By Kartik Varma and Chris Adelsbach
We are thrilled to announce and to welcome 10 exciting companies to the 2019 Barclays Accelerator powered by Techstars in London.
Starting in the summer last year, we were on a mission to recruit the 10 best teams to join our programme. While many of our companies are based in Europe, our teams are incredibly global and diverse, coming from Africa, Asia, the Americas, and of course Europe. Companies in this class span financial services for the gig economy, cyber security, creation of new asset classes, risk management, credit card loyalty, insurance, asset leasing, and enterprise software.
It is a privilege to work with some of the best entrepreneurial talent around the world: they are redesigning the financial sector. Currently in its sixth year, the Barclays Accelerator powered by Techstars has solidified its reputation as the preeminent and most selective fintech programme in the world. Our growing list of successful alumni companies that are transforming financial services, like Everledger, Flux and Cuvva, is a testament to what our two powerful networks bring to the programme.
Barclays is shaping the banking landscape around the world at a time of rapid technological change and is the first partner of choice for some of the most promising fintech startups. Techstars is the worldwide network that helps entrepreneurs succeed: the 1,600 portfolio companies of our 41 accelerators have raised over $6.5 billion in capital. Together, Barclays and Techstars are able to offer young companies the acceleration they need to set them on the path to success.
We’d like to thank our mentors, global partners, sponsors, and alumni for their time and generous support. We look forward to another great cohort—and to presenting these companies to you on Demo Day at Rise London on May 2, 2019!.
by Chris Heivly, Entrepreneur in Residence at Techstars
My children are all adults now (that does not mean I am done being a parent) and I am reminded of one of my pet peeves that siblings seem to do all the time. That pet peeve is complaining about what they did not get as compared to what their sibling received. I used to call it the compare game and my kids all knew that was a hot button for me and thus to not use that in any of their arguments.
I find that that the same compare game is weaseling itself back into my soul as I work with startup communities around the world. We have all seen this in the rankings of various startup communities. I too am both a victim and purveyor of this. I am sorry, I am trying to rid myself of the ploy.
One of my mantras is this: Startup communities are like children—they should never be compared.
You see, on one hand, community leaders need a way to evaluate how well they are doing. On the other hand, the same leaders get caught up in using other communities’ attributes as a marker or milestone to set up goals for their community.
I feel like I am back listening to my children again. “If Jessie got a new pair of ice skates, then I should get a new pair, too!” Never mind that her sister did not ice skate or even care that much for ice skating.
In community speak, it might sound something like this, “Columbus, Ohio has a $100M new venture fund, I should get one, too,” says every Midwest city.
I firmly believe that the source of this thinking is rooted in a very simple motivation—we don’t know how to do this, and if something works for someone else, I need to do it too. By the way, we have no idea if that action on the part of the Columbus community will do anything to help inspire more entrepreneurs or help build better companies or result in more jobs.
Startup community building is a nuanced game with a thousand small actions that hopefully conspire to create an environment where great things can happen. It’s that simple—and that complex.
Passionate about building your community? Take a much closer look at the tools, the actions, the activities that community builders are deploying, and dig in deep as to their actual efficacy. Then experiment in your own community and see what helps move your community forward.
Building a startup community in your city? Try organizing a Techstars Startup Weekend. All the other startup communities are doing it.
By Kate Drane, Techstars Network Engagement Manager
Hey founders: Did you know that at any given time, your startup may be in the process of being considered for a game-changing opportunity? It’s true!
As a Techstars Network Engagement Manager, a critical part of my role is to serve as a matchmaker between our corporate partners and Techstars portfolio companies. My team and I pore through our portfolio a few times a week, searching for amazing companies that best match the needs of our corporate partners. In addition, most corporations and investment teams have at least one team member that serves a similar role, and our need is the same: we are on the hunt for innovative startups (like yours!).
Whether or not you’re part of the Techstars network, if your company’s goals include entering into a strategic partnership with a corporate partner, securing investment, or attracting new customers, here are a few tips that any founder can take to better position their company to stand out:
Tip #1: Optimize your website
Oftentimes your website is the first place a corporate partner will look for information about your company.
