Incorporation (Steps 1-8)
Step 1: Choose the company name
Company name
It’s important to have the same name as the underlying open source project. From our experience, the lack of awareness of a new company name is often why the business fails to gain traction quickly in the market. A large number of resources are required to build a new brand, which is a marketing investment that detracts from product development in the early days.
The second-best option is to use a name associated with the open source project. For example, Mermaid Chart Inc. for the Mermaid open source project.
If neither the exact name nor an associated name is an option (for instance, a foundation has the intellectual property rights to the open source project name), founders will choose a company name from OCV’s name reserve.
We recognize that naming the company after the open source project name may face trademark application hurdles.
If the company can obtain trademark registration rights (to the open source project name), the company will extend a forever, royalty-free license to the project so the name lives on regardless of the outcome of the commercial company.
Companies that can use the open source project name or a similar derivative should make the commercial website the go-to destination for both project and product information. See the website handbook for information on handling the open source project and commercial company websites.
OCV name reserve
As of December 2022, OCV maintains an inventory of unique company and domain names that have cleared the following search criteria.
OCV company name search criteria
OCV-generated company names will not contain specific domain language/keywords (for example, “Apple” or “Amazon”). Otherwise, it would be more difficult to differentiate from competitors and/or pivot the business in the future. These will also be unique, reasonably short, eligible for trade name registration / a “.com” domain name, and spelled as how you’d pronounce it (avoid misspellings).
We run the following searches for a new OCV company name:
Domain availability - “.com” domains are preferred
Domain purchase budget:
B2B Companies: The name for such companies is not a priority for their customers
B2B Companies: max of USD $5,000
B2C Companies: max of USD $10,000
Google - are there other companies using a similar name in the same or adjacent industry already? Try different sound-a-like spellings too.
USPTO - are there existing trade name applications in the same class (typically, Class 42 - “Non-Downloadable Computer Software”) that could block a new registration? Try a few spelling variations too. Also check WIPO Global Brand Database.
Delaware entity - ensure no conflicts with existing entity names.
Trademark knock-out search by the Legal Team (generally takes ~2 business days).
For companies that require a name from OCV’s reserve, domain name registration will be transferred to the company’s account after incorporation.
See additional Trademark considerations.
Changing the company name
Only when a name change is deemed absolutely critical, a DBA (”doing business as”) may be considered, and a DBA should be used instead of changing the corporate entity name legally. As a policy, OCV (when serving as the single member of the board of directors) will not approve legal name change requests.
A DBA will trigger some additional compliance and tax complications, which should be weighed as part of the decision to undergo a change in name, but a legal entity name change will trigger a more significant impact on compliance processes, legal expense, and operational complications, which are too burdensome to entertain.
Filing a DBA
A DBA will need to be filed where a company’s offices are located and where the company intends to do business. As a company expands where it is doing business, additional DBA registrations will need to take place in those locations as well, increasing the complexity of the process.
OCV companies seeking to do business under a new name through a DBA (not a legal entity name change) will need to file Fictitious Business Name (FBN) Statements in San Francisco and in Santa Clara counties.
The legal team will require physical, wet-signed copies of those statements, as well as a copy of the company’s updated tax registration certificate in San Francisco, which will be mailed to the company after updating the company’s name on the SF business website.
Additionally, Santa Clara County requires the publication of the new business name in a local newspaper. The legal team will help facilitate this process (typically taking 6-7 weeks).
Proof of a completed DBA filing will include:
Stamped copies of the SF and Santa Clara Fictitious Business Name Statements
An updated SF tax registration certificate that includes the company’s DBA name
Proof of publication in Santa Clara.
Given the requirements for obtaining physical copies and sequential steps, the timeline for completing a DBA may take one to three months.
Step 2: Choose Legal Entity Structure
C-Corporation
C-corporations are the standard entity type for venture-backed companies because they allow for easy stock issuance and transfer, the ability to raise capital through the sale of stock, and provide limited liability for shareholders. Additionally, C-Corporations can have multiple classes of stock, which is useful for creating different levels of ownership and control.
Public Benefit Company
Public Benefit Companies are for-profit corporations that are legally bound by inclusion in their corporate charter (certificate of incorporation) of a set of specific public benefits as part of their statement of purpose. When it's appropriate, OCV will consider incorporating a company as a public benefit company with the associated public good being associated with their stewardship of open-source software.OCV will consider incorporating as a public benefit company when:
Safeguarding the open source project is essential
The company is not leveraging more than one open source project
The consideration is business-driven
OCV companies incorporated as a public benefit company are referred to as OCV public benefit companies (OPBC).
