Guidelines on Other Common Expenses

Business Insurance

In the early days, it’s difficult for pre-seed companies to obtain the right business insurance policy without visibility to their revenue model, customer profiles, data security protocols, etc. Company CEO will decide on the timing and coverage areas for business insurance. In general, events that will trigger business insurance policy include:

• Signing first enterprise contract (coverage like cybersecurity may become necessary)

• Fundraising (a due diligence item by new investors)

The recommended baseline policies for startups include general liability insurance, cyber liability insurance, and professional liability (E&O) insurance.

1. General liability insurance policies protect against claims made relating to general liabilities associated with operating a business which result in damage to people or property.

2. Recent quotes we've seen for this coverage are around $200 USD for $1M per occurrence and $2M aggregate.

3. Cyber liability insurance policies protect against claims made as the result of a data breach or software attack.

4. Recent quotes we've seen for this coverage are around $2,000 USD per year for $1M aggregate.

5. Errors & Omissions insurance policies protect against claims made relating to unsatisfactory work performed by a business.

6. Recent quotes we've seen for this coverage are around $3,000 USD for $1M in aggregate.

7. Employment Practices Liability insurance policies protect against claims made between managers and employees.

8. Recent quotes we've seen for this coverage are around $7,000 USD for $1M in aggregate.

9. Directors & Officers insurance policies protect the personal assets of founders and the startup from lawsuits associated with their decisions.

10. Recent quotes we've seen for this coverage are around $6,000 USD for $1M in aggregate.

Small businesses often benefit from a combination of the above policies, typically bundled with cyber insurance and subject to a limited cap. For companies ready to secure coverage, we recommend using either Vouch or Embroker's startup program. Coverage for all 5 areas above can be in the range of $17,000 per year. Coverage for 1-3 should be less than $10,000 per year.After securing external funding and gaining significant customer traction, it becomes more appropriate to tailor risk management policies to specific business needs. Open Core Ventures can introduce companies to a professional insurance broker who will help find a more customized solution.

Equipment Purchases

All work should be performed on a company-issued laptop or computer equipment. Companies should provide necessary equipment to their team members.Companies should establish their own equipment purchase policies and price range guidelines including considerations for job functions. As of February 2024, the EOR’s standard contractor agreement requires contractors to provide their own equipment.Generally, employees or their managers can purchase the equipment on their💳Corporate Credit Card or follow the company’s typical expense reimbursement processes.See OCV’s🎳Fixed Assets Tracking & Management as a reference.

Equipment Spec Guidelines:

Software Engineers: Apple 14” M4 Pro; 12-Core CPU; 16-Core GPU; 24GB Unified Memory with 512GB SSD

Workspace and Office Leasing

Founders may decide that an external workspace—whether a co-working facility or an office—would be advantageous for productivity and collaboration with co-located team members. If founders wish to rent office space, OCV advises them to discuss budgetary and tax implications with the finance team before making any leasing commitments. Out-of-US founders will need to pay leasing bills directly and then submit expenses through the company's payroll platform for reimbursement.Donations & Sponsorships

Prior to the launch of an OCV company, the open source project may have been supported by public donations and/or other sponsorships.

Donations

Accepting public donations

If there isn’t an existing non-profit organization (unaffiliated with the commercial entity) managing the open source project and donations, general guideline is for OCV companies and employees not to accept public donations.

Sponsoring the open source project and/or a related foundation

If there are unaffiliated non-profit organizations supporting and promoting the open source project, Management Team may consider making a monetary contribution. Amount and frequency consideration should include the company’s cash runway.