- Make it easy for someone to quickly understand your company by having a one to two sentence description that can be copy-pasted from your homepage.
- Include the logos of your clients (especially if they are other corporations). This can serve as a proof point to a potential corporate partner that you have the infrastructure to work with them.
- Many corporations have firewalls that prohibit them from visiting unsecure sites, so be sure to encrypt your website.
Tip #2: Ensure that your social media is up to date
Your social media presence can play a powerful role in helping to create a holistic view of your company.
- Crunchbase and AngelList are two commonly leveraged tools to provide publicly available funding information and more. Visit your profiles on both, and if any of your information is out of date, use these instructions to make updates: AngelList and Crunchbase.
- Routinely update your LinkedIn, Twitter, Facebook, and Instagram profiles. Your social presence helps to demonstrate that your company is active and thriving.
Tip #3: Update Connect (this applies to Techstars portfolio companies only)
Here at Techstars we are committed to the notion of “Techstars for Life,” and that means bringing additional value to our portfolio companies both during and after they have completed their program. For Techstars founders, our internal platform, Connect, serves as an important tool to help us identify startups that fit specific opportunities.
- Visit your company’s Connect profile, and ensure that all of your information is up to date. Taking this small action can be a game-changer. For example, some corporate partners may be on the lookout to meet with startups in their region, and when our team has the correct data, it ensures that we can connect them with you (double opt-in, of course).
This list is by no means exhaustive, however taking these small but important steps will help to position your company for the magic of engineered serendipity. Who knows, a game-changing opportunity may be trying to find you right now!
I would love to hear from you. What steps has your startup taken to stand out? Leave your best advice in the comments.
Learn more about how the the Techstars Network Engagement Program helps corporations and startups work together—to the benefit of both.
By Chris Heivly, Entrepreneur in Residence at Techstars
Great startup communities have meaningful connections from every actor in the ecosystem. Corporations are one of those critical actors. Why? It’s actually simpler than you think. There is something in it for everyone. The perfect win-win.
For an effective win-win, you must have two motivated parties each of whom get obvious value from the connection.
The problem with the corporation–startup community connection, or lack thereof, is that the value for each actor is many times not obvious.
I liken this relationship to the idea of two old college roommates who haven’t spoken for 10 years. We like each other but we have no idea what is going on in each other’s lives. In the void of information, I just don’t care as much.
But once we reconnect, our motivation to support each other seems to accelerate and all of those little nuggets of each other’s lives feel important again.
For mid to large size corporations, the two most common challenges to maintaining or growing their business are:
- Staying innovative, and
- Talent recruitment.
For startups, the challenges are simple:
- Stay alive,
- Introduce and validate their product idea, and
- Find real customers.
Unless you are Apple, Amazon, or Google (and a few others), corporations struggle to say current. Every corporation I am engaged with has doubts as to how innovative they are and have some level of fear that a new company will come along and take their customers. In addition, finding and recruiting new talent to address their innovation needs is next to impossible.
But they have customers, deep industry and product knowledge, and money.
Unless you are one of the very few startups that have raised more than enough capital to meet your long-term needs, you wake up every single day worried about whether you can find a customer to use your product.
Can you see the basis for a healthy relationship? There are so many win-win connect points and opportunities if each actor just tries a little harder.
I will go out on a limb and say to my corporate friends that the onus falls a little more on you than the startup. You are the pretty girl/boy at the high school dance. Can you make it a little easier for us dorky startups over on the wall?
How do you do this? It’s really quite simple. Show up. Every reasonably-sized startup community has formal and informal networking events. Show up. Share who you are and what you care about. The rest will quickly take care of itself.
Looking for another way to connect? Both corporations and startups benefit from Techstars corporate partner accelerators:
- Corporations, learn how Techstars can connect you with the most promising startups to future-proof your business;
- Startups, apply now to Techstars mentorship-driven accelerator programs.
Who are you?
