Financial and Personal Preparation for the Startup Transition

Preparation for startup

Guest post by Rebecca J. Conner

Taking the leap from the corporate world into start-up land can feel formidable. Some thrive on the uncertainty. Some make the jump and realize the old saying holds true: You don’t know what you don’t know. And, adding a family to the equation can further complicate your decision of whether to take the risk.

Recently I met with someone who had worked in a large tech company for six years. He was itching to jump, but was worried about the timing. He already had an offer to be a member of the founding team for a start-up with a vision he believed in, the autonomy to do what he wanted, and the power to make it happen. I could see how excited he was as he told me about the innovative platform the start-up wanted to build, the customer research that backed the need and the preliminary pricing structure.

“That sounds like an incredible opportunity! So why are you still ‘thinking’ about it?” I asked. His excitement suddenly waned, and he responded, “My wife and I are two months away from having our first child.” Plus, he continued, he was making a lot of money and was afraid to give up their lifestyle. He remembered being in his twenties, eating ramen and sleeping in his hole of an apartment (and being okay with it), but now that time felt so far away. Could his family make the move to living on less? What about health benefits, or what if something happened to him?

Making the move from an executive role at a large, established tech company to a small start-up is an emotional rollercoaster for many. How do you make the right decision and not live with regret or “what-if” syndrome?

As people move up the corporate ladder at tech companies, it’s easy to feel handcuffed by their vesting stock, a steady high-income paycheck, and the benefits. It can be easy to encounter lifestyle creep when enjoying time with friends in similar positions.

On the flip side, entrepreneurs and founders at start-ups need laser focus on their business and do not feel there is time to consider their personal situations. It’s easy to punt the financial tasks or to imagining their stock will take care of all their future needs.

And so the emotional rollercoaster begins.

Not every start-up makes it big, and many founders over time find their stock diluted and control given up as they seek additional funding or position the company for acquisition. So how do you prepare for the financial instability and whirlwind that life may entail?

Startup Transition Planning is a Family Affair

Setting boundaries as a family is important: communicating the risks and rewards, understanding where flexibility is and how the situation might change. Consider the following.

  • How much total money are you willing to contribute to doing the start-up? I’ve heard this number range from $100,000 to $500,000 or more. This is a very personal decision and will be based on the risk your family is willing to take.
  • What is your lowest possible budget? This will be your start-up family budget.
  • How much in lost wages can you sustain? If you are joining a start-up and will receive a salary, knowing your personal burn rate (total money to contribute divided by annual start-up family budget amount) will give you an idea of how long you can sustain the adventure.
  • Set success metrics. What does success at the start-up look like? What qualitative and quantitative factors keep the adventure alive? For example, the start-up is XX months away from breaking even, and at that time I can afford to be paid $YY salary. This means we would incur $ZZ additional expenses, if we maintain our customer acquisition trajectory. How sustainable is the customer trajectory? Do we have additional funds available for the additional expenses? What is the trade-off?
  • Check in over time. Be ready to track the metrics you choose over time and communicate them to your family. Establishing parameters around the situation is great, but if the metrics become out of sight, out of mind, emotions can escalate.

Carpe Cras – Prepare Now To Seize Tomorrow

If you get the itch to move to the start-up realm, but are still looking for the right opportunity, seize the day!

  • Start the family discussion now. Ask yourselves the questions above and begin decreasing your expenses to the start-up family budget amount now.
  • Throw additional cash into a savings account. Continue building your cash pile to the total amount of money you are willing to use toward the start-up.
  • Maximize current company benefits and know how they work.
    • Does your company offer a legal benefit to assist you in creating your estate plan/wills? Use it! Consider what could happen in the future – what if you died today? Do your children have a guardian? Who would receive your assets, and when?
    • Review your company health insurance policy. In the event of termination, does your health insurance continue to the end of the month, the day of termination or somewhere in between? When you begin as part of the founding team for a start-up, health insurance may not be set up through the company yet, so you will want to know your options and time frame for switching policies.
    • If you are making more now, consider pre-funding your 401(k) and optimize for employer match. Many start-ups do not have 401(k) plans, and Individual Retirement Accounts (IRAs) have a much lower contribution maximum.
    • Consider what you will do with your 401(k) funds post-termination. There may be benefits to moving your 401(k) funds to an IRA, and many companies require you to move your 401(k) funds once you leave the company. Consider talking to your financial advisor about how best to safeguard these funds in the transition to the start-up. Knowing your own financial philosophy on how you want to invest will minimize future distractions as well.
    • Evaluate your life insurance needs. Can you pick up the policy from your current company and continue it after termination? If something happened to you, how much would your family need to replace your income over time?

Moving from the world of large corporations to a start-up can be the most thrilling time of your life, but with those heightened emotions comes more risk for your family and the need to set and communicate a plan to help your whole family succeed in the adventure.

Rebecca J. Conner, CPA – Financial Advisor to Passionate Technology Executives and Founders for Merriman.

Putting the Lish in Delish

Lish BannerThe etymology of the slang word “delish” draws its roots from everything that the new Seattle food delivery service Lish is based upon: delicate, delight and delicious. The company’s concept is simple: A personal chef at reasonable prices delivered to your door.

