Included: Up to $250,000 for US founders who are ready to start full time.

Cost: $125,000 on a post-money SAFE for 8% from EF, and a second $125,000 on an uncapped MFN SAFE from EF and its partner, Transpose Platform.

The catch: The deal assumes founders live and work in EF’s San Francisco residency during the build period.

EF’s US page also offers a second door: a Fellowship Residency with a $10,000 equity-free grant and three months of housing for people still deciding what to build. The general FAQ describes a 12-week FORM phase in a local hub followed by a 12-week LAUNCH phase in San Francisco. EF is designed for individuals who arrive without a cofounder, which makes it relevant to anyone working through how to find a technical cofounder.

Antler

Included: An in-person residency of up to three months in New York, San Francisco or Austin, followed by a chance to pitch Antler’s investment committee.

Cost: Antler’s US page states a typical initial commitment of $500K to $1M plus $650K in partner credits. We couldn’t confirm the equity percentage on that page.

The catch: Antler doesn’t sponsor visas. At least one cofounder needs existing US work authorization.

There is no fee to join the residency. Antler says it reviews applications year-round and invites a group each month. Founders should ask for the current US term sheet before comparing Antler’s dilution with the fixed-percentage deals above.

500 Global (500 Fellowship)

Included: The flagship program now runs as the 500 Fellowship, four months in person in San Francisco.

Cost: “Up to $50K right away,” with up to $1M more as companies progress, per the Fellowship page. We couldn’t confirm the equity taken on that page.

The catch: The older $150,000-for-6% deal still circulates in third-party lists, but it doesn’t appear on the current Fellowship page. Treat it as history until a term sheet says otherwise.

The page lists dates of November 30, 2026 to April 9, 2027, and says the program takes founders from day zero through first users, revenue or pilots.

Alchemist

Included: An enterprise-focused program with San Francisco offices, a founder retreat and investor showcases in Silicon Valley.

Cost: The How We Invest page lists check sizes of $60,000 to $1 million at pre-seed and seed. We couldn’t confirm a current equity figure on the site.

The catch: The thesis is companies that sell to enterprises. A consumer app sits outside it.

The flagship page pitches support that lasts as long as the company is building, set against a 9 to 12 month enterprise sale. The program has moved from alchemistaccelerator.com to alchemist.vc, and old links redirect.

SOSV

Included: Pre-seed investment in deep tech through HAX (hard tech) and the SOSV SF and SOSV NY programs.

Cost: SOSV’s investment FAQ says its pre-seed check is up to $550,000 and that it needs to get above 10% ownership for its $550k average check.

The catch: Programs require four to six months in the US, and companies that have already raised a VC-backed seed or Series A are too late.

The same FAQ says SOSV reviews thousands of pitches a year and funds about 60. Its programs are geared to teams under 10 people with under $1M in annual revenue and, usually, under $1M in prior equity raised. Most SaaS, e-commerce and fintech companies fall outside its focus.

What the Fixed-Plus-MFN Deals Do to Ownership

Three programs publish enough to model. The MFN SAFEs are the moving part.

Assumptions
- Each program's day-one deal, exactly as published.
- The company's next financing is a SAFE round at a $15M post-money cap
 (the figure YC uses in its own example). MFN SAFEs adopt that cap.
- Ignores option pool changes and the interaction between instruments
 at conversion. Treat results as approximations.

Program Fixed MFN SAFE conversion Approx. total
Y Combinator 7.00% $375,000 / $15,000,000 = 2.50% 9.50%
Techstars 5.00% $200,000 / $15,000,000 = 1.33% 6.33%
EF 8.00% $125,000 / $15,000,000 = 0.83% 8.83%

Cash per 1% owned (cash / total %)
Y Combinator $500,000 / 9.50 = about $52,600
Techstars $220,000 / 6.33 = about $34,800
EF $250,000 / 8.83 = about $28,300

Drop the next cap to $10M and every MFN line grows by half. Raise it to $25M and the MFN lines shrink. The fixed percentage never moves. That’s the trade founders are actually signing.

Two Shortlisted Programs Left Off

MassChallenge and Plug and Play were on the original shortlist. We couldn’t confirm current program terms and intake on either program’s own site, so neither appears above. A program that can’t be checked doesn’t get a guessed number.