I’m Greg Monterrosa, born and raised in South-Central LA. About 10 years ago I launched a startup that outgrew me. I hired my replacement and the business is still thriving. Since then, I’ve recognized my passion for helping others get their start. It all began at a Techstars Startup Weekend, when I saw the direct impact of supporting others. Four years ago some friends and I organized the first Techstars Startup Weekend event in our community, the Conejo Valley (North Los Angeles). It changed my life. Soon after the event I booked a one way flight to France, where I found myself mentoring at four different Techstars Startup Weekends. That cemented how important it was for me to maintain a global network.
While I was away, Cal Lutheran University Center for Entrepreneurship—where we hosted our Techstars Startup Weekend—contacted me to help them bring their space to life and open its doors to community members, and Hub101 was born. I picked up a copy of Brad Feld’s book “Startup Communities,” and it’s become required reading for all staff and community leaders—it’s become our bible. Over two years we’ve grown a community of about 150 people at Hub101, and we’re continuing to foster connections that tie early stage startups into economic development and beyond.
Why do you do what you do?
I am living my purpose, which is to empower people. It’s refreshing to surround myself by inspiring doers. I can also see the impact we’re making. To date we’ve created over 50 high paying jobs. Historically, people have used funding as a metric, but our community is a bit different. We’re hyper-focused on empowering our members to seek the people they serve, their customers. It’s amazing to see the people we serve at Hub101 want to give back to the space that helped them get their start.
What’s new for greater Los Angeles?
We’re excited to bring Hub101 to other underserved communities and are working on a second location in Ventura, which was recently affected by the Thomas Fires, and we’re working on launching a third location at a major mall. We are committed to bringing startup communities to places where they don’t exist, utilizing programs like Techstars Startup Weekend and playbooks like “Startup Communities.” Recently one our community members, Beth Sidenberg, formerly a general partner at Kleiner Perkins, launched Westlake Bio Partners, a $320 million fund, to support early stage biotech companies in the area.
Any final remarks?
If you’re a Techstars Startup Weekend organizer in a rural town or a place that is struggling, please reach out to me. I’m happy to meet with you and your team to map out where you’re at, and let’s talk out how we can help your community grow. To that end, I’m also looking for a mentor myself. If you’re a community leader reading this and think you can add value to what we’re up to at Hub101 or to my personal journey I’d welcome a note. Feel free to connect with my on instagram at @GregMetro!
Hello Gunars! Could you briefly introduce yourself?
I’m the CEO and co-founder of IT House. By using technologies like Ruby on Rails, Elixir, and React Native, my team and I have helped crowdfunding projects, fintech projects, news portals, marketplace platforms, community networks, and e-commerce companies create custom sites and apps. I’ve also participated in two accelerator programs, StartupBootcamp and Ignite100.
As an original co-founder and board member of TechHub Riga, the first TechHub expansion from London, I cultivate collaborative spaces for emerging entrepreneurs and tech startups to come together to learn, share, and grow. I’m one of two people responsible for bringing Garage48, a 48-hour hackathon event, to Latvia. As a central figure in Latvia’s Ruby on Rails community, I organize regular meetups for like-minded tech enthusiasts. While I’m a curator at StartupDigest for Latvia, I’m also an active supporter of the burgeoning startup scene in the Baltic Rim and Nordic countries.
I enjoy running, hiking, rock climbing, traveling, and maintaining a healthy lifestyle.
Why did you decide to start curating Startup Digest?
Around 2010, when I traveled in the U.S. for several months, I met Christopher McCann, one of the founders of StartupDigest. At that time Chris even made pancake breakfasts for friends and the local community in Silicon Valley. I liked the idea and the Startup Digest team, and I decided that it would be great to add Latvia to the list.
What is the value that Startup Digest brings both to your local community and to you personally?
Startup Digest helps people who are interested in Latvia learn what kind of events are happening in Latvia; either they follow us on a regular basis, or they want to attend some events and plan their journey accordingly. Or they visit Latvia for a few days, and Startup Digest helps them quickly find what’s going on and what kind of events they would like to attend.
Of course, the local community also benefits from Startup Digest—by meeting potential investors or similar thinking minds, or by finding events that match their interests.
I’m happy that more and more people and startups can make new connections, exchange knowledge, and make new deals, using Startup Digest
How have you seen the Latvian ecosystem develop over the years since you’ve started curating Startup Digest?