Open Charter
Companies that incorporate under the public benefit company structure will adopt OCV’s Open Charter for their corporate charter. The Open Charter is a legally binding corporate formation document stating a company’s commitment to open source and includes a series of objectives for meeting its open source commitment.Founders who elect to incorporate as a public benefit company will need to understand reporting responsibilities and consequences.
Biennial reporting requirements for public benefit companies
At least every two years, Delaware Public Benefit Companies must provide its stockholders with a report on the company’s promotion of the public benefit specified in its corporate charter.
The public benefit report should include information on:
Objectives established towards the promotion of the public benefit
Standards adopted to measure progress in those objectives
Information measured in alignment with those standards
Assessment of the company’s success in meeting objectives
Step 3: File Incorporation Documents
Incorporation filing workflow
Our incorporation process generally entails the following sequential workflows:
OCV provides information required for incorporation docs to the Legal Team
OCV reviews draft incorporation documents and signs final versions, including Form SS-4 and required CA filings
Founders will need to sign their Share Purchase Agreement(s) and other corporate forms as required at this time. While these would not block Steps 3-5 below, they impact the timing of the Founder Share Purchase Process and OCV funding, which is a gating item for Step 8: Systems Setup.
Legal Team files Certificate of Incorporation with Delaware’s Secretary of State
Legal Team applies for an EIN with the IRS
Legal Team files California Designation by Foreign Corporation and Statement of Information (initial) with the California Secretary of State
Legal Team provides filed copy of the Certificate of Incorporation & EIN to OCV
Legal Team prepares and files in California:
CA 25102(f) Notice - for founder / common stock issuance
CA 25102(o) Notice - for the company’s equity incentive plan
CA S&DC-SN - Statement and Designation by Foreign Corporation
CA SI-550 - Secretary of State Statement of Information
Once the common share purchase is complete and funded, the Legal Team prepares the SAFE agreement for OCV to review and execute.
Once safe funding is complete, the Legal Team prepares and files the CA 25102(f) Notice for OCV SAFE.
Information required for incorporation documents
Company Name (Already Completed OCV’s company name availability search)
Brief Business Description
Entity Structure: C-Corp or PBC
Information from Initial Systems associated with the Company
Company Address (Virtual mailbox)
Registered Agent Address
Service of Process: name of the registered agent
Company’s Billing Email
Incorporator: OCV
Initial Director: OCV (single director on the company’s board of directors)
Corporate Officers: Title, name, address (including state & country), email, phone number
Executed Founder Offer Letter and ECIIAA
Including Founder-specific non-solicitation clauses
Whether Founder(s) will purchase common shares (recommended) or receive options
Whether the company will purchase any existing domain names from the founder for USD $1
Initial Capitalization Table, including information on equity ownership, vesting, and options pool
Funding Detail from OCV, including information on the amount of funding and structure
Request for a physical address authorization letter
Timing: draft review date and expected launch date
Draft incorporation documents
Formation Documents:
Action by Written Consent of Sole Incorporator
Bylaws
Certificate of Incorporation
C-Corp: single class common
PBC: dual class common
Initial Action by the Board of Directors
IRS Form SS-4 (EIN Application)
Stockholders Consent - 202X Equity Incentive Plan & Indemnification Agreements
OCV Signature Packet:
Common Stock Purchase Agreement
ECIIAA - for OCV officer
Indemnification Agreement - for OCV officer
Founder Signature Packet:
Common Stock Purchase Agreement
83(b) Election Forms - if purchasing shares
Equity Incentive Plan:
202X Equity Incentive Plan
Form: Early Exercise Stock Purchase Agreement - early exercise is only available to founders
Form: Restricted Stock Award Grant Notice (Cash)
Form: Restricted Stock Award Grant Notice (Services)
Form: Stock Option Grant Notice (US)
Form: Stock Option Grant Notice (Non-US)
Address Verification Letter
State Filings:
CA Qualification S&DC-SN: Statement and Designation by Foreign Corporation
CA SI-550: Statement of Information
CA 25102(f): Notice of Issuance of Securities (Common Stock)
CA 25102(f): Notice of Transaction (OCV SAFE)
CA 25102(o): Notice of 202X EIP (Equity Plan)
Template Corporate (Toolkit) Forms
Advisor Agreement(s)
Consulting Agreement(s)
Employee CIIAA (CA & Multi-State)
Exempt Employee Offer Letter (CA & Multi-State)
Indemnification Agreement
Non-Disclosure Agreement (One-Way & Mutual)
OCV SAFE Financing:
Board Consent
Post-Money SAFE Financing Form
SAFE Side Letter
Step 4: Issue Equity
Founder share purchase
Founders are recommended to purchase (for a nominal amount) common shares in OCV companies instead of receiving options. This is, however, dependent on each founder’s personal tax situation. Please consult with tax advisors.