Before Sending an Application

Get the entity right first. Techstars requires a US corporation or equivalent, and most of these instruments assume a Delaware C corp. The tradeoffs are in Delaware C corp vs LLC.
Put the founder split and vesting in writing. A co-founder agreement signed before the check arrives avoids renegotiating with an investor watching.
Model the MFN at three different next-round caps, not one.
Read the side letter as closely as the SAFE. Reporting and pro rata obligations last longer than the program.
Ask for the current term sheet in writing. Several programs above changed structure in the past two years.

For the wider sequence of setup steps around an accelerator application, see how to start a startup company.

A Co-Founder Agreement Template, Clause by Clause

Fri, 06 Nov 2026 17:07:00 +0000

A co-founder agreement does two jobs. Before incorporation, it records what the founders agreed: who owns what, who does what, and what happens if someone leaves. After incorporation, most of its clauses get replaced by formal company documents. Founders who understand that second job write a better first draft, because they know where each promise has to end up.

This is general information, not legal or tax advice. The template below is a starting point for a conversation with counsel, not a substitute for the stock purchase agreements, IP assignments and board consents a corporation needs.

Where each clause ends up

Clause in the founder agreement	Becomes, after incorporation
Equity split	Number of shares in each founder’s stock purchase agreement
Vesting	Repurchase right in the restricted stock purchase agreement
IP	Each founder’s IP assignment agreement
Roles and titles	Officer appointments in the board consent
Board seats	Board composition in the bylaws and initial consent
Decision-making	Board and stockholder approval rules under the charter, bylaws and Delaware law
Departure	Repurchase right, plus any separation agreement
Confidentiality	IP and confidentiality agreement

The how to start a startup company guide lists those formation documents in order. The point of the table: nothing in the founder agreement should contradict what the company documents will say. If the founder agreement promises acceleration on a sale and the stock purchase agreement does not include it, the stock purchase agreement is what binds the company.

The template

The template below is written for a two-founder company that intends to form, or has formed, a Delaware C corporation. Bracketed text gets filled in.

CO-FOUNDER AGREEMENT

1. Parties
 This agreement is between [Founder A] and [Founder B] (the "Founders"),
 dated [date].

2. The company
 The Founders intend to form [Company name], a Delaware corporation
 (the "Company"), to build [one-sentence description]. Until the Company
 is formed, this agreement records the Founders' understanding.

3. Equity
 On formation, the Company will issue common stock as follows:
 [Founder A]: [number] shares ([__]%)
 [Founder B]: [number] shares ([__]%)
 Each Founder will pay fair market value for the shares at issuance.

4. Vesting
 Each Founder's shares will vest over [48] months, with [25]% vesting
 after [12] months of continuous service and the rest in equal monthly
 installments. Unvested shares will be subject to repurchase by the
 Company at the lower of cost or fair market value if the Founder's
 service ends. [Vesting credit of [__] months for work before formation.]
 Each Founder will file an 83(b) election within 30 days of issuance.

5. Acceleration
 [None.] / [If the Company is acquired and the Founder is terminated
 without cause within [12] months afterward, [__]% of unvested shares
 will vest.]

6. Intellectual property
 Each Founder assigns to the Company all rights in work product related
 to the Company's business, including work created before formation,
 and will sign the Company's IP assignment agreement at issuance. Each
 Founder confirms that no current or former employer has a claim to
 that work, except as listed here: [list or "none"].

7. Roles
 [Founder A]: Chief Executive Officer, responsible for [areas].
 [Founder B]: Chief Technology Officer, responsible for [areas].
 Roles may change by board decision.

8. Time commitment
 Each Founder will work full time on the Company starting [date].
 [Exceptions: ...]

9. Board and decisions
 The initial board will be [Founder A and Founder B]. Decisions
 outside the ordinary course (raising money, issuing equity, hiring
 executives, taking on debt over $[__], selling the Company) require
 approval of [both Founders / the board].