I believe that Startup Digest is a niche news source of information for people; and it’s one channel, together with Facebook and Twitter. Compared to Facebook and Twitter, the information on Startup Digest is topical, and the events are better structured, and therefore more accessible for anyone who doesn’t want to get lost in the noise of news, tweets, or posts. I’ve seen how Startup Digest has helped startups make new business and friend connections.
By Chris Lucas, Vice President of BLASTmedia and Rachael Feuerborn, Program Manager Techstars Chicago
I see my fair share of brilliant founders. Many of whom have well-thought-out business models, growth strategies, product roadmaps, etc. However, most neglect PR… because honestly who gives a hoot when you are spending your last $276.78 trying to get your big vision off the ground while investors (and your parents) keep telling you to quit? I get it. That’s why I wrote this.
What is PR?
Public Relations: if you break the words down it’s quite broad.
“Public” means just that: people. Not just your customers or the media. Think of Tesla. I certainly don’t have a Tesla. But their PR strategy doesn’t ignore me all together. Tesla’s brand permeates all of society purposefully.
“Relations” is the way in which two or more people or organizations regard and behave toward one another. Thanks dictionary.com! If your startup were a person, who would she be? What characteristics and personality quirks does she have? How would she communicate with her friends? Think of a blogger. Bloggers get it. They are people creating and publishing content to essentially make more friends.
Therefore, public relations is the way in which your brand creates and maintains relationships with a variety of stakeholders.
Public Relations is not…
- Shoving your personal founding story down the throat of anyone that will read it;
- Trying to get as many media outlets as possible to publish details on your beta launch;
- A way to test product market fit;
- Even close to the same process for every startup;
- Dependent on press releases.
How to do it
- Personify the brand
If you don’t know who you are, you can’t relate to anyone. Have a point of view. If you haven’t done this your brand won’t matter. (Shoutout to mentor, Suzanne Muchin)
- Have a specific goal in mind
Anyone who has worked with me knows the first thing I ask in any meeting or brainstorming session is: What is the GOAL? I often see startups think they must do some sort of PR and to do so, they must follow generic steps 1, 2, 3. Wrong. What is your goal? Always know the “WHY?”
So you just closed a round…
Don’t: Publicizing closing your seed round because you think it’s a thing to do. Yay!
Do: Publicizing your seed round to show what an attractive investment you are for your Series A in t-minus 12 months. Promote the traction of your overall industry with investors as a segment to take notice. Make it an announcement to your future investors.
So you just launched a new feature or product…
Don’t: Read out to journalists just because you are excited about it.
Do: I hope you developed that feature in response to direct, credible customer feedback. If so…
Trala did a great job with this: How to Learn Violin 3x faster with an Audio Practice Diary. This self-published blog post provides valuable feature descriptions. Trala provided valuable content to their target market showing how the product solves the problem they knew the user had.
So you want to get your brand out there…
Don’t: Introducing Company A. Hi, we are Company A and we do X.
Do: Be creative! Here are two great examples:
Vacation Fund: 3 Canadian Startups Setting Up Shop in Chicago. Why? To show potential Chicago clients she is investing in the local community and is setting up secondary roots close by.
Rheaply: Rheaply Circular Discovery Scholarship. Why? Rheaply uses this scholarship to show its support for education, invest in the next generation of sustainability advocates, and connect with universities (one of Rheaply’s target markets).
- Decide where
Techcrunch is not the only option. It’s not even the best option 99% of the time. There are multiple options:
- Local tech outlets
- Tech blogs
- Blogs/trade media in your industry
- Blogs/media your prospects read
Example: Neopenda: Invest in Neopenda. They launched a crowdfunding campaign. For the cash? Sure… but also for the publicity. They were rewarded for their creativity and storytelling. Check it out.
Example: Speeko: Chicago Sales Professionals Meetup. Speeko created a sales professionals meetup and features speakers who offer value to their target customers. For example, at their last meetup they featured an amazing leader from Google who is transforming how the company uses data to tell stories.
- Decide when
Timing is important with PR. Launching a ton of investor related PR campaigns when you aren’t raising is wasted momentum. Don’t only think about the circumstances you can control, but also external factors giving you momentum.