When a company issues common stock, it sells ownership stakes in the company differently than it would to investors. The price of purchasing common stock is nominal for the company’s founders but may change over time with employees (see 409A Valuation).
The wiring of funds to execute the share purchase agreement needs to be completed before OCV SAFE funding.
It is strongly advised for founders to seek tax counsel from professionals who are experts in working with founder equity in venture-backed startups.
See Visa Sponsorship if work visa transfers are required.
Stock Options
Common shares are usually reserved for founders, employees, and other stakeholders.
Options give the holder the right to buy common stock at a specified price for a certain period of time and may be used as a form of compensation for employees and advisors. Though options are a right to buy common stock, they are not the same as actual shares of stock.
Guidelines for equity stakes
Disclaimer - The following guidelines are:
Subject to change
Not a guarantee that anyone will get any specific equity stake
Not necessarily a perfectly up-to-date reflection of current frameworks
Not going to impact past dealings. We will stick to the terms of previous arrangements regardless of whether they are higher or lower than the current framework.
Founder shares guidelines
Vesting Period: Four years (48 months), six-month cliff, double-trigger acceleration
CTO
Minimum of 10% (Y Combinator Founder Norm)
Additional equity may be allocated as follows:
Contributor to the project: + 5%
Original author of the project: + 5%
First C-level hire at the company with management and entrepreneurial experience: +5%
A maximum of 25%, otherwise we can't make our model work.
There may be cases where OCV launches a company and starts to assemble a team before a CTO candidate accepts the indicative offer. If the CTO role remains open and the candidate accepts and joins the company:
Within 6 months of company launch: original equity offer stands
After 6 months of company launch: new equity offer will be equal to the original offer less 5%.
CEO
Our standard model is to launch a company with a technical co-founder first and recruit a CEO shortly thereafter. CEOs recruited after the company's launch will receive stock options from the company’s options pool. See CEO equity reserve at Step 5: Establish the company’s options pool.
Under special circumstances, we would consider launching with only a CEO or both CEO and a CTO together. Guidelines for CEO equity at launch would be similar to the CTO at launch.
Founding Engineer
In certain situations, OCV may start companies with a founding engineer instead of a CTO. In cases where we recruit a Founding Engineer from outside of the community, but someone with the potential to take on the CTO role at a future date, the standard equity package is 2.5%. If and when the Founding Engineer takes on the CTO role during the pre-Seed stage, the equity package will be reevaluated with a maximum total offer of 15% (inclusive of the initial 2.5%).
Note: this role is not the same as the first engineering hire (someone who is not anticipated to take on the CTO role at a later date). Equity offers for first engineers follow the same process as Equity grant considerations.
Advisor shares guidelines
This section is intended for advisors or project authors who helped making company launch a reality (”Founding Advisors”). Consideration for Founding Advisors is at OCV’s invitation and not a self-nominated process. For advisors coming onboard after company formation, see Advisors.
Minimum of 0.25%
Original author of the project (assuming a single author): + up to 1.5%
Time commitment to advise the company on monthly basis: + up to 0.25%
Active involvement in building the business (i.e. contribute to brand building, customer introductions, recruiting, etc.): + up to 0.5%
Merge requests improving the open source project are not considered to be active involvement in building the business.
Maximum of 2.5%.
Vesting Period: Four years (48 months), six-month cliff.
83b Election
*OCV team will confirm the common share purchase is complete and email the founder to start this next step. Filing an IRS 83b Election is extremely crucial for founders and the company. Failing to do so has significant tax implications to both.
83(b) elections are required to be filed only if/when:
a stockholder purchases common stock subject to vesting (i.e., typical OCV founder shares issued during the company formation stage); or
if an option holder early exercises an option that is subject to vesting.
83b Election form needs to be completed by the founders and sent to the IRS (via certified mail with return receipt) or submitted electronically on the IRS website within 30 days of the effective date of the stock purchase agreement (the date wires are sent). For electronic filing, create a profile on the IRS.gov website, and fill out Form 15620, i.e. Section 83(b) Election, using information provided in your 83(b) document. Once complete, take a screenshot of the submission completion page as evidence of the date, though the form is instantly transmitted. For physical mail, while digital signatures are accepted by the IRS, OCV recommends printing and completing the form with a wet signature to remain compliant regardless of any IRS process changes. When filling out the 83(b) form, it will ask what date the shares were transferred to the founder. This is the same date the founder purchased their shares. A self-addressed return envelope needs to be included as well. As part of the company formation process, the Legal Team will provide the latest instructions and template form for 83b Election. For non-US founders, OCV will assist with creating a FedEx return label to be included with the self-addressed return envelope.