10. Compensation
 Neither Founder will draw salary until [event or date]. Salary
 changes require board approval.

11. Departure
 If a Founder leaves, the Company may repurchase unvested shares under
 Section 4. Vested shares stay with the departing Founder. The
 departing Founder will return Company property and keep Company
 information confidential.

12. Confidentiality
 Each Founder will keep the Company's non-public information
 confidential during and after their service.

13. Disputes
 The Founders will try to resolve disagreements by discussion for
 [30] days, then by [mediation / arbitration] in [location].

14. Replacement by formal documents
 Once the Company issues stock, the Company's charter, bylaws, stock
 purchase agreements and IP agreements control. The Founders will
 sign documents consistent with this agreement.

Signed: ____________ [Founder A] ____________ [Founder B]

Notes on the clauses that cause fights

Equity (clause 3)

The number of shares matters less than the percentages, but use real numbers so the agreement maps directly onto the stock purchase agreements. Y Combinator partner Michael Seibel’s essay on splitting equity argues for equal splits. Whatever the split, write down the reasoning in one line. Investors ask.

Vesting (clause 4)

The four-year, one-year-cliff schedule in the template mirrors what YC’s essay calls a typical setup in the Valley. Vesting protects the founder who stays. Without it, a founder who leaves in month three keeps their full stake, and the remaining founder works for years to build value for someone who left.

“Vesting credit” gives a founder credit for months already worked before formation. It is negotiable and should be written as a specific number of months.

The 83(b) line is in the template because missing it is expensive. IRS instructions for Form 15620 require the election no later than 30 days after the date the property was transferred.

Acceleration (clause 5)

Single-trigger acceleration vests shares on a sale alone. Double-trigger acceleration requires a sale and a termination. Acquirers price in any acceleration, so founders should agree on it now with the trade-off in mind. Leaving it blank is a choice too.

IP (clause 6)

This is the clause investors read hardest. The confirmation about former employers matters most for a technical founder who wrote early code while employed elsewhere. If there is any doubt, list it and get a lawyer’s view before the company is formed. The guide on how to find a technical cofounder covers trial projects and why IP assignment comes before the first commit.

Decisions (clause 9)

Two founders on a two-person board can deadlock. The template’s approval list keeps the founders from surprising each other on the big decisions. It does not solve deadlock. Some teams give the CEO the tie-break on operating questions and keep equity and sale decisions joint. YC’s essay also suggests that only the CEO hold a board seat before a significant equity raise. Pick one approach and write it down.

Departure (clause 11)

The template uses the lower of cost or fair market value for unvested shares, which means a departing founder gets back roughly what they paid for unvested stock. Some agreements add “good leaver” and “bad leaver” terms. These add negotiation and can be hard to apply when the facts are disputed.

What the template leaves out

Non-competes. Enforceability varies by state and changes over time. Ask counsel in the state where the founders work.
Entity choice. The template assumes a Delaware C corporation. The reasons are covered in Delaware C corp vs LLC.
Investor terms. Nothing here binds a future investor. A seed or Series A investor may ask founders to re-vest part of their stock. A clean founder agreement makes that conversation shorter.

If the company already exists

Founders who incorporated first and talked later need a different fix. There is no need for a pre-formation agreement, because the corporation’s documents already govern. The work is an audit:

Pull each founder’s stock purchase agreement and check that the share numbers match the cap table.
Confirm the vesting terms and repurchase price are what the founders believe they are.
Confirm each founder signed an IP assignment, and that it covers work done before the company was formed.
Confirm each founder’s 83(b) election was filed, and that the company has a copy.

Anything that does not match gets fixed by board consent and amended agreements. A short memo signed by both founders can still record the softer terms the documents do not cover: roles, time commitment, how deadlock gets broken.

Before signing

Each founder reads every clause aloud with the other present. Disagreements surface faster that way than over email.
Fill in every bracket. A blank is an argument postponed.
Have a lawyer convert the agreement into the formation documents within weeks, not months.
Calendar the 83(b) deadline the day stock is issued.

Delaware C Corp vs LLC for a Startup That Plans to Raise Venture Money

Fri, 06 Nov 2026 16:04:00 +0000

Short answer: for founders who plan to raise venture capital, the Delaware C corporation fits the way venture money is invested. Investors buy preferred stock, fund documents assume a corporation, and the federal small business stock exclusion only applies to C corporation stock. An LLC can suit a business that will stay owner-run and distribute profits. That is a different company from the one this site writes about.