This startup streamlines the pro bono work of lawyers, including those fighting for immigrants at the border. Here, Paladin is aligning their brand with a cause. Not just any cause, but a very relevant cause that some will find compelling and some will not. Paladin has a personality and (s)he supports immigrants.
- Tell a story
Make it newsworthy. Otherwise, it’s useless. By now, you (hopefully) realize how much your PR strategy can overlap with your other marketing strategies (like social, content, etc). Your company’s personality, as we established early, has a voice. What does she say? She needs to be more than a bump on a log (yes, I’m from the country… y’all). See, my voice has a little twang and sass to it. What’s yours?
One great example is the introductory sentence to this post: “Jiobit CEO John Renaldi once lost his young son in a public park in Chicago for a nerve-wracking 30 minutes.” See? There’s a story in one sentence.
- Actually do it
You can’t just write a story and slide into a reporter’s DMs. Before you even wrote the story, you had a goal in mind… you also had a target in mind for publication. Right? So write the story with the publisher in mind. If it’s for your personal blog, it should be sharable and written for your followers. If it’s for a local media outlet, make it newsworthy and show the local impact. What does the reporter want to publish? Ask him!
Admittedly, that last little tidbit is hard. So when your PR strategy is a smidge more legit than your own social media page, bring in the big guns. This year, I brought in PR experts BLASTmedia to work with the founders from the Techstars Chicago Class of 2018. I’m not a big outsourcing fan, but outsourcing PR is smart.
Benefits of outsourcing
- The firm’s sole job is to source the optimal media opportunities for you;
- They have the relationships you just don’t have time for;
- They are not only PR subject-matter experts, but also experts in your space (if you have hired a firm with industry experience);
- You have a team of people to provide outside perspective, helping to hone your message and provide reality checks when needed.
Outsourcing NO NOs
- The PR firm will NOT define your brand’s personality, target customer, or go-to-market strategy. To set yourself up for success, know who you are, what you are selling and to whom before bringing on an outside PR partner.
- Outsourcing doesn’t allow you to wash your hands of it. Sure, it’ll ease up your workload but you are now in a partnership that requires your attention. Treat the firm like an extension of your team, not a standalone vendor, and the results will show it.
I chose BLASTmedia for multiple reasons. First, they are specialized in B2B tech and SaaS, working with start-up, scale-up, to publicly-traded tech companies for 13 years. They understand how to take a company and make them a thought leader in their industry, not blindly sending out press releases hoping it will get pick up. Second, they work with clients long-term to really understand the brand personality and story, allowing them to more effectively source opportunities and help create content… which about 4% of founders actually enjoy doing. Lastly, I spent hours on their blog learning about PR strategies and tips. After about 30 minutes of reading their plethora of media mentions, I realized I was in a PR trance and said, “dang, they are good.” If you’re a B2B SAAS company, check them out.
In 2018, Techstars Chicago scoured a list of thousands of mostly midwest startups to select ten. Techstars does indeed thrust a young company into the PR limelight quickly; however, every startup can follow a few tried and true principles to quickly put a PR plan in place. Good luck!
By Chris Heivly, Entrepreneur in Residence at Techstars
For a brief, shining moment, I was in the fire suppression business, so I know a little about fire. Fire needs three elements: spark, material, and oxygen. That is why you keep your door closed when there is a fire outside the room—don’t feed it more oxygen.
When I meet with startup community enthusiasts, we talk about the factors that seem to grow a community and the factors that seem to inhibit progress. If we could only do more of the right thing and less of the wrong things maybe we could build a little momentum.
Every community has its challenges. Some of the ones I hear are:
- We do not have enough capital;
- There are leaders who try and control everything;
- I can’t find any good mentors;
- The local corporations do not engage with startups;
- We don’t have any breakout companies.
These are real challenges and each one plays a negative role. But here’s the thing—in itself, publicly and privately bitching about these issues also has a negative role to play. I know this is human nature. I also know we need to address the issue.
Those complaints just gave the challenges more oxygen. And now we have a bigger fire.
Negative community talk creates doubt and has a direct impact on each member of the community. At the very least we need to balance the challenge discussions with the positive milestone stories.