The appropriate IRS office to send the election to can be found at the IRS website (those with no payment enclosed). Non-US founders should use the following address.
Department of the Treasury Internal Revenue Service Austin, TX 73301-0215 USA
To document the completion of this process, founders must provide the following three items to the company’s legal team via e-mail:
A copy of the completed election form,
Proof of certified mail sent to the IRS (such as a photo of a receipt with tracking number), postmarked within the 30-day deadline, and
Proof of a self-addressed return envelope from the IRS.
Step 5: Establish Equity Pool
Each company will establish an options pool for employee equity grants. The size of the initial pool depends on the Day 1 team composition of the company. To prevent unintended dilution prior to the next capital raise, our goal is to reserve a sufficient allocation for all required hires (including executive roles).
Typical size of options pool at an OCV company is 20%, consisting of 10%-15% for future CEO reserve and rest for employees.
Following conventional venture practice, the options pool will reset with each additional round of financing. The size of the new options pool at the Seed round depends on the founding team, future investor, and OCV inputs.
Step 6: Banking systems set up
Banking and Credit Card setup
OCV will set up a bank account for the company and manage the SAFE funding process. Additionally, a corporate credit card account will be created for the company to manage payments and expenses.
CTOs will have full access to these accounts as designated Control Persons and may be required to complete KYC steps as part of the bank and credit card application process.
Beneficial Ownership
A beneficial owner is an individual who owns 25% or more of the company in question either directly or indirectly, including founders.
Control Person
The CTO should be named the Control Person for the new company's finance system applications. If there is no CTO, then the company's named CEO.
Any one single individual with significant responsibility for managing the company, such as an executive officer, managing member, general partner, or vice president.
Step 7: Fund the business
Standard OCV funding is $2M per company via a SAFE. As of April 2022, OCV Fund I SAFEs do not include discounts or valuation caps.
Safe side letter
As of July 2024, OCV SAFEs will include a side letter with the following notes:
"In the event that the Company negotiates a term sheet or letter of intent in connection with the Equity Financing or a debt financing, the Company shall not, without the Investor’s prior written consent, include any provision in such term sheet or letter of intent promising the issuance of equity awards to the Company’s officers, directors, employees or consultants.”
As of May 15, 2025, the new OCV’s SAFE Side Letter added the following:
“In the event that the Company, directly or indirectly, by amendment to the Company’s organizational documents, merger, consolidation or otherwise, creates or authorizes the creation of or authorizes the issuance of any simple agreements for future equity and/or convertible notes (together, “Convertible Securities”) that (i) exceed $400,000 in the aggregate (excluding the Convertible Securities held by Investor) (the “Additional Convertible Securities”) and (ii) contain terms more favorable than those of the Convertible Securities held by Investor, then the Company agrees to amend and restate such Convertible Securities held by Investor (including the Investor’s Safe), at Investor’s sole discretion, to be identical to the instrument evidencing the Additional Convertible Securities.”
IMPORTANT: OCV can only initiate a wire for safe funding after the founder share purchase process has been completed.
Once safe funding is complete, the OCV team will confirm completion with the Legal Team. The Legal Team will prepare and file the CA 25102(f) Notice, which accepts digital signatures.
Step 8: Systems setup
During the company formation stage, OCV companies follow a set of standard systems to ensure a smooth and efficient launch process.
Initial systems
Some initial systems are required to initiate the legal entity formation process; these include:
Domain name: May involve registration of a new name or the transfer of an existing name owned by the founder
Company email: Founder email address and group emails for the company’s support teams
Virtual Mailing Address: To be used for the majority of business purposes. A physical address will only be used in certain cases, where required, such as KYC for banking
Registered Agent
Core systems
After SAFE funding, additional core systems will be set up, these include:
EOR account for payroll and as an HRIS
Company credit card account
Equity management account
Secure password management vault
Optional Business Tools
DUNS Number
A DUNS (Data Universal Numbering System) number is a unique nine-digit identifier issued by Dun & Bradstreet to track global business entities. It helps establish a company’s credibility, enables access to government contracts, and is often required for partnerships or credit applications. Businesses use it to streamline identity verification and build trust with vendors and clients.
A DUNS number is offered for free by Dun & Bradstreet. To obtain one, simply register and create an account on their website. It typically takes about 30 days for the number to be issued.
This number can be created as needed at the CEO's discretion. If a DUNS number is obtained, we ask the CEO to share it with OCV so it can be logged in the Ops platform for reference.
Publicly listed phone number
Beyond the virtual telephone number that founders receive during system setup, companies sometimes need a publicly listed phone number. You can create an additional line through the virtual telephone system as needed—just be aware that these numbers tend to attract sales calls.
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