This is general information, not legal or tax advice.

Clause by clause

Question	Delaware C corp	LLC
What investors buy	Preferred stock, or SAFEs that convert into it	Membership units, defined by the operating agreement
How profits are taxed	At the corporate level; stockholders taxed on dividends and sale gains	Passed through to members by default
Section 1202 (QSBS)	Available if the company qualifies	Not available while it is an LLC
Employee equity	Stock options, including incentive stock options	Profits interests or unit options under custom documents
Model financing documents	YC post-money SAFE, NVCA model documents	Custom drafting
Annual state cost in Delaware	Franchise tax plus a $50 annual report fee	Different regime; outside this site’s scope

Investors buy preferred stock

A seed or Series A investor expects a liquidation preference, protective provisions and conversion rights. Those live in a corporation’s certificate of incorporation. The NVCA model documents, last revised in October 2025 for the charter, stock purchase agreement and investors’ rights agreement, are written for a corporation issuing preferred stock. Y Combinator’s post-money SAFE converts into preferred stock in a priced round.

An LLC can create preferred units by contract. Every investor’s counsel then has to read a bespoke operating agreement instead of a familiar charter.

Pass-through income and fund investors

LLC income passes through to members, who receive a share of taxable income whether or not cash is distributed. Venture funds raise money from pension funds, endowments and foreign investors, and pass-through business income can create tax and filing problems for those limited partners. That is the reason fund investors tend to ask for a corporation before they invest.

QSBS: the C corporation requirement

Section 1202 lets a non-corporate holder exclude gain on qualified small business stock. The statute, as amended in July 2025 and reproduced by Cornell’s Legal Information Institute, defines a qualified small business as a domestic C corporation and sets these terms for stock acquired after July 4, 2025:

Exclusion of 50% after 3 years, 75% after 4 years and 100% after 5 years or more.
A per-issuer cap of $15,000,000 (or 10 times basis, if greater), indexed for inflation after 2026.
Aggregate gross assets of the corporation no more than $75,000,000 before and immediately after issuance.

Membership units in an LLC do not qualify. Under section 1202(i), stock received when an LLC later converts is treated as acquired on the date of the exchange, so the holding period starts then, not at formation.

Stock options for employees

Incentive stock options under Section 422 are options to buy stock of a corporation. A startup hiring engineers on equity can grant options under a board-approved plan and a 409A valuation. LLCs can offer profits interests, which work but need explaining to every candidate.

Delaware’s cost and its case law

The Delaware Division of Corporations’ annual report statistics say that nearly 70% of US-based IPOs in 2025 chose Delaware. For a seed-stage company, the cost is the annual franchise tax. The Division’s calculation page sets a $175 minimum under the Authorized Shares method and $400 under the Assumed Par Value Capital method, and the corporation pays the lesser. The walk-through in how to start a startup company shows why a startup with 10,000,000 authorized shares should file using the second method.

When the LLC question comes back

Founders sometimes start as an LLC to pass early losses through to their own returns, then convert before a priced round. Conversion is possible. It costs legal fees, starts the QSBS clock only at conversion, and puts a tax event and new documents in front of the company at the moment it is trying to close a round. If raising venture money is the plan, starting as a corporation avoids that work.

Also consider

A C corporation formed in the founders’ home state, then reincorporated in Delaware before a priced round (a merger or conversion, with its own legal costs).

A Delaware public benefit corporation, which is still a corporation that can issue preferred stock, with a stated public benefit in its charter.

For a profitable business with no plan to raise outside equity, a conversation with a tax adviser about which structure fits.

How to Start a Startup Company, From Day Zero to Day 90

Fri, 06 Nov 2026 15:28:00 +0000

A startup company, in the sense this publication uses, is a corporation built to raise venture capital and grow fast enough to need it. That narrows the first 90 days to a short list of documents, a few filings with hard deadlines, and one or two decisions that are expensive to undo later.