Are you an active member of your startup community? Find yourself spending just a little too much time whining about what you don’t have? Try and minimize those conversations, and try celebrating a few more of the advances you have made.
One great advance for any growing startup community is a Techstars Startup Weekend. Organize one in your city!
By Chris Pearson, Manager, Partnerships | IBM Digital Business Group
I’ve spent my fair share of time mentoring startups, and when we meet for the first time, I always begin by asking the founders a seemingly simple question: “Why are you doing this?” Answers to this question come in different forms, typically to the tune of “We’ve noticed a gap in ‘x’ market that we can expose,” or “We have an innovative product that can revolutionize the way ‘y’ business is done,” and of course the ever so original “We’re the Uber for ‘z.’” It’s always great to get a picture of the product these founders are developing and to witness their excitement about the potential impact it can make, but none of those really answer the question I’ve asked. They’re all telling me the what and how but not necessarily the why. The reason I specifically ask “Why?” is that this question requires the founders to defines their purpose—and I believe that understanding your purpose is the foundation on which companies can truly thrive.
“He who has a why to live can bear almost any how.” These wise words, written over a century ago by Friedrich Nietzsche, are just as true today as they were then. Circumstances change, markets shift, new innovations arise, all of which are uncontrollable factors that can impact what and how, but if you have firmly established your why, there will be very little you cannot overcome.
Determine Your “Why”
Simple questions don’t always yield simple answers. The purpose behind our actions, let alone our business, isn’t necessarily easy to define and oftentimes takes a bit of digging, but once you have it, the decision making process becomes significantly easier across the board. As a founder, you have to account for hundreds of decisions on a daily basis, each of which can potentially take you any one of a hundred directions. The benefit to understanding your purpose is that it acts as a compass in your decision making. Whatever answer or course of action aligns most closely with the central purpose you’ve identified is the decision you make, period.
For me personally, I decided years ago that my purpose was to help foster growth across the startup ecosystem. I’m not a founder myself, but I have recognized a pattern across history: civilizations tend to thrive—and reach their pinnacle—when they are focused on innovation. Creating solutions that make life and business more efficient and effective is a central theme in growing societies, and I believe that is just as true today as it’s ever been.
I developed this mission shortly after joining 500 Startups in a business development role after many years in corporate finance, and it was this idea that opened my eyes to a missing component in the startup ecosystem. I realized that enterprise companies play a critical role in the development and growth of startups and that the development of startups plays into the long-term success of enterprise companies. For the sake of time, I won’t dive deeply into the subject. Here is a reason so few large corporate entities survive, or at least maintain, a high level of success beyond three generations—and it revolves around their inability to accept and buy-in to innovation.
Partners for Innovation
It was this revelation that led me to take a role at SoftLayer, which ultimately fully migrated into IBM, where I’ve worked to become a key figure in the development and execution of our startup program Startup With IBM. Our objective is to manage a program that not only provides startups access to our technology through credits and more importantly positions those companies that work with us to reach our global network of clients and partners in order to help them find customers and generate revenue. We want to leverage the strength of what IBM is today to create meaningful value for the growth and development of these startups who will ultimately determine what IBM becomes in the future. If we can serve these startups well, helping them grow and scale on our cloud, as more than just as technology providers but also as a business partner, then we have the opportunity to become a core piece in the success of the next generation of these companies. By design, our program is only successful when startups are successful first. The goal is to create a structure that serves and supports founders by leveraging IBM’s core competencies to give them the tools and resources they need to do what they do best: innovate.
It’s yet to be seen whether or not our complete vision will come to fruition in the end. What we do know is the why behind what we’re doing, and every decision we make for this program will be to serve that ultimate purpose as we go forward.
Learn more about how Techstars partners with corporations to promote innovation—within corporations and for startups.
By Shannon Liston, Techstars Corporate Council
Just to be clear: This sheet is for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Companies should consult their own attorneys for legal advice on these issues. Because of the generality of the issues discussed in this piece, the information provided may not apply in all situations and should not be acted upon without specific legal advice based on particular situations.
Sometimes, startups fail.