Lish FoodThis concept was brought to fruition by two former Amazon executives, Aakhil Fardeen and Mark Piper, who spent long hours working, but still wanted access to well-crafted, well-balanced meals. Eating out was time consuming, as well as hit and miss in the terms of taste and quality of ingredients. The choices from frozen prepared meals were limited and still contained many of the unhealthy, highly processed ingredients that restaurants use to cut costs.

“Lish is a marketplace where people order meals directly from the best local chefs, for delivery. Each chef operates independently and makes their favorite meals with the freshest ingredients, in a certified kitchen,” CEO Aakhil Fardeen explained. “It’s like having a new personal chef everyday that offers meals that match your dietary needs while having the convenience of smartphone ordering and scheduled delivery.”

Lish FoodBoth founders loved food. When they realized that they had found an unfulfilled niche in the market, they combined their expertise and formed Lish.

From concept to working startup, the founders made the wise move of bringing on successful peers to engineer, design, and operate the concept. Presentation of product, ease of use and quality fulfillment was key. Not only did they build a teamLish screen shot of technical experts—most importantly—a team of great local chefs who either work in Lish’s exclusive collaborative kitchen or their own restaurants.

The Lish app is currently available for free download. You can also use the website on your phone or computer. We encourage you to download it and try it out. The food is great, the delivery people are nice and if there are any issues they are highly responsive.

Order by 6:30 pm for same-day delivery. Open Monday-Friday for delivery between 5-8 pm. Now serving: 98101, 98102, 98103, 98104, 98107, 98109, 98112, 98119, 98121, 98122.

Disclaimer: Lish is one of my clients.

Announcement: Moving to Carney Badley

New Startup Law Practice

My good friend and former DLA Piper colleague Mike Schneider and I are pleased to announce that we are bringing our corporate and IP transaction practices together to work on startups and emerging companies at the law firm of Carney Badley.

Carney Badley

You can find information about Carney Badley at

A New Alternative For Startups & Emerging Companies

We are excited to be working together again, and are looking forward to offering a new option for legal services to startups and emerging tech companies in the Pacific Northwest.  Startups and emerging companies can come to us for help with business formation, angel and venture financings, IP transactions, software licensing, exits and other strategic transactions.

We will also represent angels and institutional investors in their investments in early stage and tech companies.

A New Blog:

We will be blogging at, and we will also plan a podcast discussing startup and legal issues.  Stay tuned for more details.

If you are interested in hearing more about our new platform, please feel free to reach out to either of us directly.

Best regards,

Mike Schneider & Joe Wallin

Learn more and contact Mike here.

Learn more and contact Joe here.

Angels, Pitches, and Beers is Back!

Angels Pitches and BeerAngel Investor Gary Rubens and Seattle attorney Joe Wallin of DWT are collaborating on this event.

If you are an angel investor, or if you are a company looking for angel funds, you might like to come to this event.

Event: “Angels, Pitches & Beers”

When: Wednesday, November 19th, 5:30 p.m. to 9:00 p.m.

Where: SURF Incubator, 999 Third Avenue, Seattle, 7th Floor

Pitch format: Private room, 10 minutes (total, including setup)

Cost: Free


The Idea behind the Event: Connecting Angels With Companies Seeking Funding

Companies seeking funding spend a lot of time trying to meet angels. Similarly, angels spend a lot of time meeting with companies, shepherding deals to other angels, etc. The whole process is fraught with inefficiency, and is very time consuming.

At this event, we will try to connect entrepreneurs with active Angel Investors. We hope to have a good crowd of active angel investors (13 at the last event). We also hope to have a bunch of companies seeking angel funds in attendance (40 at the last event).

What to expect:

Show up on time, sign in, get your name tag, red solo beer cup, and please enjoy the networking opportunities, drinks and some snacks while you wait.

There is no guarantee you will get to pitch if time runs out; it depends on how many companies show up.

Companies will be selected on a first come, first served basis. However, if you do not come with the requirements listed below or if you pitched recently, you will not be allowed to pitch again until you show significant changes in your business status.

The list of companies pitching will then be posted outside the pitch room. Please arrive and wait outside the pitch room in advance of your pitch slot. You will be called in when it’s your turn.

Pitch Format:

10 minutes total, this includes set up, handing out your executive summary, your presentation/PowerPoint and QA. You will not be allowed to run over the allotted time. Angels will be able to follow up with you later if they wish to.

Pitches will be in a private room, not in front of the crowd.

If you expect to watch other companies pitch to a crowd, this is not the event for you. We want the undivided attention of the Angels focused on the Companies who are pitching. We have a large TV and projector for your presentation, so bring your own device to connect with all associated adapters.


You must bring the following if you wish to pitch, no exceptions:

1-Presentation/PowerPoint – (Angels love demo’s)

2-Executive summary sheet to hand out (15 copies)

3-Your own device and dongles

4- Business cards (optional)

It should be a fun event. Please tell folks about it. I hope to see you there.

Bonus: Practice Pitch

There will be opportunities to practice your pitch to seasoned entrepreneurs in private rooms.