Most of the work is paperwork. The product matters more, but the paperwork is where the permanent mistakes happen: a missed tax election, founder shares with no vesting, code that the company does not actually own. None of those show up on day one. They show up in diligence before a seed round, when fixing them costs legal fees and negotiating position.

This is general information, not legal or tax advice. Every filing below has an official source linked at the point it comes up, and those sources control over any summary.

The 90-day map

Window	What gets done	Document or filing	Hard deadline?
Days 0 to 7	Founding team, split, entity choice	Founder term sheet (informal)	No
Days 7 to 14	Incorporate	Certificate of incorporation	No
Days 7 to 14	Board organizes the company	Bylaws, initial board consent	No
Days 7 to 14	Founders buy their stock	Restricted stock purchase agreements	Starts the 83(b) clock
Days 7 to 14	Company owns the IP	IP assignment agreements	No, but do it at issuance
By day 44	Tax election on founder stock	IRS Form 15620 or written statement	30 days after transfer
Days 14 to 30	Tax ID	EIN from the IRS	No
Days 30 to 60	Equity plan and first grants	Stock plan, 409A valuation	Valuation within 12 months of grants
Days 60 to 90	First outside money	SAFE, Form D	Form D within 15 days of first sale
Every March 1	Delaware annual report and tax	Annual franchise tax report	Yes

The rest of this guide walks through each row.

Days 0 to 7: decide who the founders are

The founding team is the first decision and the hardest one to change. Adding a co-founder later means issuing new stock at a higher value. Removing one without vesting in place means that person keeps the shares.

Three questions settle most of it:

Who is building the product? A company selling software with no one who can write it is a company that will spend its first raise on contractors. Founders without a technical partner should read the guide on how to find a technical cofounder before incorporating, because the split conversation is easier before shares exist.
How is equity split? Y Combinator partner Michael Seibel has argued for equal splits among co-founders on the grounds that nearly all the work is ahead of the team. Unequal splits are legal too; what matters is that the reasoning survives a conversation with a future investor.
Is everyone full time? Part-time founders with full founder equity are a diligence question. It is better answered now than in a partner meeting.

Write the answers down in a one-page founder term sheet. It is not the legal agreement. It is the record of what everyone agreed before lawyers turned it into documents.

Days 7 to 14: incorporate the right entity

Venture investors buy preferred stock. Preferred stock is issued by corporations. That is the short version of why venture-backed companies are C corporations, and why so many of them are formed in Delaware.

The Delaware Division of Corporations says on its annual report statistics page that nearly 70% of US-based IPOs in 2025 chose Delaware as their corporate home. The practical reasons for an early-stage company are narrower: investors and their counsel know the Delaware statute, the Court of Chancery has a long body of case law on corporate disputes, and the model financing documents published by the National Venture Capital Association are drafted with a Delaware corporation in mind.

Other structures exist and suit other businesses. A company that plans to stay profitable and owner-run is not the reader this playbook is written for.

What the certificate of incorporation sets

The certificate of incorporation is filed with Delaware and is short. The founder decisions inside it:

Authorized shares. How many shares the company may issue. A figure in the millions, with founders issued most but not all of them, leaves room for an option pool without amending the charter.
Par value. A nominal figure per share. A very low par value keeps the price founders pay for their stock tiny and, as shown below, matters for Delaware franchise tax.
Classes of stock. At formation, usually common stock only. Preferred stock gets added when the first priced round closes.

The organizing documents

After filing, the incorporator hands control to the board. The board then adopts bylaws, appoints officers, approves the sale of founder stock, and adopts the form of IP assignment. A single written board consent usually covers all of it.

Day of issuance: founder stock, vesting and the IP

Founders buy their shares under a restricted stock purchase agreement. Two clauses in it matter more than the rest.

The repurchase right. The company can buy back unvested shares at the price the founder paid if the founder leaves. That repurchase right is what vesting means for founder stock. YC’s essay on splitting equity describes four years with a one-year cliff as a typical setup in the Valley. The full mechanics, including acceleration, get their own article later on this site.

The IP assignment. Each founder assigns to the company any code, designs, domain names and other work made for the business, including work done before incorporation. Investors check this. A founder who wrote the first version of the product before the company existed and never assigned it still owns it.

