New Clerky tools help startups hire and raise funds without running into legal problems
Clerky may not be a household name like TurboTax today, but the company’s business formation software has been called a “secret weapon” by startup founders in Silicon Valley for years. Many Y Combinator co-founders use it to get their companies started on paper. And now, Clerky is launching two new tools called Hiring and Fundraising to help startups move beyond incorporation.
Co-founded by attorneys Darby Wong and Chris Field in 2011, Clerky focuses on the needs of startups, not just any small business, but companies that optimize for growth and intend to raise some angel or venture funding. These companies also typically issue equity compensation to employees, consultants or advisors.
CEO Wong said, “Our software makes it easy for founders of startups to get their legal paperwork done without messing it up, and without having to pay lawyers or paralegals to do what amounts to time-consuming clerical work. We’re not trying to replace lawyers though. We’re trying to make it so that startups can save their money for what makes lawyers valuable — legal advice.”
The company’s Formation, Fundraising and Hiring software includes features that facilitate attorney-client collaboration, Wong explains. For example, founders can have their lawyer double-check everything they type into the Clerky system, and be automatically apprised whenever they close a new investor. Or founders may use the platform to communicate with their attorneys to figure out what should be a new employee’s vesting provision.
While an attorney will charge startups thousands of dollars, typically, to handle their seed financings, Clerky’s Fundraising tool costs $99 for six months of unlimited issuances of SAFEs or convertible notes. Companies that formed their business off the Clerky Formation platform need to also pay a $99 set-up fee, as the startup has to evaluate their business to ensure they’re in the clear to begin issuing SAFEs and convertible notes.
When it comes to incorporating a business efficiently online, Clerky faces competition from major platforms like Stripe: Atlas, LegalZoom or BizFilings.com, which are generally aimed at business formation and not targeting “hypergrowth” startups with a Silicon Valley mindset, per se. But it faces less competition on the fundraising and hiring front where negotiations today are facilitated by consultancies, law firms and, in some cases, helped along with open-source documents available from various VC blogs and law firms.