It’s painful and brutal—and nothing to be ashamed of. It’s part of many, many entrepreneurial journeys. But along with the emotional ups and downs, you’ve got to deal with the practical legal side of shutting down your startup.
The legal name for one version of this is corporate dissolution. If you don’t need the protections of bankruptcy (you’ve got low risk of litigation or disputes over claims), corporate dissolution may be right for your startup.
The Techstars legal team has created this best practices sheet to give you guidance and practical tips if your company is facing dissolution. Unsurprisingly, these will be different depending on which state you’re incorporated in—this sheet focuses on Delaware, because of the large number of US corporations incorporated there.
Long-Form v. Short-Form Dissolution
Many smaller companies liquidate without the protections of federal bankruptcy law, as corporate bankruptcy can be very expensive. Instead, you can get some of the same protections through Delaware’s long-form dissolution process—it gives boards of directors similar protections, and provides company creditors with notice, plus an opportunity to present their claims.
Work with your legal counsel to make sure you meet all the formalities of the long-form process, like 60-days notice to all known claimants, including public notice, and a court approval process ( 8 Del. C. 1953, § 280).
The formalities of the long-form process may be overkill for your company, especially if you’ve already sold your operating assets, if you stopped operations a while ago, or if you’re unlikely to have unknown creditors.
In this case, short-form dissolution may be right for you: it’s simpler and less expensive for many companies, and comes with fewer formalities than the long-form process (8 Del. C. 1953, § 275).
7 Steps to Dissolve a Business
- Obtain Board and Shareholder Approvals. Your company’s Board of Directors must approve the decision to dissolve and adopt a Plan of Liquidation. A majority of the company’s shareholders must also approve the decision and the Plan of Liquidation.
- Pay Franchise Taxes and File an Annual Report. You must pay Delaware franchise taxes in full (including the current calendar year franchise tax) and file all applicable Annual Franchise Tax Reports. The Delaware Division of Corporations will not accept the Certificate of Dissolution (see below) until this step is done.
- Notify the IRS. Within 30 days of the Board approving the dissolution (the dissolution resolution date), your company must file a notice of dissolution with the Internal Revenue Service: Form 966.
- If the dissolution involves the sale or exchange of corporate assets, Forms 8594 and 4797 might also be necessary.
- See the IRS checklist for other required filings.
- File for Dissolution with the State. Once the decision to dissolve is properly approved, the company must file a Certificate of Dissolution with the Delaware Division of Corporations.
- If your company has stopped doing business and doesn’t have any remaining assets, it might qualify to file the short form certificate of dissolution.
- If the company is registered to do business in another state, it will have to withdraw or surrender those qualifications.
- Provide Appropriate Notice to Creditors and Stakeholders. Follow state law requirements to give notice of the dissolution to anyone with a claim against the company. Delaware’s long-form dissolution notice requirements are here: 8 Del. C. 1953, § 280.
- “Winding Up”. After the dissolution is effective, the dissolved company is deemed to continue, generally for three years, for the limited purposes of winding up per the Plan of Liquidation. This means:
- Settling and closing the business;
- Liquidating remaining corporate assets;
- Settling claims;
- Resolving any lawsuits;
- Making final distributions to creditors, and if funds remain, to applicable shareholders.
- File Final Federal and State Tax Returns. Review the IRS checklist for closing a business and filing final returns. For the company’s final returns, check the box to indicate the tax return is a final return.
Do’s and Don’ts
Do: Act in accordance with your fiduciary duties.
It’s your responsibility to focus on maximizing the company’s value. For more on your obligations as a Director, see here.
Don’t: Disappear; act in a manner that presents a conflicting interest; arbitrarily pay back one creditor over another; etc.
Do: Send the filed Certificate of Dissolution to investors, describing your decision to dissolve and your efforts to maximize return to shareholders.
Don’t: Use dissolution as an escape hatch.
Dissolution alone does not abate actions, suits, or proceedings begun by or against your corporation prior to dissolution—or, generally speaking, for a period of three years after dissolution.
Do: Educate yourself on the several ways to wind down a company.
Talk with your lawyer about which way to wind down your company is the best choice for your situation—the complexity of your company (number of employees, investors, creditors, etc.) will have a big impact on this.