A worked example of the purchase:

Assumptions
- Two founders, equal split
- 10,000,000 shares of common stock authorized
- Par value $0.00001 per share
- Each founder buys 4,500,000 shares at $0.00001 per share
- 1,000,000 authorized shares left unissued for a future option pool

Price paid per founder: 4,500,000 x $0.00001 = $45.00
Shares issued: 9,000,000 of 10,000,000 authorized (90%)

Paying a real price, even $45, matters for the next step: it lets the fair market value and the purchase price match on the day of transfer.

By day 44: the 83(b) election

Restricted stock that vests over time is, for tax purposes, not fully owned until it vests. Without an election, the founder recognizes ordinary income each time a tranche vests, measured at the stock’s value on that date. If the company has raised money in the meantime, that value can be large, and the tax comes due with no cash to pay it.

Section 83(b) lets the founder elect to recognize the income at the time of transfer instead. With the purchase price equal to fair market value, the income recognized is zero.

The deadline is fixed. IRS Form 15620 instructions say the election must be filed no later than 30 days after the date the property was transferred. If the 30th day falls on a weekend or legal holiday, a postmark on the next business day counts as timely. The regulations at 26 CFR 1.83-2 also require a copy to go to the company.

Filing methods, as of November 5, 2026:

Online. The IRS lists Form 15620 on its mobile-friendly forms page as requiring an IRS Online Account. After filling it in, the filer can submit it online or download a copy for mailing. Online submission returns a confirmation.
Mail. The signed form, or a written statement that meets the regulation, goes to the IRS office where the founder files a return. Certified mail with a return receipt gives proof of the postmark.

The election cannot be revoked without IRS consent, and there is no general extension for a late one. Put the deadline on the calendar the day the stock purchase agreement is signed.

Days 14 to 30: the EIN and the company’s own accounts

The IRS issues an employer identification number free and online, and the page warns against sites that charge for one. The online tool requires a US principal place of business and a responsible party with a Social Security number or ITIN. Companies that do not meet those conditions apply by phone, fax or mail.

With an EIN, the company can open accounts in its own name. Founder money and company money should never mix, because the cap table, the books and any later diligence all assume the corporation paid its own bills.

One filing that older checklists still list is no longer required. FinCEN’s beneficial ownership page states that, under its final rule, US companies are exempt from BOI reporting and are no longer required to file BOI reports.

Every March 1: Delaware franchise tax

Delaware corporations file an annual report and pay franchise tax by March 1. The Division’s tax calculation page describes two methods: the Authorized Shares method (minimum $175) and the Assumed Par Value Capital method (minimum $400). The corporation pays the lesser. The annual report filing fee is $50, and the annual report instructions list a $200 penalty plus 1.5% monthly interest for failing to file and pay.

The same page says the annual assessment is based on authorized shares, which is why the first notice a startup sees can look alarming.

Assumptions
- 10,000,000 shares authorized, par $0.00001
- 9,000,000 shares issued
- Total gross assets $500,000 (from the federal return, Form 1120 Schedule L)

Authorized Shares method
 First 10,000 shares: $250
 Remaining 9,990,000 shares / 10,000 = 999 units x $85 = $84,915
 Total: $85,165

Assumed Par Value Capital method
 Assumed par = $500,000 / 9,000,000 = $0.055556
 All authorized shares have par below assumed par:
 APVC = $0.055556 x 10,000,000 = $555,560
 Tax = $555,560 / $1,000,000 x $400 = $222.22, below the minimum
 Total: $400

Owed: $400 tax + $50 annual report fee = $450

The second method needs the issued share count and gross assets, so it only works if the company files with real numbers.

Days 30 to 60: an option pool and a 409A valuation

Early hires and advisors get equity through a stock plan approved by the board and the stockholders. The 1,000,000 unissued shares in the example above are the room for that pool.

Options must be granted at or above the fair market value of the common stock to avoid problems under Section 409A of the tax code. The regulations at 26 CFR 1.409A-1 presume a valuation is reasonable if it comes from an independent appraisal dated no more than 12 months before the grant. The same regulation includes a separate method for illiquid stock of a start-up corporation, based on a written report prepared in good faith. A company that wants the presumption buys an independent appraisal before the first option grant and refreshes it within 12 months, or sooner after a priced round.

Days 60 to 90: the first outside money

The first check usually comes in on a SAFE. Y Combinator’s SAFE page lists three post-money versions for US companies: valuation cap with no discount, discount with no cap, and an uncapped MFN version, plus an optional pro rata side letter. YC says the post-money SAFE has been its standard since 2018.

The post-money cap makes ownership simple to calculate:

Assumptions
- One SAFE, post-money valuation cap
- Investment: $500,000
- Post-money valuation cap: $8,000,000
- No other SAFEs outstanding

Ownership on conversion (before the priced round's new money and pool increase):
 $500,000 / $8,000,000 = 6.25%

The money is a securities sale, so securities law applies. A SAFE round sold privately to a handful of investors can rely on Rule 506(b) of Regulation D. The SEC’s 506(b) page says the company cannot use general solicitation, can sell to up to 35 non-accredited investors in any 90-day period (each of whom triggers disclosure duties), and must file Form D within 15 days after the first sale. States can still require notice filings and fees.

For individual investors, the SEC’s accredited investor page lists the tests: net worth over $1 million excluding a primary residence, or income over $200,000 (or $300,000 with a spouse or partner) in each of the prior two years with the same expected this year, or a Series 7, 65 or 82 license in good standing. Raising only from accredited investors keeps a first round simple.

What day 90 should look like

A founder who has done the above can answer every early diligence question with a document:

Certificate of incorporation, bylaws and the initial board consent
Signed stock purchase agreements with vesting, plus proof of each founder’s 83(b) filing
Signed IP assignments from every founder and contractor
EIN confirmation letter
A cap table that matches the share certificates or ledger
Board and stockholder approval of the stock plan, and a 409A report if options were granted
Signed SAFEs, the Form D filing and any state notice filings
A calendar entry for March 1

Questions founders ask in the first 90 days

Can the 83(b) election be filed before the stock is issued? The regulation says the election may be filed before the date of transfer. In practice, founders file once the purchase agreement is signed and the transfer date is known, because the form asks for it.

Does the company need a lawyer to incorporate? The certificate itself is a short filing. The documents around it (purchase agreements, IP assignments, the stock plan) are where errors cost money, and investors’ counsel will read every one of them.

Do founders need vesting if there is only one founder? Priced-round investors can make it a condition of closing. Starting with vesting avoids renegotiating it under term-sheet pressure.

When should the company switch from SAFEs to a priced round? When an investor wants board seats, protective provisions or other rights that come with preferred stock, or when the amount raised on SAFEs makes the eventual dilution hard to manage. That decision is the subject of later articles on this site.

How to Find a Technical Cofounder Without Giving Away the Company

Fri, 06 Nov 2026 10:33:00 +0000

A technical cofounder is not a hire. The person builds the first product, makes the architecture decisions the company lives with for years, and owns a founder-sized share of the stock. The search should be run like a search for a business partner, because that is what it is.

The failure pattern is familiar. A non-technical founder with an idea and a slide deck offers 5% to an engineer, the engineer says no, and the founder concludes that engineers are hard to find. The offer was the problem. Engineers who could start a company on their own are being asked to take employee-level equity for founder-level risk.

Start with what the company needs built

Before looking for anyone, write one page that answers three questions:

What does version one have to do? Not the roadmap. The smallest product a first customer would pay for or use weekly.
What kind of engineering is it? A mobile consumer app, a data pipeline, a hardware prototype and a B2B web app need different people. “Technical” is not one skill.
What has the non-technical founder already done? Customer interviews, a waitlist, letters of intent, a pilot with a named company. This is the evidence a strong engineer will ask for first.

A founder who cannot fill in the third answer is not ready to recruit a technical partner. The better use of the next month is talking to customers.

Where technical cofounders actually come from

There is no single channel. The places below are listed roughly in order of how much the founder already knows about the person.

Channel	What the founder learns before the first meeting	Cost
Former colleagues	How the person works under deadline	Time
Friends of colleagues	A trusted second-hand reference	Time
University networks and alumni groups	Shared background, sometimes shared coursework	Time, some events
Open-source contributors to tools the company uses	Public code, communication style in issues	Time
Hackathons and build weekends	How the person ships in 48 hours	Entry fees, travel
Cofounder matching platforms	A self-written profile	Varies; YC’s is free

On matching platforms, Y Combinator runs Co-Founder Matching, which its page describes as free, with no equity taken. YC says the platform has made over 100,000 matches and lists active profile counts by city. A profile gets a founder into conversations. It does not replace the trial described below.

Former colleagues sit at the top of the table for a reason. The question that matters most, how this person behaves when things go wrong, is one the founder can already answer.

The first three conversations

Treat the early meetings as mutual diligence. The engineer is evaluating the founder at least as hard.

Conversation one: the problem. The founder explains the customer problem and the evidence. The engineer’s questions show how they think. Someone who jumps straight to the tech stack before asking who the customer is may be a strong engineer and a weak cofounder.

Conversation two: the work. Each person describes how they like to work: hours, location, how decisions get made, what happens when they disagree. Remote or in person, full time now or after a notice period, salary needs for the next 12 months.

Conversation three: the deal. Equity split, vesting, titles and who sits on the board. YC partner Michael Seibel’s essay on splitting equity among co-founders argues for equal splits because the work is ahead of the team. A founder who wants an unequal split should be able to explain why in a sentence an investor would accept.

Run a paid trial project

A trial project is the closest thing to working together without being married. Four to six weeks is long enough to see how the person handles ambiguity, scope cuts and a missed deadline.

A simple trial scope, written as a short agreement:

Trial project agreement (outline)

Parties: [Founder A] and [Engineer B]
Term: 6 weeks starting [date]
Scope: Build [one workflow] end to end for [named pilot customer]
Check-ins: Twice weekly, 30 minutes
Compensation: [cash amount / none]; no equity promised during the trial
IP: All work product assigned to [Founder A, or the company
 once formed]; Engineer B confirms no employer claims it
Exit: Either party may end the trial with written notice
After trial: If both continue, incorporate and sign founder documents
 within 30 days

Two lines in that outline protect both people.

The IP line. Code written during the trial has to belong to the company, or to the founder for transfer to the company once it exists. An engineer with a current employer should check that employment agreement first. Employment agreements can include invention-assignment clauses, and work done on an employer’s laptop or time can create a claim. A lawyer should look at the clause before any code gets written.

The equity line. No equity is promised during the trial. Promising “10% if this works out” in a chat message creates an argument later about what was promised and when.

What to sign once both say yes

Once the trial works and both founders commit, the paperwork follows the same order as any new company:

Incorporate, as a Delaware C corporation if the plan is to raise venture money.
Issue founder stock to each founder under a stock purchase agreement with vesting.
Have each founder sign an IP assignment covering prior work on the product, including the trial code.
File each founder’s 83(b) election within 30 days of the stock purchase. The IRS instructions for Form 15620 set out the 30-day rule.

This is general information, not legal or tax advice.

When the search stalls

A three-month search with no candidate is a signal, not a failure. Three causes come up again and again:

The evidence is thin. Engineers are pitched constantly. A founder with paying pilots gets a different response than one with an idea.
The offer is an employee offer. Single-digit equity with a title of “CTO” reads as a hire.
The search is too narrow. Only looking for a senior engineer from a famous company, when the product needs someone who ships quickly.

There are fallbacks. A founder can hire a contractor to build a prototype under a work-for-hire agreement with IP assignment, then use the prototype and customer results to recruit a cofounder. That costs cash and gives up nothing on the cap table, but it delays the moment when the company has a technical owner, and investors will ask who that owner is.

Red flags in a technical cofounder

None of these is disqualifying alone. Two or more together should end the conversation.

Unwilling to sign an IP assignment or talk about vesting.
Wants a large equity grant up front with no vesting.
Cannot name a project they finished.
Will only work nights and weekends with no plan to go full time.
Dismisses the customer work as “sales stuff.”

The same list applies in reverse. A good engineer will be checking whether the non-technical founder brings something beyond the idea, and the honest answer has to be customers, distribution or money.